Sunday, September 20, 2009

How a convention center hotel is funded

I came across this Dallas Business Journal editorial from Dallas mayor Tom Leppert arguing the case for Dallas' controversial convention center hotel. The hotel has been a large source of controversy in the Dallas area because other hotel owners are upset that a hotel development is getting public assistance, and the Libertarian crowd are upset that a developer in general is getting public assistance. Proponents argue that it is not public assistance and that in fact Dallas needs this hotel desperately if its convention center is to remain competitive on the national scene. You be the judge.

Leppert argues that the city is merely using bonds that it quickly repays because it's easier than getting private financing, and the city ends up with a profit out of the whole deal. The revenue the hotel generates goes toward some kind of expedited repayment of the bonds. He mentions that Houston recently sold their Hilton Americas (that the City of Houston owned) for a large profit, making money in the end on the whole deal.

He also argues that with all of Dallas' competition building these kinds of hotels, in order for Dallas to remain competitive, it too must have a large 1,000-room hotel ATTACHED to the convention center. "The convention center is a $1 billion asset we must protect." The operative belief is that Dallas would have lost money had they not chose to build the hotel.

That's not to say that the hotel is a convincing issue. It would not have become a reality without a pro-business City Council coalition pushing it through, despite the overwhelming citizen disapproval for the project. One great example is here. "When you plan your next convention, be sure to book it at Dallas' only city-owned hotel. We'll make your experience memorable, and provide a variety of official forms for you to file in case we don't live up to your expectations."

Another interesting fact, from Leppert: "Once the Dallas City Council voted to proceed with a hotel, the Dallas Convention and Visitors Bureau saw a record-breaking rise in major convention bookings, making Dallas No. 1 in the state." So not having the convention center hotel had been holding Dallas back, behind Houston (who does have a convention center hotel). With just an official announcement and ground not even turned yet, it has already made a very real impact on Dallas' convention business.

So we have to ask eachother, as we build one of these new 21st century convention centers ourselves, does OKC need one of these large 1,000-room convention centers? When should it be built, after the convention center is finished, or along with it? How should we fund it? Are we ready to compete with major cities like Dallas and Houston?

No comments: