February 1, 2009 --SUN VALLEY -- For decades, Sun Valley has attracted world-class skiers, celebrities, vacationers from across the globe, mountain bikers and hikers -- all visitors to a small Idaho town with the cachet of history.

But for a town with so many guests, there are relatively few places to stay. There are two-thirds the number of hotel beds in Ketchum and Sun Valley as five years ago, and none of the luxurious, five-star hotels that attract the wealthy to other mountain resorts.

When big events are in town -- like the Boulder Mountain Tour cross-country ski race and the Special Olympics World Winter Games, both of which hit the valley next weekend -- the quest for a pillow becomes even more challenging.

"We have so few beds in the valley - north and south, that whenever there is a major event or a major holiday they never meet the need. They're always sold out," said Jim Spinelli, executive director of the Hailey Chamber of Commerce.

'A rising tide'

The chambers and economic development organizations in the valley are well aware of the problems room shortages can pose -  and the economic benefits that more rooms would provide.

"We've really taken this on as an issue, to get more hotel rooms," said Bronwyn Patterson, public relations manager for the Sun Valley/Ketchum Chamber & Visitors Bureau. "There's kind of the mantra out there that if you build it, they will come."

"They" means tourists as well as workers -some for the hotels, but also for jobs that would be created when visitors and locals alike go out for shopping, dining and entertainment.

"It's the whole thing about a rising tide lifts all ships," said State Rep. Wendy Jaquet, D-Ketchum, who previously was executive director for the Ketchum chamber.

In Ketchum, hotels are required to provide housing for a quarter of their employees (based on a standard number of employees per room), either by building affordable housing onsite or providing equivalent housing elsewhere in the city. Five-star hotels, to provide the services that guests expect, have more employees per room than those with fewer stars.

"They're a huge economic engine for our community. They will provide job base and increase our tourism and exposure to the outside world, and they'll increase vitality," said Lisa Horowitz, hotel planner for Ketchum. "We're all in this together, all the communities of Idaho. Improving the Ketchum economy helps the state as a whole; getting a better lodging base up here is good for all of us."

About a year ago, Ketchum created the Community and Economic Development Department, and hired Horowitz to head it. Although the department has other goals, facilitating more hotels in town is top priority.

The desire for luxury

There are two reasons that four and five-star hotels are coming to Sun Valley and Ketchum: Visitors want luxury, and high-end rooms are the only structures developers can afford to build. Anything else wouldn't be profitable.

"Most of the areas that we compete with have very nice quality five-star hotels and the chamber will tell you they get calls from people who would like to stay at a comparable quality hotel in Sun Valley, and we really don't have that," said Dick Fenton, local coordinator for the developers of Ketchum Lodge, a high-end hotel proposal that is expected to come before Ketchum's planning and zoning commission in a few months. With 78 rooms, plus condos, fractional ownership condos, retail and restaurants, Ketchum Lodge will share plaza space with the Sun Valley Center for the Arts' new building planned for downtown Ketchum, Fenton said.

Ketchum Lodge is one of five active hotel proposals in Ketchum, Horowitz said. The others are 80-bed Bald Mountain Lodge on South Main Street, which was submitted to the city last month; The Hotel Ketchum, a 70-bed building just across River Street from Bald Mountain Lodge, which was approved by the City Council last fall; the 120to 180-bed Warm Springs Ranch Resort in Warm Springs, which the planning commission has approved; and Sun Valley Co.'s River Run Resort, with 100 to 200 beds, which has been proposed for annexation.

Many of the rooms in Sun Valley Lodge, Sun Valley's flagship hotel, have been remodeled to meet high-end guests' expectations, said Jack Sibbach, director of sales, marketing and PR for Sun Valley Co. He said the company welcomes the coming wave of luxury hotels because of their potential to drive the economy, and he isn't worried that Sun Valley Lodge will lose business.

"We have a lot of people who can afford a lot more than this, who will come back and stay here. We have people who've stayed here for 50 years, and they bring their children and grandchildren," Sibbach said. "We always are proud of our history and use it in our marketing."

All these planned rooms are likely just the first that will be proposed for Ketchum and Sun Valley, said Doug Brown, director of the Wood River Economic Partnership. "The marketers have determined there is a need for between 500 and 800 upscale hotel rooms that this market could support."

Is the money there?

That assumes hotel developers can get financing. And in a declining economy, money isn't falling from the sky like snow.

"It'll be very difficult for a lot of hotels to come in because of the price of land right now," Sibbach said. "To pencil out, it's almost impossible now."

Fenton, who works with other hotel developers in mountain resorts, said developers are adding saleable residential units - condos and houses - to help pay for the hotel rooms, and amenities such as spas, golf courses and convention facilities. The latter are especially important in resort towns because conventions help fill hotels during spring and fall, when tourism is low. However, these amenities take up expensive real estate.

"Up here, dirt and water are more valuable than platinum and gold," Spinelli said.

Fenton estimated that in downtown Ketchum, land is selling for $250 to $270 per square foot - meaning a city block would run more than $10 million.

"In Hailey the same property is probably 70 to 80 bucks a foot," he said. "The other side of that same coin is if there was a comparable parcel in Aspen, it'd be some multiple of $250."

And although the cost of land might appear to be the limiting financial factor, increasing construction costs can't be ignored. To make a hotel work when it costs so much to build, developers add those saleable units and amenities, but they also build up as well as out.

"It seems like each year you have to build higher or wider to get the same number of rooms," Brown said. "All these costs have escalated and the need for greater mass has increased."

The character issue

Greater mass often isn't so popular with the neighbors.

At the Ketchum planning commission meeting last month where the Warm Springs Ranch Resort was approved, Warm Springs resident Wally Limburg questioned the increases in building size the developers wanted.

"It's getting out of control," he said. "It's not in keeping with the neighborhood and it's getting worse."

Individuals with similar concerns have expressed them at hearings for other proposed hotels, and it's an issue planners are aware of.

"Their biggest issue on all of these hotels is their size, either the height or the bulk of the buildings. The reality is, if we want a hotel or a resort, we will probably need to accept some increase in size," Horowitz said.

Jaquet said she's confident city planners will take these concerns into account as they consider hotel projects.

"I think the community is really sensitive to making sure quality of life is preserved," she said. "You don't want to look like downtown Seattle, you want to look like Ketchum, Sun Valley. That's why people come to see us."

But town character isn't a stagnant thing, said the planners and developers. Horowitz noted that many former Ketchum residents have moved to Hailey or Bellevue because they can't afford to live in the ski town anymore.

"Most people who actually live here are very concerned about the 'dark windows' syndrome, that there aren't as many locals here in Ketchum as there once were," she said. By adding workers at the hotels and other businesses, some of whom will live in town, as well as the tourists who will stay at the hotels, there will be more feet on the sidewalks even during slack seasons, she said.

Warm Springs homeowner Lee Chubb isn't so sure. He worries that large projects such as Warm Springs Ranch Resort will drive out full-time residents and tilt the economy toward a mono-culture of tourism.

"We're constantly reducing our year-round population, and now they're destroying the reason (that) people who were able to stay stayed for," said the 17-year Ketchum resident. "You're killing the goose that laid the golden egg."

He favors projects such as Ketchum Lodge that fit the city's character and accommodate resident concerns, but says Warm Springs Ranch Resort is too big for the neighborhood and he'll move when it's built.

A ticking clock

With financing increasingly difficult to come by as the economy worsens, both developers and planners worry that projects won't go forward as planned.

"I'm concerned there are a lot of big projects proposed right now. I would like to see that once a project is proposed, what's proposed gets built," said Vanessa Fry, executive director of Citizens for Smart Growth, an advocacy group in Ketchum. She noted that the community has to look for additional solutions to the economic situation it faces. "I don't want the hotels to be thought of as the silver bullet that'll solve all our problems."

Through Ketchum's Community and Economic Development Department, the city has streamlined the process to get a project approved, which developers said was a serious consideration when looking at the city for a hotel site.

"We're all very cognizant of the difficulties of putting the financing together today, and we're all spending tons of money to go through the planning and approvals process in the hopes of being able to finance them," Fenton said. "The expectation is that as they wind their way through the approvals process, that the capital markets will improve and they'll be able to finance the projects."

Even liberal estimates put the completion of the first new rooms at years - perhaps as many as four, Horowitz said - but the quicker the process, the quicker results will be seen.

"Being able to keep the ball rolling is really important, and the leadership seems to get that right now," Brown said. "Time is of the essence; the clock is ticking. We've got to get things going here."

Ariel Hansen may be reached at 208-788-3475 or [email protected].

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