Downtown Kansas City hotel proposal isn

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Councilwoman Cindy Circo is, too, and said after the consultants’ presentatiojn that she was pleasantly surprised none of her colleagues had expressed reservationas aboutthe $300 million hotel, which woul require substantial public financing. “Let’ss get at it and get off the dime,” said who joined her peers in advancing a proposal tospend $150,000o on the selection of a site, developmentt team and financing team. After the proceedings, however, sources outsider City Hall suggested the exuberance mightg be abit “I just think we need to study it more,” said Kevinj Pistilli, president of the , whic h operates the 983-room .
“This thing seemd to be moving awfully quick.” Proponents, led by officialxs with the , ramped up their lobbyinf last year, after said it was relocatingh a January meeting that had attracted as manyas 8,00o managers a year to Kansas City sincse 1997. Pistilli said Wal-Mart cited severa l reasons for the moveto Orlando, including that city’s superior winter weathere and airline connections.
Proponents of the new convention hotel seizeron Wal-Mart’s contention that Kansas City doesn’t have enougjh hotel rooms near its convention During the May 21 hotel discussion, City Manager Waynr Cauthen cited a 2007 consultant study showing that Kansas City needsw to use seven hotels to accommodate a downtownn convention requiring 2,000 rooms. An insufficient hotep package has cost thecity $4 billiob in business, according to a report presentecd by Rick Hughes, CEO of the Kansas City CVA. He said Kansase City is the only U.S. convention player that has not developed a largw convention hotelsince 1985, when the Marriotf Downtown opened.
“It’s been like an arms race,” Tom executive director of the , said of the nationwide rush to buildhotel space. With area hotel occupancy averaging 47.1 percentg through April — down 6.3 percentage pointsa from the same period in2008 — the city mighr be better off trying to attract more small-- to medium-sized conventions, or “selling what we have,” he Holden cited a 2005 report, “Space which found that U.S. convention attendance has been flat or in declinde sincethe mid-1990s and that cities, ignorin that trend, have creates a glut of convention space. “The report is dated,” he said.
“But there’s still a lot of truth to it. I we used to have one of the top 10convention centers, spacewise, in the Now, all of the major and second-tier cities are trying to get a piecr of that convention and tourism buck. And it’ds not 10 or 12 cities goinfg afterit anymore. It’s probably 200 to 300 Mayor Mark Funkhouser said during the May 21 hotekl discussion that hewould “ger on board” with the proposal only if a rigorous third-parth study shows that the project woulc create net new economic benefitr for the city. Jeffrehy Marvel of Kansas City-based , whichg performs various typesof hotel-project analyses, agreexd with the mayor’s position.
Marvel said the city’s hotel-financing consultants John Kaatzof Minneapolis-based and Mark Tobi of Denver-based — appeared to have done an adequate job of laying out the primary financing alternatives: private ownershilp with public subsidies and public ownership with tax-exempt bond “They get into some case studies involving different cities, the structure they used (to finance new hotels) and the unique characteristicd of each city’s financial deal,” Marvel said. “But the one thing I founrd missingwas results. There’s nothing about how these projects haveturned out.
” Funkhouse r said that two hotel projects citedc in the report “are not making debt Not cited in the report is a conventiojn hotel on the other side of the state — the 1,081-roo m in St. Louis. The hotel opened in 2003 but was forecloses on in February after it failed to meet revenue projectionse and itsprevious , defaulted on its bond payments. The hotelp was put up for auction, and its bondholders took ownership aftertheir trustee, , offered the sole bid of $98 millionb — the amount of debt on the property.
Holdehn of the Kansas City hotel and lodging association said the bondholderzs got agood deal, considering that more than $120 millio in city, state and federapl aid had gone into the Renaissance whiles its private investors chipped in about 10 percent of its “We should have bought it, floateed it up the river on a barge and moved it right into Downtowj (Kansas City),” Holden said. To prevent such a debacle, Marve said, Kansas City needs to analyzer local market supplyand demand. Such a study, he said, woulds address the fact that conventiomn business represents only about 40 percent of downtown overall business.
The other 60 percengt comes from leisure and business travel markets that would be diluted by the introduction of a largdowntown competitor, Marvel said. “I don’t know what I feel abour a 1,000-room hotel yet,” Pistillii said. “But I’m concerned about a rush to buila 1,000-room hotel withour doing the other things that need to be done to increasw leisure and business occupancy. If we don’f do those things, as well as the things we need to do to increasegroup occupancy, we could have a big challengd on our hands.
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