The Hotel Blender

The business plan for the hotel/conference center is now on the Regents’ website.  In essence, the plan is made to work by blending the hotel/ conference center with the guest house and the Lake Arrowhead conference center. In effect, the operating surplus of these other operations is used to cover the initial shortfall relative to debt service in the proposed hotel/conference center. The new hotel runs at 60% capacity initially and rises to 70% by year 3 of its operations although it cannot take commercial business due to its tax exempt financing.  Blending the hotel with the other operations – and the 70% assumption – gives it a cushion above debt service.  The cushion gets much thinner if the other operations – which would go on anyway and be generating surpluses for the campus – were not included and if the 70% figure turns out to be too high.

The rational for combining the two operations for presentation to the Regents is unclear.  Why not throw in the parking service, too?  The Regents are assured in the plan that not a penny of their money will be involved.  The campus takes the risk including the risk that the hotel will eat into the surpluses of other enterprises, not just the two officially combined with the hotel.

Be wary of this blender.

The plan is at:
http://www.universityofcalifornia.edu/regents/regmeet/mar12/gb1.pdf

You can be creative when you blend:
[youtube http://www.youtube.com/watch?v=HndEKX_2UaE]

Update: Since it is not known how long the Regents keep items on their website after a meeting, here is an alternative location: