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The Dallas City Council to Vote on Securing a Prime Hotel Site to Build a 1,000 plus room
 Convention Center Hotel; Many Believe Hotel Critical to Energizing Dallas'
 Flagging Convention Business
By Dave Levinthal and Suzanne Marta, The Dallas Morning NewsMcClatchy-Tribune Regional News

Feb. 9, 2008 - A hotel attached to the Dallas Convention Center -- a decades-old dream of politicians and tourism officials -- is one step closer to reality.

The Dallas City Council's agenda for next week includes a vote on securing a prime tract of downtown land to build one.

Wednesday's council vote would authorize spending $500,000 in Dallas Convention & Visitors Bureau money to secure a contract for an 8.34-acre tract on Young Street between Market and Lamar streets that's now a parking lot.

The agreement would grant Dallas rights -- through Sept. 30 -- to buy the property for nearly $40 million, Assistant City Manager A.C. Gonzalez said.

Mayor Tom Leppert on Friday described the vote as "an important step" toward building the hotel.

Approval would give political and business leaders renewed hope for a facility considered critical to energizing Dallas' flagging convention business.

In recent years, Dallas has found itself eclipsed by cities with newer and more bountiful convention amenities.

"While there are some other properties adjacent to the Convention Center that we've looked at, this is not only adjacent, but in the center of gravity of the convention center itself. It's also close to and open to the center core of downtown, which makes it very attractive," said Mr. Gonzalez, who oversees the city's economic development initiatives.

The land is owned by CP-Dallas L & Y LP, which has offices in Cincinnati. Officials there could not be reached for comment.

Prospective convention center hotel developers have until Wednesday to submit credentials to the city. Mr. Gonzalez said he expects several developers to respond.

Soon after Wednesday's vote, officials would request formal proposals from qualified developers and begin crafting financing plans for a hotel.

Taxpayer investment

City officials have long acknowledged that such a hotel -- with at least 1,000 rooms and built at a cost of $200 million to $300 million -- would require significant taxpayer investment.

But on Friday, top officials, including Mr. Leppert, declined to speculate on how much public participation a convention center hotel would require, saying it would be premature to do so.

Dallas Convention Center debt could be refinanced or a certificate of obligation could be issued to purchase the land, officials said.

Parking revenue in the interim also could defray some costs, said Frank Poe, Dallas' convention and event services director.

The Dallas Central Appraisal District's taxable value for the land is about $7.5 million, but two independent appraisals put the value above $40 million, Mr. Poe said.

If the city didn't purchase the land by Sept. 30, the Dallas Convention and Visitors Bureau would forfeit its $500,000.

Mr. Leppert said that even if the city purchases the site, there's no guarantee that a hotel will be built there.

John Keeling, a senior vice president with PKF Consulting in Houston, said a convention center hotel won't come cheap.

The building boom in places such as China and Dubai, not to mention the rebuilding projects due to Hurricane Katrina, has caused construction costs to skyrocket.

In 2003, the city of Houston built its 1,200-room convention center hotel for $285 million.

Mr. Keeling estimates that Dallas' hotel could cost as much as $400,000 per room, or $400 million for a 1,000-room hotel, in order to build the associated lobbies, restaurants and meeting space that convention center-oriented properties require.

Mr. Keeling said such a hotel would be difficult to build without financial assistance from the city.

"It's required," he said. "The only places we see large 1,000-room hotels being developed without government assistance are Las Vegas, New York City and Orlando."

What makes the 8.34-acre tract exciting, Mr. Leppert said, is the opportunity to build more than just a hotel on it. Since a hotel probably would occupy just half the acreage, shops, restaurants and additional meeting space also could be built, he said.

Purchasing the land and negotiating a development deal is "certainly my hope," said Mr. Leppert, who since becoming mayor in June has aggressively advocated building such a facility to support the convention center.

"Without it, objective third parties will say, 'That convention center you spent so much money on -- it's not going to be competitive going forward.' "

Phillip Jones, chief executive of the Dallas Convention & Visitors Bureau, said Friday that the hotel project would help address the city's major challenges in wooing groups.

The convention center was last expanded when trade shows were booming, and it didn't include the breakout meeting space and ballrooms that the most sought-after medical and technology groups demand today.

Also, all of Dallas' major competitors already have an adjacent hotel either built or under construction.

Dallas has tried to strike deals with developers before, but the primary sticking point has been disagreement over how much public money would be required.

John Crawford, president and CEO of DowntownDallas, says the city will still have to put up a great deal of money, "but probably not as much as in the past. We're in the midst of a major revitalization, and we haven't seen that in a long time."

Condition to sign

Mr. Jones has said at least 80 groups representing $800 million in direct spending have said they wouldn't consider hosting an event in Dallas until a convention center hotel was under construction.

"We have a short list of the top 10 groups that we think we could book in the next 18 months if we can get this project moving forward," Mr. Jones said.

One group that has promised to bring its meeting to Dallas is the American Heart Association. A spokeswoman for the Dallas-based group said it has reserved 2013 and 2017 to hold its annual meeting here, contingent on the city building an adjacent hotel.

The AHA last met in Dallas in 2005.

A city-supported convention center hotel has gotten mixed reviews from some members of the local lodging industry, who argue that the new property would represent more competition for existing hotels.

"For our property, it's a double-edged sword," said Tyler McDonald, director of sales and marketing for the Hilton Anatole.

Mr. McDonald wouldn't go so far as to say he opposed the addition of a convention center hotel, but he said that while it may improve the city's chances of attracting more group business, most of the year it would represent additional inventory for the market to absorb.

But Tom Garcia, managing director of the Adolphus Hotel, said he supports the plan.

"We've lost our competitive edge," Mr. Garcia said. "If we don't keep building on and expanding to make the convention center more usable for our customers, it will just sit empty and die a slow death."




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