Home is where the hotel is
- Jeanie Senior
- Portland Tribune - News
• Developers once again like the idea of a big hotel just for conventioneers
A headquarters hotel at the Oregon Convention Center Ñ an on-again, off-again project for more than a decade Ñ is back on the Portland Development Commission's radar screen.
'We are in discussions with three hotel convention center developers that have a strong interest in this market,' said PDC Executive Director Don Mazziotti.
Mazziotti declined to identify the interested developers, but he said all three initiated the contacts and represent investment groups 'that have developed convention center hotels in other major American cities.'
The discussions are occurring at a time, however, when Portland is hamstrung by a soft economy, escalating land prices around the convention center and municipal budgetary problems, Mazziotti said.
Still, he ventured a guess that a headquarters hotel Ñ a big hotel associated with the convention center Ñ would be up and running by 2005 or 2006.
The convention center is halfway through a $116 million expansion that will double its size, to almost 1 million square feet, making it the largest such facility in the Pacific Northwest.
A headquarters hotel, its advocates say, is needed to keep the convention center booked.
But Portland's current office vacancy rate of almost 15 percent, coupled with hotel occupancy rates of about 65 percent and the general state of the economy, makes it almost impossible to find private financing, Mazziotti said.
And public funding is problematic. Public support funds, he said, 'are very limited at the current time for any kind of partnership.'
PDC paid $5 million toward the convention center expansion. The rest of the cost is being paid out of proceeds from the city's hotel tax.
The city's budget woes have been compounded by an Oregon Supreme Court decision in favor of Shilo Inns that restricted PDC's urban renewal funds.
Many headquarters hotels are publicly subsidized, Mazziotti said, because of the wild swings in occupancy rates typical of the breed. They must be able to offer a block of 500 rooms or more to convention goers one week, then absorb the costs of running empty the next.
Matt Pizzuti, the convention center's director of sales and marketing, said, 'A headquarters hotel now is virtually a mandatory requirement for lots of conventions, and it's the major piece that's missing from the Portland convention package.'
As an example, he cited Portland's unsuccessful bid several years ago to attract the NBA All-Star game.
The Rose City would have won the game 'hands down, easily,' Pizzuti said, 'but one of their issues is that they need a headquarters hotel of 800 rooms. If we had a 750-room hotel, we could probably swing it, but we've got 400 (at the DoubleTree Lloyd Center) and it's four blocks from us. That's an issue.'
The convention center hasn't tried again to get the All-Star game, Pizzuti said, 'based on the reality of what they told us: Don't bother until you get a hotel.'
The demand for an attached or adjacent convention center hotel arises because delegates and exhibitors want to be close to their hotel rooms, and they want close access to hotel hospitality suites.
Concerns over safety and the weather also arise, although Pizzuti was quick to point out that Portland is a safe city with a public transportation system to boast about.
The convention center hotel usually envisioned would have at least 800 rooms and occupy between two and four blocks in the immediate vicinity of the convention center on Northeast Martin Luther King Jr. Boulevard.
Including the land, it would cost an estimated $120 million to $160 million. 'It's a very big number,' Mazziotti conceded.
A couple of past proposals to build a hotel at the convention center haven't gotten beyond the proposal stage, but the idea 'is kind of continually under discussion,' said Joe D'Alessandro, president and chief executive officer of the Portland Oregon Visitors Association.
Portland has an abundance of hotel rooms, the result of a flurry of hotel construction in the last few years. But what's been referred to as a hotel glut doesn't obviate the need for a hotel at the convention center, its advocates say.
The added rooms, D'Alessandro said, have taken some of the pressure off convention planners, but he said a headquarters hotel still needs to be built, 'hopefully in sooner than a decade.'
Seattle has 1,700 rooms within easy walking distance of its convention center, pointed out Governor Hotel General Manager George Forbes.
'To get 1,700 rooms in this town, you have to go to at least five or six properties,' Forbes said Ñ a fact that makes transportation an issue.
Although Portland's Fareless Square mitigates the problem, one convention group last fall spent about $300,000 for charter buses to transport delegates across the Willamette River from downtown hotels to the convention center.
Finding the money to get the hotel built may be the real challenge.
'It's a tough one,' acknowledged Forbes, a former president of the visitors' association. 'Some hoteliers in this community don't want to see any subsidy for a hotel that would become the headquarters hotel. Others think if it did get done, it would help everybody.'
'Other cities have done it,' Pizzuti said. 'There's no reason in the world why it can't be done here.'