(Wikimedia Commons)

Downtown Phoenix Sheraton

City council members have voted to get out of the hotel business. They approved selling the downtown Sheraton to an out-of-state investor for $255 million.

But, the city’s two most outspoken fiscal conservatives, who have repeatedly said the city should have never been in the hotel business, argued that Phoenix should now stay in it – at least temporarily.

After years of losing money, the hotel is now turning a profit, about $16 million in the past couple years, according to the city’s chief financial officer. That’s why Councilman Sal DiCiccio thinks the city should hold onto it.

“You’re taking a bad idea and making it worse by selling it today when we’re in a growing economy, a growing market,” he said. “A one-year wait would not have hurt this thing.”

Councilman Jim Waring echoed that sentiment, “That doesn’t mean we have to take this offer that comes along because it’s the one we’ve got and it’s better than a couple others after a little while of trying.”

City Manager Ed Zuercher said it was by far the best offer the city has received, which they believe is above the hotel’s current market value.

“Selling the hotel eliminates the city’s ownership risks, the broader economy risk, the travel industry risk and any local building ownership risks,” he said.

Zuercher also said the city would avoid spending money on hotel renovations estimated at "upwards of $20 million" to keep it viable.

Phoenix built the Sheraton to support the expanded convention center when the private sector would not. It opened in 2008 during the depths of the recession.

“It did accomplish the goal, which is large, mega event support and attracting large conventions,” Zuercher said.

In total, the city reports the Sheraton cost taxpayers $87 million. The sale to TLG PHoenix is expected to close by January 2018.