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Albuquerque Convention and Visitors Bureau Wants Downtown Hotel
 with 800 rooms; Difficult to Compete with Tucson, Colorado Springs
 and Salt Lake City
By Rosalie Rayburn, Albuquerque Journal, N.M.
Knight Ridder/Tribune Business News

Oct. 18, 2004 - ALBUQUERQUE, N.M. -- The president of the Albuquerque Convention and Visitors Bureau is prescribing a new upscale, full-service hotel as the tonic to stimulate growth in the city's convention business.

Dale Lockett, who became bureau president in January, says Albuquerque has too many limited-service hotels and not enough full-service properties that offer restaurants and meeting space for business visitors.

In particular, the city needs a "headquarter hotel," a full-service hotel Downtown with at least 600 rooms, within walking distance of the Convention Center.

He has the support of some hoteliers and at least one Albuquerque city councilor. But a convention researcher says one more big hotel Downtown has been tried with limited success elsewhere.

The Duke City has four full-service hotels with a total of about 700 rooms close to the center: the Hyatt Regency, Doubletree, La Posada and Hotel Blue.

The Embassy Suites, at Lomas and I-25 and due to open next spring, will bring that number to nearly 1,000.

But that's not enough to persuade meeting planners to bring larger conventions here when they can go to such cities as Tucson, Colorado Springs and Salt Lake City, which offer more hotel rooms close to the meeting center, Lockett said.

Albuquerque has lost ground compared with other cities that have added full-service hotels in the past few years. A full-service hotel with between 600 and 800 rooms Downtown would help Albuquerque compete. But a Downtown hotel adjacent to a Downtown arena would be the ideal package, Lockett said.

"That would leapfrog us above the other cities Albuquerque is competing with," he said.

Conventions that bring 1,000 to 3,000 people to a city mean "hundreds of thousands" of dollars in direct spending, said Tom Morton, general manager of the Albuquerque Convention Center.

If Albuquerque could offer more than 1,000 rooms, concentrated close to the center, the economic impact for Albuquerque could be in the "millions," Morton said.

Lockett was more cautious. A feasibility study should be conducted to gauge the level of economic benefit such a hotel would bring to Albuquerque, he said.

Lockett said the city would probably have to offer some form of financial carrot to get such a hotel built because a hotel that large presents higher costs and risks for investors.

Several city councilors and hoteliers generally support Lockett's idea because of the economic benefits they believe the hotel could bring to Albuquerque.

"If we are ever going to move forward in attracting citywide conventions, we can't do it with the (hotel) inventory Downtown. We just can't do it," said Charlie Gray, general manager of the Sheraton Uptown.

Gray is on a task force established by City Councilor Eric Griego to study the feasibility of building a Convention Center hotel.

Griego said he believes another Downtown hotel is essential for Albuquerque to win more convention business.

He also said the hotel could go on the site near First and Central where the Downtown arena had been proposed, or on a city-owned parking lot bounded by Roma and Marquette between Third and Fourth.

Griego supports some form of incentive, such as giving a developer the land. Under state law, the city is allowed to pass an ordinance that would permit land to be given to a developer provided it is for economic development purposes.

This was similar to the way the city attracted the Historic District Improvement Co. to develop the site at Central and First now occupied by the Century 14 cinema block, several restaurants and businesses, he said.

The Albuquerque City Council also voted to approve $41 million in metropolitan redevelopment bonds to help build a 261-room Embassy Suites hotel near Lomas and Interstate 25. The bonds offer tax relief on buildings for seven years.

Although that project will help attract convention business, Lockett said, it is too far from Downtown to satisfy some meeting planners.

"People don't like waiting for a shuttle bus. It adds costs and hassle factor," Lockett said.

Critics say expectations that the new hotel will bring a flood of convention business may be too optimistic.

"I would like to see if the Embassy Suites bring us more business before we build another hotel," said Deb Short, general manager of the Hotel Blue.

Short said average occupancy at the Hotel Blue has been about 60 percent this year.

Doubletree general manager Bob Gansfuss said average occupancy at his hotel was "in the mid-60 percent range" this year.

"There are some real questions as to whether these (downtown convention center hotels) work," said Heywood Sanders, professor of public administration at the University of Texas at San Antonio, who studies the convention industry.

Sanders said attendance at conventions in 2000 was 10 percent below projections by the Center for Exhibition Industry Research, a nonprofit industry research organization. Since then, convention attendance has dropped because of Sept. 11.

In a recent phone interview with the Journal, Sanders said the vast majority of consultant feasibility studies give optimistic scenarios but there is little evidence to support those rosy predictions.

He cited examples from other cities such as Denver, Houston, St. Louis and Austin, which have helped finance convention center hotels only to see them perform below expectations.

"I strongly urge folks who think this is the answer to this problem to think carefully," Sanders said.

In St. Louis, the city provided about 80 percent of the funds for the St. Louis Renaissance hotel and tower with 1,083 rooms and suites. The funding included $80 million in city funding, $20 million in state tax credits and $98 million in city bonds backed by revenues from the hotel.

A consultant's feasibility study projected the new hotel would have a 63 percent occupancy rate in 2003, increasing to 73 percent by 2005.

Instead, occupancy has hovered around 52 percent, the hotel has yet to turn a profit, and Moody's Investors Service has cut the bond rating to B3, a speculative, low-grade rating.

When the city has money at stake in a hotel that is not profitable, the city has to decide whether to let the hotel collapse or come up with more money, Sanders said.

Many local hoteliers say Albuquerque already has too many hotels.

Hotel construction has boosted the city's available rooms from 13,515 in January 1998 to 16,320 in July of this year, according to Smith Travel Research, an independent data-gathering service based in Hendersonville, Tenn. In 1998, Albuquerque had 131 hotels and motels with 20 or more beds each. Now it has 159.

And hotel officials say the competition from new hotels has hurt occupancy and forced them to lower rates to attract guests.

Lockett and Griego say all the new hotels appeal to the budget-minded freeway traveler; the new full-service hotel they propose would target the higher-spending business market.

-----To see more of the Albuquerque Journal, or to subscribe to the newspaper, go to http://www.abqjournal.com.

(c) 2004, Albuquerque Journal. Distributed by Knight Ridder/Tribune Business News. For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.

 
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