Is there a ceiling on how many hotels can be successful in Traverse City? Should the local hospitality industry pay into a fund to cover local infrastructure costs, or even to spur the development of more affordable housing in northern Michigan? The Ticker sat down with Trevor Tkach, president and CEO of Traverse City Tourism (TCT) to get his thoughts on these big questions and others.

Ticker: Last fall, we talked about eight new hotels in development in and around Traverse City. Since then, two of those hotels have opened – the Tru by Hilton in Garfield Township and the Alexandra Inn in East Bay Township – and four of the others are under construction. We’ve also heard plans for two more Hilton hotels to be built at the corner of Three Mile and US-31, which would bring another 186 hotel rooms to the region. Do you see a ceiling on how many hotels and rooms Traverse City can support, based on recent demand?

Tkach: What I would share in general – and it's not just about hotels, but about short-term rentals (STRs), as well – is that demand continues to climb for Traverse City. Year after year, we continue to see more people who want to experience the Traverse City area – not just in summertime, but throughout the year.

That said, during certain times of the year, it might be fair to say that supply is outpacing demand. Sure, if you add another hotel, we're going to come pretty close to filling that in the summer, and that means the total number of rooms we’re going to sell between Memorial Day and Labor Day is going to increase.

But when you see a new 100-room hotel come online, that's 100 rooms new in our market every single day for 365 days a year. You can't take 100 of those rooms from January and move them into July to make more money. It's a one-day spoilage rule, and once that day is done, you’ve either sold the room or you haven't. And we know that, as we've added more rooms both on the STR side and in the hotel space, there are certain times in the year where all the inventory just means you're splitting up a finite amount of demand into even smaller pieces. That makes it more challenging, as a business owner, to stay viable

A 100-room hotel means 36,500 more room nights over the course of a year that you need to sell to get to 100 percent occupancy. Even to hit 50 percent occupancy, you have to sell 18,250 more rooms. So, the question becomes: What is the sustainable number [to have a successful business]? Well, we’re going to find that out. I’m optimistic we’ll have enough demand to keep these businesses viable. But the future is unwritten, and it’s linked back to a lot of different variables that affect travel decisions – things like consumer confidence, the economy, and gas prices.

Ticker: TCT has been working for a long time on bringing an indoor sports complex to the region. Earlier this year, news broke that TCAPS was considering a proposal to build new field houses at Central and West. Has there been any movement since?

Tkach: I do believe that project is on track. I've stayed closely engaged with Jessica Sullivan of the Traverse Indoor Sports Coalition, who has been spearheading the TCAPS project, and she has been extremely positive about the progress. I've also stayed closely connected with [TCAPS Superintendent] Dr. John VanWagoner, and it does appear as though there's real interest from the district in seeing these types of venues come online, for a variety of reasons. So, I've got high hopes that within the next few months we will start to see this project crystallize and see some real campaigning going on to raise the private funds necessary to get these two field houses built.

[Note: Under the current plan for the field houses, half the cost of the project would be raised through private fundraising, while the other half could potentially be folded into the next TCAPS bond request.]

Ticker: What was your reaction to the news that the Traverse City Film Festival (TCFF) would be refocusing its efforts on a weekly film series, rather than a more traditional festival event?

Tkach: First and foremost, hats off to TCFF for coming up with a new strategy to sustain business. It's not an easy time for the film industry, and for them to get creative and come up with a new concept that potentially helps keep the theater vibrant and full of customers, that’s a good thing.

Now, is TCFF the same as what it was before, from a tourism perspective? Well, clearly it's not. You can’t just do year-round programming and expect it to be the same as having an internationally-recognized week-long celebration in the middle of summer. It's apples and oranges. [TCFF Tuesdays] is more like the National Writers Series, and while it's nice to have these opportunities in our market that show our commitment to the arts and cultural scene, I'd still love to see something bigger. Maybe it’s not in the middle of summer, but maybe there's something more we could develop to put more of a pinnacle on this new film festival concept.

Ticker: TCT is funded by a 5 percent assessment on local hotel bookings. I've heard some chatter from locals who think TCT’s hotel assessment should be modified so that it can also help pay for things like local infrastructure or affordable housing. What’s your rebuttal to this line of thinking?

Tkach: I don’t know that I have a ‘rebuttal.’ I think it's really important that we do talk these things through.

As I've shared before, the TCT assessments could go to a variety of different purposes or causes. We've got a pretty broad scope of opportunities that we can engage in. However, we at TCT have to respond to the demands of our membership. Our members are the hoteliers, who are collecting the assessments and helping provide guidance on how to fully capitalize on the assets we have. We’ve got all these hotels, with all these employees, and we want to keep those businesses busy and keep their people employed. That’s how our system currently works. And it helps our local economy as a whole, too, because we’re bringing customers to the region.

Now, if the members collectively decide they want to invest in something else, we have the ability to do that. So, for instance, they could absolutely decide that they want to spend some of the assessment on housing. It's pretty much at their discretion. But what we've seen in this market is that the business owners have mostly taken it upon themselves to address the housing issue. When you see large properties like Grand Traverse Resort and Spa build dormitories for their employees, I can assure you they're not the only ones doing that. There are a lot of hoteliers and property managers who have invested in housing for their employees, to ensure that they've got a reliable workforce. And so, to say the housing issue is not being addressed by our industry, I think would be misleading.

Further, the housing issue isn't exclusive to Traverse City. It's an international issue. This is a challenge everywhere across the country and around the globe. So, it's hard to say that it's the responsibility of one industry to solve it. TCT and the hospitality industry are at the table. We want to help – and I think, in our way, we are. But it's a very complex and wicked issue, and we know it's going to take a lot of thinking and a lot of action, from a lot of different players, to move the needle.