Tribal Council approves $3.2 million budget for hotel remodeling

by May 5, 2023NEWS ka-no-he-da0 comments


One Feather Reporter


CHEROKEE, N.C. – During the May session held on the morning of Thursday, May 4, Tribal Council approved to cover costs to remodel and rebrand the Chestnut Tree and Hampton Inn hotels located on the Qualla Boundary.

During the May session held on the morning of Thursday, May 4, Tribal Council approved to cover costs to remodel and rebrand the Chestnut Tree, shown in photo, and Hampton Inn hotels located on the Qualla Boundary. (JONAH LOSSIAH/One Feather photos)

Both of these businesses are owned by the Eastern Band of Cherokee Indians. Following a second resolution that was passed on Thursday morning, both hotels will now be managed on behalf of the Tribe by Kituwah, LLC. The total allotted for the efforts will be $3,270,784. $545,131 of that is contingency money in case remodeling costs are higher than expected.

Res. No. 565 (2023) approved the funding for this project and Res. No. 599 (2023) approved the transition of management to Kituwah, LLC.

Mark Hubble, chief executive officer of Kituwah, LLC, was in the Council Chambers to speak on the resolutions. He wanted to lay out what the expected returns were with the current management contract.

“We basically just manage this on the Tribe’s behalf. It’s not our building. We believe that, even with this, it will cash flow positive overtime. 80 percent of the profits are specially dividend back to the Tribe immediately. Well, quarterly. As we do that, the other 20 percent goes into the normal dividend pile, which is the escalating schedule over time. So, all of the profits, essentially, function back to the Tribe after the expenses are paid,” said Hubble.

“This had significant infrastructure damage when it was turned over to the Tribe. But even with all of that, it was still cash flow positive. Probably fairly significantly positive. We talked yesterday. We think between this and the Hampton, the outlay to the Tribe is about a million. Probably a little over a million dollars per year.”

Jeremiah Wiggins, president of Kituwah Builders, was also in attendance to explain how they came up with the figures they provided to Tribal Council.

“At a proposed rate of $500, revenue is right around $800,000 a year. Expenses are estimated at around $200,000 dollars, including repairs and maintenance. And we’ve got a couple of employees we’ve brought on board. Potential profit around $600,000. That’s only utilizing a little over 50 percent of the inventory. That’s servicing the H-2B work force housing requirements. There are some long-term J1 work force housing needs, which could roughly amount to another 10 units each from TCGE and service company. So, up to 100 rooms. Which, using the same metrics, would equate to about a million dollars in revenue, and about 800,000 dollars a year profit, and special dividends at around 600,000 dollars a year once the remodel is complete.”

Wiggins continued by saying that there were an additional 50 to 55 rooms on the property that will be held for potential workforce housing. He said that this will help alleviate housing concerns with projects that are in need of temporary housing for employees.

Hubble and Wiggins both discussed the search for a new franchise partner for the Hampton Inn, which will be losing its Hampton affiliation. After sorting through offers, they said that Choice Hotels gave the best offer. The hotel will specifically be a Clarion, which is a Choice Hotels brand.

“Right now, we’ve just done some preliminary investigative work, talking to some other brands. Hampton, Marriot, Choice, and trying to find a brand that would fit with the current structure that would not require any structural changes that would amount to a great deal of expense to the property. We kind of got that down to two. One was a Hilton property, but we don’t think that’s going to exactly fit that. And Clarion Pointe was offering 250,000 dollars in key money to convert the property,” said Wiggins.

Yellowhill Rep. T.W. Saunooke had questions about the large contingency for the project.

“Why is the contingency at 20 percent? Typical is anywhere from 5-10 percent. Why are you at 20 percent for this project?” asked Rep. Saunooke.

Wiggins said that they are simply doing whatever they can to cover their bases.

“It’s a good question. It’s just the age of the building. We definitely raised the contingency amount. We’ve actually already incurred some dips into that contingency. We think we might have it covered in some of the other line items. Just an example: the roof on the main building, we planned on a simple roof repair and that’s what this estimate is based on. When they peeled back the old roof, over 50 percent of the old roof was rusted out. It’s a metal deck so they’re going in and having to replace the metal deck on the roof now. Again, it’s just a security blanket for the aging facility,” said Wiggins.

Rep. Saunooke suggested that the Council add an amendment to the resolution that would require the contingency money to return to the Tribe in the event it goes unused. A second amendment was made to the legislation that stated the funding for this project was coming from the fund balances of both the Building Rental Fund and the Business and Economic Fund for the Tribe.

The EBCI Tribal Council passed the resolution with only one vote against, that being Yellowhill Rep. T.W. Saunooke. Big Cove Rep. Teresa McCoy was absent from the vote.

After both resolutions passed, Yellowhill Rep. David Wolfe wanted to make a statement about how Kituwah, LLC seeks approval moving forward.

“The process they used last time was they went to Business Committee and sort of got approval there. But, according to the Charter, approval has to be done by resolution. Even the agreement needs to be done by resolution instead of going to Business Committee and getting approval. Because I know you’ve done a ton of work down there on the roofs already. If this resolution hadn’t of passed today, what would you have done? I think you need to follow the process that we have in place that we use with all our programs.”

There was no further discussion after Rep. Wolfe finished his comments.