|By Steve Wartenberg, The Columbus Dispatch, OhioMcClatchy-Tribune Regional News |
June 07--The new Hilton Columbus Downtown, the convention hotel built with great hopes, appears to be on track to fulfill its missions. For one, it's expected to generate sufficient revenue to pay off the $160 million in county-backed bonds that funded its construction.
"It's still early and it could take several more years to know for sure, but so far they're running ahead of projections. Hotel occupancy is strong," said John Christie, chairman of the Franklin County Convention Facilities Authority, which operates the 532-room hotel across N. High Street from the convention center.
Just as important, the hotel is accomplishing the goal of attracting larger, national meetings to Columbus since opening in October.
"We recently got the Girl Scouts' annual meeting (for 2017), and we could not have had a competitive bid without the Hilton," said Brian Ross, CEO of Experience Columbus, the city's convention and visitors bureau.
"What it's done is helped us book larger groups, and we're way ahead of the pace of the past few years in 2015 and 2016."
Revenue to pay for the semi-annual bond payment of$5 million comes from the Hilton's operating income, the 10 percent bed tax guests pay and subsidies from the federal government's Build America Bonds program.
These semi-annual $5 million payments cover only the interest on the loan. They jump to $6.2 million in 2016 when the principal is added, gradually rising to $6.6 million in 2038. The loan is scheduled to be paid off at the end of 2042.
"Overall, we anticipate income from the hotel will exceed our debt obligations," said Maria Mercurio, the facilities authority's finance director.
Because it took time for hotel operations to ramp up, the facilities authority had to "borrow" about $650,000 from its $8 million reserve fund to help pay the bond payment due on June 1, she said.
However, hotel revenue is expected to climb over the next several months, Mercurio said. Not only will the $650,000 be returned to the rental reserve fund, but there will be a $2.1 million surplus by the end of the year, she said.
The Hilton's operating income for the first five months of this year was $2.3 million and is expected to be $4.9 million for the final seven months of the year.
Bed-tax revenue was a little more than $500,000 from January to May and is expected to be $1.2 million for the remainder of the year.
"We are set to meet our pro forma goals that were set for us (by the facilities authority)," said Julia Hansen, the Hilton's director of sales and marketing. "And these pro forma numbers are lofty and hard to meet."
Without Experience Columbus and the Hilton bringing in new business, Hansen said, the new hotel would lure away guests from other Downtown hotels.
"The idea is that everyone should be able to grow," she said.
The Hilton has "made the overall hotel package here that much more desirable," Ross said, adding that it and the nearby Hyatt Regency Columbus are "bookends" to the convention center and are attracting attention from national event planners.
Guests at all Franklin County hotels and motels pay the 10 percent bed tax that is split between the city and county and is used to fund a variety of programs and services, including Experience Columbus. The bed tax collected from the new Hilton is not part of this fund and goes to pay off the bonds.
Even without contributions from the Hilton, bed-tax revenue is up 1.2 percent for the year, according to Experience Columbus.
Construction of the hotel was expected to cost $140 million but was done for about$2.4 million less, Christie said.
"We'll use that to create an operating reserve, in case there's a slowdown in the economy," he said.
The city is required to set aside $1.4 million in parking-meter revenue as a reserve for bond payments if needed.
"None of that reserve has been needed to date," said City Auditor Hugh J. Dorrian.
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