Hotel Online 
News for the Hospitality Executive




 
The Inn at Walnut Bottom in Cumberland, Maryland Closing
Citing Government Interference as Factor

By Kevin Spradlin, Cumberland Times News, Md.McClatchy-Tribune Regional News

Jan. 18, 2010--CUMBERLAND -- After more than 14 years, Kirsten Hansen and Grant Irvin have closed the Inn at Walnut Bottom on Greene Street on the west side of Cumberland.

Telling five part-time employees they no longer had jobs was difficult. Contacting repeat customers over the past two weeks has been trying.

Both insist, however, that an ever-changing market simply wasn't for them. And there are economic trends, both argued, that make them question how any smaller bed-and-breakfast can survive.

"Nothing lasts forever," Irvin said. "Businesses are constantly adapting and changing to meet the demands of the environment. I think, after a long analysis, we concluded that our business model will not adapt to the current environment."

The couple, who moved from Michigan to purchase the Inn at Walnut Bottom from Sharon Kazary in 1995, have raised their two children, ages 17 and 13, in what Hansen called "a wonderful place to be."

But reality set in. The bottom line was adversely impacted by government interference, five examples they cite:

--Rocky Gap Lodge & Golf Resort.

--Western Maryland Scenic Railroad.

--Canal Place Preservation & Development Authority.

--County hotel/motel tax.

--How the county hotel/motel tax is used.

Irvin said Rocky Gap Lodge is a prime example of government meddling in a place it doesn't belong. Development was offered to private companies but no one took the bait. The reason, he said, is simple.

"They did not believe it was going to be financially viable," Irvin said. "That's why they passed on it."

Irvin said the facility is "beautiful ... excellent in every way, but one thing that we know now is that it has not met its goal financially. It's an unambiguous truth."

Lower room rates currently available there "send a signal to the market," Irvin said.

That message is simple -- there's more supply than demand, causing prices to fall. And as many welcomed last summer's opening of the Fairfield Inn & Suites at Marriott, Irvin and Hansen said it only added to the problem.

"Essentially, it doubled the number of hotel rooms in the city of Cumberland," Irvin said. "Not exactly, but close to it. You have a growth rate of supply at nearly 100 percent and a growth rate of demand less than 5 percent. What's likely to happen is there's likely to be over capacity and price-cutting."

The Western Maryland Scenic Railroad and the Thrasher Carriage Museum both are private entities subsidized in large amounts by hotel/motel tax revenue collection. In fiscal 2009, which ended in June, the two entities received a combined $272,000, including $170,000 to the train.

The train, museum and several other entities, as well as the county tourism office's operations, are funded first through hotel/motel tax revenue. In 2009, the county dipped into the general fund for $226,487 to cover expenses. And that overspending is only part of the problem, Irvin said.

He said there's "no accountability" for the tourism office's direction or management. Tourism isn't simply another county function. It has contracted with Barb Buehl and Rivers Edge Business Associates since July. Before then, tourism responsibilities were managed by the Allegany County Chamber of Commerce, then headed by Buehl.

Two local agencies that serve as key subcontractors are marketing firm McClarran & Williams and Web developer Exclamation Labs. Irvin argues that by contracting out tourism to private entities, the county no longer has control over what happens.

But in some ways, that's not necessarily a bad thing.

"Sell it," Irvin said of the train and museum. "Auction it off. Get what they can. This is the whole point. The government does not belong in these businesses."

Government could help, Irvin said. By reducing or eliminating subsidies to tourism operations, the county could reduce the hotel/motel tax.

"The tax supresses demand," Irvin said. "If you want to sell less of anything, raise the price. If you want to discourage any activity, you tax it. You have a situation where, from an economic standpoint, government appears to be on one hand oversupplying the market and on the other hand suppressing demand through taxation."

"Cut the tax and boost demand," he said. "It'd be good for tourism."

Kevin Spradlin can be reached at kspradlin@times-news.com.

-----

To see more of the Cumberland Times News or to subscribe to the newspaper, go to http://www.times-news.com/.

Copyright (c) 2010, Cumberland Times News, Md.

Distributed by McClatchy-Tribune Information Services. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA. NYSE:MAR,




To search Hotel Online data base of News and Trends Go to Hotel.OnlineSearch
Home | Welcome| Hospitality News | Classifieds| One-on-One |
Viewpoint Forum | Industry Resources | Press Releases
Please contact Hotel.Onlinewith your comments and suggestions.