The Hotel at Batavia Downs

High construction costs and high interest rates have temporarily shelved plans to expand the Hotel at Batavia Downs.

The Western Regional Off-Track Betting Board of Directors voted on Thursday to temporarily "pause" expansion plans on the recommendation of outgoing CEO/President Henry Wojtaszek.

Wojtaszek said the executive team sought construction estimates for the proposed expansion and the estimates -- not bids -- came in at $16 million and $16.5 million, which is about $4 million more than the original cost estimate.

"Because of the high cost of the estimate to build a hotel and the high cost of borrowing, we recommended to the board that they delay their decision and come back and review (the proposal) in six months to a year," Wojtaszek.

The Hotel at Batavia Downs is currently an 84-room luxury facility that opened in 2016. It was originally constructed and operated by ADK Hospitality, a Buffalo-based company. It costs ADK $5.4 million to build the hotel. The OTB purchased the hotel in 2021 for $8 million.

Officials were looking at an expansion that would essentially double the size of the hotel, with a new wing added to the north side of the current hotel.

Byron Brown, the new CEO and president, said pausing expansion given the current construction market makes sense.

"The construction companies that reviewed this felt that costs in the construction industry are extremely high right now and that interest rates are high right now, and we should delay seeing if construction costs come back down and if interest rates go down," Brown said. "And, you know, one example of this is if you even look at reporting on the Bills new stadium project, construction expenses have ballooned by over $560 million over original estimates."

Asked about the possibility of new import tariffs, as promised by the incoming White House administration, raising the cost of construction, thus making the project even more expensive to pursue, Brown said, "That's why we made the recommendation to delay moving forward with the hotel expansion, so that we would give the board the opportunity, with the management team to look at these things and to look at the costs, and if costs come back in line, then we would be able to move forward. And if costs don't come back in line, that would be something that the board would need to consider."

The board, Wojtaszek said, will likely look at a scaled-down expansion (fewer new rooms) at its December meeting to see if it could be financially feasible. 

The board may also be asked to authorize construction BIDs to see if maybe they come in lower than the estimates, Brown said.

As he stepped into his new role as president and CEO, Bryon Brown noted that the hotel has helped contribute to revenue growth at Batavia Downs and he said he supported expansion.

"(The hotel) has led to this corporation becoming a lot more profitable," Brown told The Batavian in October. "So purchasing the hotel in the first place was a very good decision. From my perspective, just being able to evaluate this during the week that I've been here, I think expanding would be a good decision as well. But again, I don't want to try to speak for the board."

Brown said delaying expansions is a disappointment for all concerned.

"The management team and the board are all disappointed. I'm disappointed," Brown said. "You know, we did not anticipate the numbers being this high with the increase in construction costs and interest rates, but we have to make a sound business decision, and that's what we're doing by recommending that the hotel expansion be delayed at this time."

Western Regional Off-Track Betting Corp. directors passed a pair of resolutions on Thursday advancing their look into a possible expansion of the Hotel at Batavia Downs. WROTB management has been talking about adding more rooms since last March. 

Directors voted to contract with Bammel Architects of Orchard Park to provide conceptual design drawings per a request for proposal, at a cost of $76,000, and with Spectrum Gaming Group of Horsham, Pa., to perform a gaming market analysis, at a cost not to exceed $29,750 plus out of pocket expenses.

All directors, except newly appointed Erie County representative Timothy Callan, voted in favor of the resolutions, which could help determine whether adding 42 rooms to the 84-bed hotel is feasible.

Callan said after the meeting that many of his questions about the hotel in his role as Erie County’s deputy comptroller have gone unanswered. In the 17-member municipality board’s weighted voting system, he holds 24 of the 99 votes.

“A large number of our questions vis-à-vis my day job role were not answered by the corporation in the last couple of years,” he said. “So, when these two resolutions were presented yesterday at … the Batavia Downs Operations committee, I spent a great deal of time posing a large number of questions about both resolutions. I didn't feel like management gave me enough information to answer my questions about both of the proposed engagements.”

Callan said he was against paying an architectural or engineering design firm before conducting a market study. He voted against both measures because his questions “weren’t answered to my satisfaction.”

“Some of these questions pertain to the nature in which these vendors were acquired -- the competitive process in which they were pursued,” he said. “And so, and asking management questions about that yesterday, they didn't answer questions in a way that made me feel confident. And so that's why I chose not to vote for both items.”

Previously, Callan’s boss, Kevin Hardwick, called out WROTB’s 2021 decision to sell land to ADK Hospitality LLC of Buffalo to build the hotel and, then, its decision to buy it back from that group and the purchase price of the sale.

“While I wouldn't say that played a role in my decision as a director now, in voting on these two resolutions, it was certainly in the back of my mind, unanswered questions remaining about previous processes with the hotel,” he said.

Corporation President/Chief Executive Officer Henry Wojtaszek, when asked about Callan’s concerns, said that management “provided to board members everything necessary for them to make an intelligent vote.”

Wojtaszek said purchasing department staff explained the bidding process, adding that contracts were awarded to “the most responsible bidders at the best price.”

He also noted that the hotel has been experiencing a “high level of occupancy” in recent months.

“We’re looking forward to getting the results (of the study) and going from there,” he said.

In other action, the board:

-- Heard a report from Chief Financial Officer Jacquelyne Leach, who stated that $39,780 in surcharge from Batavia Downs Gaming wagering in February will be distributed to member municipalities;

-- Passed resolutions to contract with Alterity of Amherst as a insurance consultant for three years at a total cost of $120,000 and with Lawley of Buffalo to provide insurance coverage as “broker of record” for three years through May 31, 2027; 

-- Passed a resolution authorizing WROTB to be an “ambassador sponsor: of the Buffalo and Erie County Naval and Military Park at a cost of $25,000.

A raise for all Western Regional Off-Track Betting Corp. employees, a plan to expand The Hotel at Batavia Downs and an application to add more terminals to the gaming floor.

Those items and the passage of about 65 resolutions that had been in the hopper for up to three months gave WROTB directors plenty of activity at this morning’s board meeting at Batavia Downs Gaming on Park Road.

Directors voted in favor of a resolution granting all employees of the public benefit company a 4 ½ percent raise, effective Jan. 1-Dec. 31, 2024.

“The organization is only as good as the people who support the organization,” said Temporary Chair Dennis Bassett (City of Rochester). “… It a step in the right direction for us as a board.”

The pay increase extends to all employees, union and non-union, including senior management, who were given a three-year contract last spring.

WROTB President/Chief Executive Officer Henry Wojtaszek said the (United Professional & Service Employees) Union signed a contract “that gives those workers the same raise as the entire corporation.”

“In the old days, they had a separate clause in there where they would have a raise depending upon what they negotiated that year,” he said. “But the latest contract that they signed, they get the same as every other employee at WROTB.”

The resolutions stated that Batavia Downs Gaming’s net win (money left in the gaming machines after payouts to customers) rose by $7.2 million from 2022 to 2023 and attendance increased by more than 58,000 during that same period. Additionally, food and beverage, and hotel room sales increased by 14 percent.

Update: Antonella Rotilio, UPSEU labor relations representative, said that the union is "very pleased that the board acknowledges the success of the corporation because of the members and the employees. Those are big steps."

HOTEL FEASIBILITY STUDY APPROVED

The board passed two resolutions pertaining to The Hotel at Batavia Downs – one to extend its contract with Hart Hotel Inc. to manage the 84-room facility for three more years at a cost not to exceed $9,000 per month and the other to authorize spending up to $100,000 for a feasibility study to determine if expansion is warranted.

Wojtaszek said that Dave Hart, owner of Hart Hotel Inc., will “take the lead on looking for an architect to do the drawing and for a company to study how an expansion would affect our business.”

He said the board will not make a decision until the feasibility study is complete and submitted for review. He said adding 40 rooms has been talked about but “nothing is definite at this point.”

MORE GAMES ON THE FLOOR?

Vice President/Operations Sean Schiano has applied to the New York State Gaming Commission for the right to add 18 more Video Lottery Terminals to the gaming floor.

Wojtaszek said the addition of 18 games would max out the floor, increasing the total number to 928.

“After that (approval) we probably will not have much more room to expand on the current floor, so we’d have to take a different approach,” he said. “But those 18 will fit on our current makeup.”

In other action, the board voted to approve the 2024 Operating Plan that was submitted by Chief Financial Officer Jacquelyne Leach and her staff. 

Previously: Member municipality distributions to approach $10 million in 2024: WROTB chief financial officer

Just a few months removed from what Western Regional Off-Track Betting Corp. officials reported as a record year for revenue, signs are pointing toward even greater earnings for Batavia Downs Gaming in 2023.

“We experienced a record 2022 and now the first quarter of 2023 is up 16 percent in what we distribute (to member municipalities),” WROTB President Henry Wojtaszek said following this morning’s board of directors meeting at the Park Road facility. “It’s the highest net win by more than a half a million for the corporation, so it’s really been a blockbuster first three months of the year for us.”

Jacquelyne Leach, the corporation’s chief financial officer, provided a report to The Batavian that shows that distribution of surcharge and earnings to the 17 participating municipalities for the first quarter of 2023 compared to the same time period in 2022.

The numbers indicate that $2,269,956 in surcharge and earnings was generated this year compared to $1,956,149 in the first quarter of last year.

Genesee County’s share increased by 18 percent – from $42,002 to $49,664.

Leach also pointed out that the "net win" for March was the corporation's highest ever, $7.7 million. "Net win" is defined as credits played in the machines less credits won, she said.

Wojtaszek said Batavia Downs Gaming is bucking the trend in the gaming industry, citing information shared at a recent conference in Atlantic City.

“We heard that while the industry is doing pretty well as a whole, the indication is that the brick-and-mortar part of the casino (business) isn’t necessarily up, depending where you are, geographically,” he said. “But we’re clearly a brick-and-mortar operation and we’re clearly having a banner year. Our numbers are definitely up.”

He said he is optimistic that 2023 will exceed last year’s figures.

“(The first quarter) is usually the slow season. We’ve experienced no slowdown and now we’re coming into the busy part – with the Triple Crown, the concerts and many other events that we have here. So, we’re looking forward to a great 2023.”

On another front, Wojtaszek said a committee looking into the possibility of expanding The Hotel at Batavia Downs met on Wednesday and is leaning toward recommending the expenditure of up to $100,000 for a feasibility study and architect’s rendering.

“We’re going to be careful in our analysis of it and spending any money, but in order to figure out whether or not the expansion of the hotel is warranted, we’re most likely going to have an architect give us some drawings and have a market study done as to the return on the investment … if we do expand,” he said.

Following last month’s meeting, Wojtaszek mentioned the possibility of adding 42 rooms to the 84-room facility, but today he backtracked a bit.

“We discussed it yesterday and decided not to sit on a number at this point,” he said.

He pointed out that the hotel has been very busy and sold out on many nights, but wasn’t sure if “we’ve hit that tipping point to necessitate additional rooms.”

Wojtaszek also noted that an expansion would enhance the ease of guests’ entrance into the hotel.

“We want to make sure we have a safe drop-off area and convenient drop-off area for people,” he said. “Now, it’s a difficult situation relative to the drop-off and entrance to the hotel. We’ve acknowledged that and we’re trying to give a better experience to the guests arriving at the hotel.”

He did say that Downs’ officials will address the drop-off situation regardless of the decision on expansion.