Diversification is key to our future | TahoeDailyTribune.com

Diversification is key to our future

Charlie McDermid

Year after year the city suffers from a chronic shortfall in its budget. Year after year many small businesses in this town struggle to survive. And year after year the gaming revenues on the South Shore remain flat — the number of skiers on the slopes remains flat — the head count in the lodging properties remains flat.

What is wrong with this picture? To overstate the case, we seem to be in the wrong business. If we were manufacturing buggy whips, we would reallocate our resources and invest in more of a growth industry. But here in Tahoe we remain hugely dependent on the tourist business, which, for us, has not been growing or prospering. The advent of Indian gaming in California will damage our midweek business even more in years to come.

Do we have a way out? Yes. It is called economic diversification.

Let us look back some 20 years — to 1983, to be exact — when some of our leading citizens recognized the need for redevelopment to replace aging properties with a new a better product. Since then, redevelopment has been a long and agonizingly slow process. But thanks to the efforts of people like Miller, Childs, Von Klug, Jamin, Marchio, McDougall and Gooch in the public sector — professionals like Feldman, Midkiff, Crabb and Wallace — local business risk-takers like Moss, Phillips, Nalley, Mason, Foff, Lohr, Jovicich, Casteel, Embassy, Heavenly and Marriott — we have made some progress. But clearly it is not enough. The city still needs more revenues to provide first-class services for its citizens, and local businesses need more customers in order to prosper. We need to broaden our tax base and, as 9/11 proved once again, we need to smooth our the fluctuations in our tourist-driven economy.

At the risk of shocking the lodging folk, let me argue we have ITAL far too many tourists ITAL in town — too many, that is, on Saturday night. When our departing guests overload Highway 50 on Sunday afternoon, it becomes virtually impossible for the pig to move through the python. During the week, on the other hand, we have ITAL far too many rooms ITAL and not enough guests. Our midweek occupancy is abysmally low. Hence, if we removed 2,000 rooms from the South Shore, those lodging properties which remain would do better during the week while traffic congestion would be markedly reduced on the weekends. We would strike a much better balance between room supply and demand.

In terms of a specific model, envision the impact of converting 1,000 motel rooms over the next 20 years (those properties that are already economically obsolete) into affordable housing for our citizens, and another 1,000 rooms into commercial space — such as office buildings for Wall Street analysts, or a research facility for the likes of Amgen or Intel. This could be a win-win for all the parties involved. The new companies would be better able to attract and retain key employees who want to live in God’s country. The city would generate higher tax revenues. Restaurants and retail shops would benefit from more affluent customers. Debt-ridden motel owners could cash out if they wanted to. Lodging could provide an upgraded product for our tourists. With cleaner industry the environment would be enhanced and the aesthetics improved. The city would not get any bigger.

Can this happen? It’s won’t work with just a volunteer effort. We would need to convene a blue-ribbon group of leading citizens to provide structure and direction, but then we would also have to hire a dynamic executive director to hasten the conversion of substandard motels into affordable housing and commercial space. We need a strong, successful change agent to help the South Shore re-invent itself for the 21st century.

In effect, we would change our economic mix during the next 20 years. Can we afford this? Or is the real question: Can we afford ITAL not ITAL to do this?

We will always have whiners and naysayers in our midst. But let us be the doers who say, looking back 20 years from now, we did it.

— Charlie McDermid is the manager of the Holiday Inn Express. He was the 2001 president of the South Lake Tahoe Lodging Association.

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