- From left, the Sheraton, Courtyard Marriott, Renaissance and Skirvin Hilton hotels can be seen downtown in OKC. mh
Seven years after its grand opening, the Renaissance Grand, a nearly 1,000-room convention center hotel in St. Louis, closed one of its buildings as $98 million in bonds used to help construct the hotel went into foreclosure.
The hotel, which opened in
2002 and went through foreclosure proceedings in 2009, was recently sold to a group that plans to renovate it under a new financial package that will see the city of St. Louis take a reimbursement hit on loans it issued to help pay for the hotel development.
Its a cautionary tale that opponents
of a potential convention center hotel in Oklahoma City can point to as a reason the city would be foolish to help support a similar hotel as part of a planned $250 million convention center. But in the same way OKCs future convention center is a different project than those in other cities (see last weeks Oklahoma Gazette for more), a new convention center hotel in Oklahoma City, if one is ever built, would also follow a different path than ones built in cities like St. Louis, Boston and Nashville, where original occupancy estimates have not been met.
Is it feasible?
A new convention center, which was approved by voters as a part of the
2009 Metropolitan Area Projects Plan
3 (MAPS 3), is coming to downtown. However, there are some who believe the success of the new convention center will depend on whether a large anchor hotel is also part of the project. The proposed hotel isnt part of the MAPS 3 project, so city management is studying the best ways to attract possible investors.
It will work without a hotel, said Cathy OConnor, president of The Alliance for Economic Development of Oklahoma City. But it wont work as well as its able to. We will not be as competitive without [a convention center hotel].
The Oklahoma City Council
is waiting for another report on the feasibility of a publicly supported hotel. OConnor said the report, which is due this summer, will outline the options available to the city to help fund a hotel that could have as many as 775 rooms.
The convention center will work
without the hotel, but the hotel wont work without public assistance, OConnor said.
Full-service hotels are hard to do without public help, OConnor said. If you look around, we have a lot of hotels being built in Oklahoma City right now, but not a full-service hotel. The Embassy Suites is the closest, but it is getting some [public] help. Its a tough environment for those big hotels.
More than just rooms
The number of hotel rooms a city has
is often viewed as a benchmark for attracting convention traffic. However, the total number of rooms is not always the most important factor, but rather how many of those rooms are within just a few hotels, convention center officials say.
For example, Nashville, which is rated as a top 15 convention destination by the event and survey firm Cvent,
has a total of 20,373 hotel rooms.
That is 18,000 fewer rooms than St. Louis, which does not have as strong
a convention industry. However, the difference between the two cities is that Nashville has a few larger hotels that are desirable for conventions that wish to locate the majority of their guests under one roof.
Cash or credit?
Oklahoma Citys proposed convention center is the most expensive MAPS project to date, but at an estimated $250
million, its price tag is only a fraction of those recently built or proposed in other cities. Also, the convention center is being built with money generated through sales tax, which makes the project less of a financial risk.
Public assistance for a new convention center hotel could be achieved through a variety of methods, OConnor said, including through tax increment financing, also known as TIF, or creating a nonprofit that owns the hotel.
The hotel is going to be riskier [than the convention center] just from that perspective, OConnor said about the funding options the city will face. How much riskier? I dont know. I think there are things that you can do to mitigate that risk, and those are some of the things the city council will want to look at. You certainly structure these things so the financial risk is not bore by the city.
OConnor also adds that the city has a track record of conservative funding practices when paying for large projects.
Just general financial management in Oklahoma City is much more conservative than you will see in some other places, OConnor added.
In the coming months, the city council will be presented with a detailed study on the funding options that exist for supporting a convention center hotel, and there will most likely be a vote on whether or not Oklahoma City should help pay for a major downtown hotel.