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As Construction Slumps in Kansas, Hotel Projects are Providing Relief for Some

By Bill Wilson, The Wichita Eagle, Kan.McClatchy-Tribune Regional News

Sept. 02, 2011--Dave Wells is thankful that the economy hasn't forced hotel builders to the sidelines. Because without steady growth in hotel building jobs, and some growth in the work from national retailers, Wells doesn't want to think about where his firm, Key Construction, would be.

"Public-sector spending is definitely down," Wells said Wednesday afternoon as he returned from Bill Warren's Moore, Okla., IMAX project.

"And private-sector spending, if it's up, it isn't up by much."

Construction work is still tough to come by in Kansas, Wells said, especially locally.

But hotel owners and builders are saving the day regionally, he said, refusing to hunker down because of economic turmoil.

"It's really been a pleasant surprise how the hospitality industry, while it's down, has been more active building," Wells said.

"We've got some great projects out there -- especially in Kansas City, where we're building a Courtyard (by Marriott), a boutique hotel for Paul Coury and a Holiday Inn Express."

One of Wells' clients, Jim Korroch, said the availability of federal loans has helped many small hoteliers.

"Federal loans have been more aggressive and readily available than they were a couple of years ago," said Korroch, who is the developer of the Fairfield Inn by Marriott at WaterWalk.

"The SBA (Small Business Administration) will loan up to $4.5 million on a hotel and that's twice what it used to be. For a smaller hotel -- 100 rooms or less -- that could be the entire debt amount or a good portion of it."

Nationally, there aren't many pleasant surprises, according to officials at the Associated General Contractors of America.

Construction spending plummeted in July as public spending, residential improvements and factory construction declines overtook increases in other private nonresidential, home and apartment construction, the association said.

"The construction spending pendulum is likely to keep swinging between gains and losses, given the spotty increases that are occurring in private investment and sharp declines in federal, state and local construction budgets," the association's chief economist, Ken Simonson, said in a news release. "The only consolation is that total spending has stopped falling from year-ago levels."

Total construction spending in July 2011 was $790æbillion, a 1.3 percent drop from the upwardly revised June estimate of $800æbillion and nearly identical to the July 2010 total.

Private power construction and improvements to existing single- and multi-family structures both jumped 22 percent over 12 months, while private commercial construction climbed 13 percent.

Private commercial has been good to Key as well, said Wells, the company president.

"Any increases we've seen haven't been local," he said. "It's been the big clients like Wal-Mart and Verizon holding on with us."

Economic uncertainty and the ongoing tightness of commercial credit are the reasons, Wells said.

"It certainly isn't that traditional lending has eased up," Korroch said.

"It's a whole different world out there financially," Wells said.

Reach Bill Wilson at 316-268-6290 or bwilson@wichitaeagle.com.

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(c)2011 The Wichita Eagle (Wichita, Kan.)

Visit The Wichita Eagle (Wichita, Kan.) at www.kansas.com

Distributed by MCT Information Services



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