Hotel operations at Iron Horse Inn will cease Saturday
October 31, 2012
Steamboat Springs — The overnight hotel portion of the Iron Horse Inn will shut down Saturday.
The city of Steamboat Springs, which owns the Iron Horse and has managed the hotel business for more than a year, has been losing money on the nightly rental portion of the operation.
The 25 rooms that acted as nightly rentals are in a newer building separate of the units that serve as long-term rental housing. However, one unit in the newer building houses a long-term tenant.
Anne Small, director of general services for the city, said the city will save money on overhead costs by shutting down the hotel operations.
"We'll come out ahead this way," Interim City Manager Deb Hinsvark said.
The hotel operations cost the city about $380,000 last year compared to $341,368 in revenue, according to Small. The city also spends $58,000 annually for other overhead expenses related to the hotel.
The hotel maintained an occupancy rate of about 40 percent for the past 10 months, Small said.
The long-term housing at the Iron Horse typically maintains full occupancy.
"That's our affordable workforce housing," Small said. "It can sustain itself and generate revenue."
"We do plan to have another conversation about the Iron Horse," Hinsvark said about the building's future.
Plans to demolish the Iron Horse to build a police station were shelved. The city will pay about $480,000 per year until 2032 to erase its debt on the property.
The property itself serves as collateral for the debt the city owes on its purchase. Because the building is used as collateral, any necessary maintenance will continue to be done.
To sell the building, the city would either have to pay about $7 million to buy back the debt or use a different city property as collateral for the debt. The city bought the Iron Horse for $5 million and would pay an additional $2 million in essentially a pre-payment penalty if it chose to do so.
"We've been talking about the Iron Horse and the possibility of selling it since I came here three years ago," Hinsvark said.
Hinsvark's staff report from Tuesday's City Council meeting states that two possible users of the facility are Colorado Mountain College's resort management program or a group that has inquired about using it as a business incubator.
To reach Michael Schrantz, call 970-871-4206 or email mschrantz@SteamboatToday.com