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Consider risks of an HQ hotel

The Metro Council must focus on the operating costs and risks of constructing a publicly owned, privately operated headquarters hotel across the street from the Oregon Convention Center. Supporters say the headquarters hotel is needed to attract more large national events and meetings to the convention center, which now relies on local and regional meetings for its business. Meanwhile, other cities that Portland competes with for big-time national conventions do have headquarters hotels that allow convention planners to reserve large blocks of room well in advance — a practice that some say existing downtown Portland hoteliers avoid. Critics of the headquarters hotel, including operators of some Portland hotels, say public funds may be needed to cover possible operating losses. Good arguments support both sides Over the next month, Metro will work with private and other public partners to create a hotel development financing plan. As part of the plan, Metro needs to take a deeper look at the costs and risks associated with operating the hotel in changing economic times, which can bring scant profits one year and losses the next. Such an evaluation is essential to assure citizens, other local governments, and public and private hotel operators that Metro won’t come looking for an economic bailout should the operation of the headquarters hotel not meet expectations. Once a more detailed operating-cost and risk analysis is completed, the decision by the Metro Council will not be an easy one. There are reasonable-sounding arguments on both sides of the issue. Consider the following: Point: A headquarters hotel across the street from the conference center will make Portland more attractive to large meeting planners. Counterpoint: No one really knows how much new business a headquarters hotel will attract until it is built. Point: The marketplace should determine investments like hotels. Counterpoint: A private developer might not spend enough to build a large enough hotel to attract national conventions and maximize benefits to the convention center. Point: A headquarters hotel could serve as an economic stimulus by helping redevelop the area around the convention center. Counterpoint: The area already is poised for redevelopment because of the commitment to install a Portland streetcar line. Point: Public funds shouldn’t support private businesses. Counterpoint: Even private hotel developers want public subsidies to consider building a headquarters hotel. Plan for economic downturns With a detailed economic analysis of operational costs and contingency planning in hand, the Metro Council’s decision on whether to build a publicly owned headquarters hotel ultimately hinges on whether to accept or avoid risk. That’s why we think it is essential for Metro to concentrate as much on operational costs and contingency plans as on construction costs and who pays to build the hotel. If the economy were to stumble, there would be a plan to operate and finance the hotel during difficult times without raising taxes or requiring public subsidies from existing tax revenues. In the final analysis, the future always is chancy. Without a willingness to take some acceptable risk, no one ever gets ahead and nothing important ever gets done.