Hotel Online 
News for the Hospitality Executive



 
John Q. Hammons Hotels Inc. Pulls Out of  a Proposed $60 million Hotel Development
 in Decatur, Alabama; Incentives for the Hotel Turned Down by City

By Eric Fleischauer, The Decatur Daily, Ala.McClatchy-Tribune Regional News

May 28, 2008 - Unless Genesis Development U.S.A. finds another hotel developer to join Bass Pro Shops, Sweetwater may dry up.

Barney Lovelace, attorney for the developer, said Tuesday that John Q. Hammons Hotels Inc. had pulled out of the development at I-65 and I-565.

Decatur Mayor Don Kyle said Hammons had been engaged in what he called "back-end dealings" for about three weeks prior to Tuesday's announcement. He said Hammons had requested incentives in exchange for the hotel locating in Decatur, but that request was turned down.

While Kyle was optimistic that Genesis would find another hotel to replace Hammons, he said the development would not work without a hotel or some other revenue generator.

Kyle said language in proposed contracts to formalize Sweetwater already had been amended to allow Genesis to pursue hotel chains other than Hammons.

"They're one of the premier hotel companies in the country, but they're certainly not the only one."

It was to be a $60 million suite hotel with between 275 and 300 rooms, up to 12 stories tall. A 60,000-square-foot convention center was to be attached to the hotel. Most Hammons hotels are Embassy Suites or Marriotts.

City Council President Billy Jackson said he was disappointed but remained optimistic. "We've come too far to turn around on this thing at this particular point," he said.

Last week, the developers pulled a site plan for the project from the Decatur Planning Commission agenda. They said they removed it from the agenda as a cost-saving measure.

A letter of intent signed by the city and Genesis specified that a Hammons hotel would be included in the development. Lovelace said in March that Hammons would announce the name of the hotel in April.

Lovelace said Tuesday that the hotel chain wanted economic incentives to locate in the development. In previous interviews, Lovelace said Hammons was willing to come to the site at the southwest corner of the Interstate 65/Alabama 20 intersection without incentives because of Bass Pro's presence.

According to published reports, Hammons continues to be interested in locating a hotel in Huntsville.

Lovelace said Bass Pro still intends to come to the development.

The financing package under discussion by the developer, Bass Pro and the city called for the city to divert $32 million in sales tax from the Bass Pro toward repayment of a bond issue that would pay for construction of the store.

A letter of intent signed by the city and Genesis also called for the city to pay $14 million, financed through general obligation bonds, for renovations to Alabama 20, purchase of the $2.5 million Bass Pro property from Frazier Farms, re-routing of high-power Tennessee Valley Authority electric lines and other infrastructure improvements.

All of those expenditures, including the $32 million bond for construction of the Bass Pro, were contingent on a John Q. Hammons hotel, with a convention center, locating in the development.

Kyle said the city was counting on revenue from the hotel and convention center to pay the debt service on the $14 million bond.

"In hindsight, we probably should not have specified John Q. Hammons," Lovelace said Tuesday. "These things are fluid."

Lovelace said Genesis never had a signed agreement with Hammons. He said there are "two or three" other hotels interested in the development, but Genesis has no contract with them.

Lovelace said other cities have agreed to provide incentives for a Bass Pro even without the promise of hotels or other secondary commercial development.

Originally, Genesis said it wanted to close the deal with Bass Pro and Hammons in June.

"We were optimistic about when we would like it to close," Lovelace said. "In retrospect, it was a mistake to give a date."

Lovelace suggested that an agreement with the city were still possible if the $32 million bond for construction of the Bass Pro was segregated from the $14 million general obligation bond.

He would not say whether Bass Pro would locate at the site without the extensive renovations of Alabama 20 previously demanded by Genesis.

The renovations would include a traffic light and a realignment of Bibb-Garrett and Mitchell roads.

-----

To see more of The Decatur Daily, or to subscribe to the newspaper, go to http://www.decaturdaily.com

Copyright (c) 2008, The Decatur Daily, Ala.

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.