Feb. 16, 2008 - At least one Dallas hotel owner isn't too happy with City Hall's plans to buy land for a convention center hotel and entertainment district.

Harlan Crow, chairman and chief executive of the Hilton Anatole's owner, Crow Holdings, sent a letter to Dallas Mayor Tom Leppert saying a $500,000 land option agreement was the first step toward "putting the city in the hotel business and in competition with the private hotel owners."

Mr. Crow wrote in a letter dated Thursday that the plan for a city-financed 1,000-room convention center hotel would be "the height of folly" because the market isn't strong enough to support the additional rooms.

He also said the hotel project probably would cost $500 million to build, would operate at a loss and "will be a huge loser."

Reached Friday, Mr. Crow said he isn't opposed to a privately financed convention center hotel but said the reason one hasn't been built is because it doesn't make sense financially and isn't in a part of town where people want to stay.

"The city is going to lose their shirt on this deal," he said.

The Dallas City Council approved using $500,000 in Dallas Convention & Visitor Bureau funds Wednesday to pay for an option agreement for an 8.34-acre tract on Young Street between Market and Lamar streets.

Under the agreement, the city would have until Sept. 30 to decide whether to purchase the land from Cincinnati-based CP-Dallas L&Y LP for just under $40 million. If the city decides not to move forward by that date, the visitors bureau would lose the $500,000.

Mr. Leppert's deputy chief of staff, Paula Blackmon, said the mayor had received the letter and "it's one of the many comments the mayor has received."

"Overall, we have received some overwhelming support" for the convention center hotel, Ms. Blackmon said.

Asked if Mr. Leppert had any intentions to meet with Mr. Crow, Ms. Blackmon said, "It's a possibility."

Tourism boosters have argued for more than two decades that the city needs an attached or adjacent convention center hotel to attract large conventions. Dallas' hotel occupancy rate averaged 60.3 percent during 2007, placing it among the worst-performing of the top 25 markets in the U.S., according to Smith Travel Research.

"We believe that it's crucially important to the city of Dallas to make this investment for us to remain a competitive convention and meetings destination," said Phillip Jones, the chief executive of the Dallas CVB.

He added that in recent years, many large groups have made a convention center hotel a requirement to book their business.

Mr. Jones reiterated that hotel membership dues and occupancy taxes weren't used to fund the bureau's $500,000 contribution to the land deal.

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