Hotel Online 
News for the Hospitality Executive




 
The Board of Paducah-McCracken County Convention Center Plans to Buy the
 434 room Executive Inn and Manage it While Seeking Proposals From
 Private Cevelopers to Decide its Future
By Bill Bartleman, The Paducah Sun, Ky.McClatchy-Tribune Regional News

May 24, 2007 -  The Paducah-McCracken County Convention Center Board will buy the Executive Inn next week and manage it while seeking proposals from private developers to decide its future.

The two major options for the 25-year-old hotel-convention center complex are finding a buyer who would renovate the facilities, or tearing them down and finding a developer to build a smaller hotel and add to the five-year-old Paducah Expo Center. The latter would not be razed.

"This is being done to ensure the long-term future of a very important tourism asset for Paducah and western Kentucky," said Jim Sigler, chairman of the convention board. "It also is being done to make sure we don't lose the quilt show that attracts more than 25,000 people to the city each year, and to improve the facilities so that we attract more conventions."

Sigler, Paducah Mayor Bill Paxton, and attorneys representing the city and convention board met late Wednesday with Bhupinder Singh, who has operated the complex since July 1 when he signed a $5.7 million purchase agreement with long-time owner Yvonne Holsapple.

At the time, Singh said he planned to make $18 million in renovations and turn it into a first-class facility.

However, Singh hasn't begun renovations, hasn't signed a contract to host the 2008 quilt show, and hasn't fully responded to requests by the convention board for detailed information about his plans and his ability to pay for them.

The land on which the hotel is located is owned by the convention board and leased to the hotel owner. Because of concerns about the future of the hotel and convention center under Singh's ownership, Sigler said the convention board decided to exercise an option in the lease agreement to buy the hotel for the same price Singh agreed to pay Holsapple.

So far, Singh has paid her $2.2 million and was scheduled to make a final payment of $3.5 million on June 12.

Singh could not be reached for comment after the meeting on Wednesday and did not return a telephone message left at the Executive Inn.

Sigler said Singh was surprised when told of the plans by the convention board but did not indicate that he would fight them.

He said that Singh was told that after May 31, he would no longer own or manage the hotel.

The convention board and Paxton have been quietly working on the takeover plan for weeks. It picked up speed Tuesday after it was discussed at closed meetings of the convention center Board and Paducah City Commission.

Paxton said the city backs the plan and will write the $2.2 million check to cover what Singh has paid Holsapple. The city also could be responsible for paying the $3.5 million balance and covering any financial losses of the hotel while it is owned by the convention board.

"I know there's going to be controversy over this decision and a lot of questions will be asked, but it is the right thing to do," Paxton said. "It is about the future of downtown and the future of providing convention facilities for the city."

Although Paxton said the city could initially spend millions of dollars to buy the hotel, make infrastructure improvements and offer incentives to attract a new operator, he thinks the city will eventually recoup its investment, although it may take years.

He said the city plans to create a Tax Increment Financing district that would allow the city to use property and payroll tax revenues from new developments in the area to finance incentives for the hotel and convention center.

TIF revenue will come from three river-related industrial expansions that have been announced or completed, Paxton said. He said he didn't have an estimate of how much will be raised by creating the special district.

The convention board has hired Holsapple, the former owner, to manage the facility. She will begin working on Friday, Sigler said. Paxton said she was a successful manager when she owned the facility and he's confident that under her management "it will at least break even."

Holsapple -- with the assistance of the city and local economic development officials -- spent more than three years searching for a buyer for the Executive Inn. Deals with major hotel operators and investment groups fell through because of concern over the condition of the facility and the cost of renovation.

Singh agreed to buy the facility in June, but never satisfied local officials' concerns about his commitment to making renovations and attracting conventions and entertainment.

The hotel and convention center was a source of conflict even before it opened. When plans were unveiled in 1980 by the late Bob Green, a coal executive who developed Executive Inns in Owensboro and Evansville, Ind., then-Paducah building inspector Paul Moore said his plans did not meet building codes and that the construction was of poor quality. The city removed Moore from overseeing the construction, turning it over to state building officials.

Paxton confirmed that questions have been raised in recent months about the quality of construction and whether it is worth renovating, but he said he doesn't have the personal knowledge to know if those concerns are valid.

The idea of razing the hotel rather than renovating it was raised publicly last summer by a consultant hired to help the city prepare its 20-year comprehensive plan.

The consultant, Lane Kendig, said that even Singh's promise to invest up to $18 million wasn't enough for the hotel to be "retrievable."

In addition to its state of disrepair, its 434 rooms "can't consistently be kept at an occupancy level to make money," Kendig said. "Our opinion is you shouldn't be throwing money at the facility. My best advice to you is to take it down."

The mayor said that when Kendig made those comments in September he didn't agree with them. Now, he says he thinks Kendig was right.

"When it was built, we didn't have as many motel rooms in Paducah as we have now," Paxton said. "The rooms were needed back then, but they aren't now. We've probably added 1,000 or more hotel rooms since then, and more hotels are being built."

He said one option would be to raze the hotel and Julian Carroll Convention Center, then find a private operator willing to build a high-rise 200-room hotel and double the size of the Paducah Exposition Center to 100,000 square feet.

Paxton also raised concerns Wednesday about the design of the hotel-convention center, saying that it was too long, making it inconvenient for guests and those attending conventions. He added that it has a considerable amount of wasted space, making it expensive to heat and cool.

Sigler, however, said the future of the complex will be "developer-driven."

"If a developer wants to come in and do something with the existing facilities, that's the way we'll go," Sigler said. "If that isn't feasible, and a developer wants to raze it and build a new hotel, then that is the option we'll consider."

Paxton and Sigler said they are confident they'll find a developer. "It is part of 28 acres of prime development land along the river," Sigler said. "I think we'll have a lot of interest."

Paxton said he anticipates considerable interest from a private developer because of the Paducah Expo Center, the long-standing commitment of the annual quilt show and the prospect of adding more major conventions.

"It has a lot of potential with the right facilities and the right management," Paxton said.

As part of the development, an effort also will be made to find someone willing to building a high-rise condominium complex, something that has been discussed in the past.

Plans for the Executive Inn

The Paducah-McCracken County Convention Center board plans to:

Exercise an option to buy the Executive Inn for for $5.7 million rather than allow the sale to be finalized with Bhupinder Singh.

Hire former owner Yvonne Holsapple to run it beginning Friday and until a new private developer is found.

Solicit proposals from developers to determine if the existing hotel and convention center are worth renovating or if they should be razed and replaced by a smaller hotel and an expanded Expo Center.

Prepare an incentive package -- financed by the city and possibly the state -- that could include cash and transfer of ownership of the Expo Center.

Sell some of the land it owns for a high-rise condominium complex.

Accept city funding for the plan, which could cost $15 million or more. Part or all of the investment would be recovered the city's creation of a special taxing district that would allow tax revenue from new downtown developments to be used to fund improvements to the hotel-convention center.

-----

Copyright (c) 2007, The Paducah Sun, Ky.

Distributed by McClatchy-Tribune Information Services. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.




To search Hotel Online data base of News and Trends Go to Hotel.OnlineSearch
Home | Welcome| Hospitality News | Classifieds| One-on-One |
Viewpoint Forum | Industry Resources | Press Releases
Please contact Hotel.Onlinewith your comments and suggestions.