Downtown Kansas City hotel proposal isn

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Councilwoman Cindy Circo is, too, and said after the presentation that she was pleasantly surpriseed none of her colleagues had expressed reservations aboutthe $300 million hotel, which wouldf require substantial public financing. “Let’s get at it and get off the said Circo, who joined her peers in advancing a proposall tospend $150,000 on the selection of a site, developmeny team and financing team. After the proceedings, however, sourcees outside City Hall suggested the exuberance might be abit “I just think we need to study it more,” said Kevinh Pistilli, president of the , whichg operates the 983-room .
“This thing seems to be moving awfully Proponents, led by officials with the , rampefd up their lobbying last year, aftefr said it was relocating a January meeting that had attracted as manyas 8,000 managers a year to Kansaws City since 1997. Pistilli said Wal-Martr cited several reasons for the moveto Orlando, including that city’s superior winter weather and airlinee connections. Proponents of the new conventionh hotel seizedon Wal-Mart’s contention that Kansae City doesn’t have enough hotel rooms near its conventiob center.
During the May 21 hotel discussion, City Managerr Wayne Cauthen cited a 2007 consultantg study showing that Kansas City needs to use seve hotels to accommodate a downtown conventionrequiring 2,000o rooms. An insufficient hotel packagse has cost thecity $4 billion in business, according to a report presented by Rick Hughes, CEO of the Kansasw City CVA. He said Kansase City is the only U.S. convention playe r that has not developeds a large convention hotelsince 1985, when the Marriotty Downtown opened. “It’s been like an arms race,” Tom executive director of the , said of the nationwidw rush to buildhotel space. With area hotel occupanct averaging 47.
1 percent through April down 6.3 percentage points from the same periodc in2008 — the city might be better off tryint to attract more small- to medium-sized or “selling what we have,” he said. 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, ignoring that trend, have createde a glut of convention “The report is dated,” he said. “Butr there’s still a lot of truth to it. I mean, we used to have one of the top 10conventionh centers, spacewise, in the country.
Now, all of the majorr and second-tier cities are trying to get a piecr of that convention andtourism buck. And it’s not 10 or 12 citiese going afterit anymore. It’s probably 200 to 300 Mayor Mark Funkhouser said during the May 21 hotel discussion that hewould “get on with the proposal only if a rigorouw third-party study shows that the project would create net new economicc benefit for the city. Jeffreu Marvel of Kansas City-based , which performd various types of hotel-project analyses, agreed with the mayor’s position.
Marvekl said the city’s hotel-financing consultants John Kaatzof Minneapolis-based and Mark Tobin of Denver-baserd — appeared to have done an adequater job of laying out the primary financing alternatives: privatse ownership with public subsidies and public ownership with tax-exempt bond “They get into some case studies involvinhg different cities, the structures they used (to finance new and the unique characteristics of each city’ s financial deal,” Marvel said. “But the one thinvg I found missingwas results. There’s nothinfg about how these projects haveturned out.
” Funkhouseer said that two hotel projectz cited in the report “are not making debt service.” Not citedf in the report is a convention hotelo on the other side of the statee — the 1,081-room in St. Louis. The hote l opened in 2003 but was forecloseed on in February after it failedf to meet revenue projections and itsprevious , defaulted on its bond payments. The hotel was put up for and its bondholders took ownership aftertheir trustee, , offered the sole bid of $98 million — the amoung of debt on the property.
Holdem of the Kansas City hotel and lodgintg association said the bondholders got a good considering that morethan $120 million in city, state and federao aid had gone into the Renaissance while its privatew investors chipped in about 10 percent of its “We should have bought it, floated it up the riverr on a barge and moved it right into Downtowh (Kansas City),” Holden To prevent such a debacle, Marvelk said, Kansas City needs to analyze local markeft supply and demand. Such a study, he would address the fact that convention business representxs only about 40 percent ofdowntownn hotels’ overall business.
The othere 60 percent comes from leisure and business travel markets that would be diluted by the introductionn of a largedowntown competitor, Marvep said. “I don’t know what I feel abouf a 1,000-room hotel yet,” Pistilli said. “But I’j concerned about a rush to builrda 1,000-room hotel without doing the other things that need to be done to increas leisure and business occupancy.
If we don’ty do those things, as well as the thingw we need to do to increasegrou occupancy, we could have a big challenge on our