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Columbus, Ohio Officials Grapple with Proposals to Add Downtown
 Hotel Rooms; Providing Cash Subsidies and Tax Abatements
 to Hotel Developers an Unresolved Issue
By Marla Matzer Rose, The Columbus Dispatch, Ohio McClatchy-Tribune Business News

Aug. 24, 2006 - Public officials and others are working to add several hundred hotel rooms that they say Columbus needs to be a contender for marquee events that bring millions of dollars into the city.

Proposals being considered would involve expanding the Hyatt Regency Hotel adjoining the convention center or building an upscale hotel across High Street from the center, on land controlled by the Franklin County Convention Facilities Authority.

For the past year or so, a committee led by the authority and including input from the city and private concerns has met to consider the options.

The group is armed with outside studies suggesting that Columbus could use and support up to 500 new full-service hotel rooms. Meeting planners often have chosen other cities because of a lack of hotel space in Columbus, reports say.

One major issue confronting the group is that both proposals likely will require millions of dollars worth of public-money incentives. Experts say this follows a nationwide pattern of cities aiding pri- vate development of convention hotels as an economic-development tool.

"A downtown convention hotel is a peculiar animal," said Tom Besanceney, a Cincinnatibased hotel consultant and former Columbus hotel executive. "They need a lot more hand-holding, because land costs, labor costs, everything is higher."

Besanceney said public financing for convention hotels has become common in recent years.

Experience Columbus CEO Paul Astleford agrees. "In today's economy, it would be impossible to get new fullservice hotel rooms without public funding," he said. "Columbus is doing better in recovery mode (from Sept. 11) than a lot of our competitor cities. But it's still coming back up to normal, while construction costs are rising dramatically."

Giving public money to private developers in the form of cash subsidies and tax abatements is unpopular in some quarters. Sam Staley, a senior fellow with the Buckeye Institute free-market think tank, says that Columbus officials should take it as a sign of caution if a private developer isn't willing to take on building hotel rooms on its own dime.

"We continue subsidizing the convention business, when we consistently see in academic analyses that markets such as Columbus are just not viable as big convention draws. People are going to places like Orlando, (Fla.,) Los Angeles and Boston, that are already established as tourist destinations," Staley said.

Platinum Ridge Properties is one group that is expressing interest in building a hotel across from the convention center. The Dublin-based firm, set to start work on a Hilton at Polaris, last year bought five airport-area hotels from local developer Don Kenney.

Platinum Ridge is a client of Rinehart & Rishel, a firm led by former Columbus Mayor Dana "Buck" Rinehart that specializes in helping companies "solve problems with government."

Rinehart characterizes Platinum Ridge as being in the "exploratory" stages with regard to a convention-center hotel.

"They were approached by several business leaders in town, who asked them to take a look at it," Rinehart said. "You either think you're going to make money, or you go home."

Brian Ellis of Nationwide Realty, a member of the committee, says conceptual plans for a new tower on the site of the Hyatt Regency have existed for years. A rendering done in the 1990s by Columbus-based architectural and design firm NBBJ shows a sweeping new wing that would add several hundred rooms at High Street and Nationwide Boulevard.

These plans were not acted on as the hotel's ownership changed to a group led by Nationwide, which focused on its other developments, including the Arena District. Capitol Square Ltd., the commercial real-estate arm of The Dispatch Printing Company, is an investor in the Hyatt, along with Nationwide.

Ellis said his firm is "wearing a number of hats" in its interest in adding hotel rooms.

"We're the majority owner of the Hyatt. We have a major investment in our headquarters and in the Arena District next door," Ellis said. "We believe strongly that what's good for Downtown is good for Columbus," Ellis said. He also said he thinks that public funding of some sort will be needed to add rooms.

"Any hotel project in Downtown Columbus today will require considerable public support," Ellis said. "It will ultimately become a publicprivate partnership."

He said Nationwide and the other Hyatt investors have made "no requests" for public funding so far, and that specifics of such financing were still undetermined.

Eric Belfrage, of hotel consultancy Integra Realty Resources Columbus, said fairly low levels of new construction have strengthened the hotel market nationally and locally in recent months. However, he added that Columbus has a marked shortage of full-service hotel rooms compared with similar cities, including Cincinnati, Indianapolis and Pittsburgh.

According to Experience Columbus, the city's convention and visitors bureau, year-todate hotel occupancy rates Downtown average 67.3 percent. "To really be prosperous in the hotel business, you need 78 percent to 80 percent occupancy," Astleford said.

Belfrage said adding hotel rooms could help the overall market Downtown because of the new convention business the city could go after. "If you look at some of the lost (convention) business for Columbus and the reasons, it's clearly the bookable rooms," Belfrage said. "There would probably be some adjustment with new full-service hotel rooms coming online. But I think in the long run, it will benefit everyone if Columbus is more competitive."

Downtown development director Bob McLaughlin, who also serves on the committee, said there has been a good deal of private investment in Downtown hotels in such projects as the overhauls of the Renaissance Hotel and the Holiday Inn. But he added that most new convention center hotels being built in the U.S. now include public help.

"That's where we as a community are not yet resolved."

mrose@dispatch.com

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Copyright (c) 2006, The Columbus Dispatch, Ohio

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