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Tourism officials seek new hotel for Scott County

CLIFFORD JEFFERY • Mar 19, 2007 at 12:03 PM

GATE CITY - Tourism officials in Scott County would like to see at least one new hotel locate in the area.

A study released to the county Economic Development Authority recently delivered statistics about a Scott County hotel's viability.

The county may be able to support a full-fledged hotel, but only if the tourism proponents keep working, according to the Virginia Tech Office of Economic Development.

While the county could support the construction of a hotel, the study found Scott County's tourism is based primarily on historic, cultural and natural sites, and those types of destinations do not draw the crowds they used to.

The findings of the Hotel Feasibility Study for Scott County found that the planned Daniel Boone Wilderness Trail Interpretive and Exposition Center could create a market large enough to support a 100-room hotel.

"Interactive type centers, places like the Carter Family Fold, where people come and listen to the performance then can interact with the performers - those sites are up," said Chad Miller, an author of the study from the Virginia Tech Office of Economic Development.

If the county's tourism-based business continues to expand, then the economic development net present value forecast for a 100-room hotel would be $325,046 with an investment of $5.2 million.

The net present value is a conversion of future cash flow to current value, Miller said. It is the net income in today's dollars.

"A positive number indicates it is a good value," Miller said.

The number of midsized hotels supplying food and beverages is shrinking, according to the study. The results of the forecast showed the same 100-room hotel that tried to offer food and beverage to visitors would cost an additional $291,550 and would only make a net present value of $45,139.

Even with the exposition center, which is not yet in the development phase, existing demand may not support a hotel unless other hospitality business is developed in the area, such as restaurants and entertainment venues, according to the study.

Whereas the national average hotel occupancy rate averages 63.3 percent, the study found a Scott County hotel would likely average 38 percent to 42 percent occupancy the first year. By 2011, the rate could increase to 60 percent if it doesn't offer food and 64 percent for a hotel that does offer food and beverage services.

"A hotel by itself just doesn't do as well over time as one with a restaurant, or a restaurant next door," Miller said.

The study's executive summary writer noted that "continued regional tourism development is a crucial caveat of this study."

The study found that the average growth in Scott County is higher than in other areas. With about 20,500 automobiles traveling the route daily, the section of U.S. 23 between Weber City and the Tennessee state line is the busiest section of road in the county.

Traffic volume makes the area between Gate City and the Tennessee state line the best area in the county for development of a hotel, according to the study.

About 70 percent of rooms in the Scott County area are provided by hotels in Kingsport and Bristol. The average national room rate from 2001 to 2005 was $62.96 with an average annual increase of 2.86 percent, according to the report.

While events like races at Bristol Motor Speedway and the Carter Family Music Festival are figured into study estimates, business travel was not.

While businesses in the Duffield Regional Industrial Park generate a demand for both rooms and meeting facilities, future business-related travel increases were not figured into the study results.

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