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Harmony Hospitality Gets Nod for Potential Development of a 194-room Sheraton
Convention Center Hotel in Wilmington, North Carolina

By Shelby Sebens, Star-News, Wilmington, N.C.McClatchy-Tribune Regional News

Aug. 17, 2011--With bated breath, the Wilmington City Council took a chance Tuesday on the only developer that remains in the running to build a convention center hotel.

For the fourth time since 2007, the city is attempting to get a developer to build an upscale, full-service hotel next to the newly opened convention center. The developer, Harmony Hospitality of Virginia Beach, has proposed building a 194-room Sheraton.

The city council voted unanimously Tuesday to allow the consulting firm, Strategic Advisory Group, to negotiate terms with Harmony Hospitality and come back with a final development agreement in 60 days. During this "memorandum of understanding" period, the company will work to get its $1 million surety for the project, a commitment from Starwood, the Sheraton franchise, and more research to back up the room rates of $135 and the number of rooms.

If all goes as planned, construction could begin in early 2012, and the hotel could open by late 2014. Council had the option of seeking more proposals but took the advice of the consulting firm to take a chance with Harmony.

"You couldn't hope to get a better proposal than what Harmony has on the table right now," Strategic Advisory Group Senior Partner Tony Peterson told the city council Monday when he first gave the recommendation to council during an agenda meeting. Council is paying the group up to $25,000 to work on the hotel deal.

Harmony originally proposed a Sheraton Four Points, which is a step below a Sheraton -- similar to what a Hilton Garden Inn would be to a Hilton. But Starwood suggested the company move toward a Sheraton. Starwood has not given a commitment to the city but displayed a clear interest and has put its flag on Harmony's proposal.

Harmony will start its market study Wednesday. That study will show if the area can support an upscale, full-service hotel. If not, the developers have said they would be willing to build a limited-service hotel, such as a Hampton.

"We need to start thinking about what the market can take. I would like to see the plaza hotel here, but we've got to also be realistic," Mayor Bill Saffo said.

Council members have focused on getting a well-known, upscale hotel, but it's affordability that matters most to convention and event planners. And what should matter most to council, Peterson said, is whether or not the developer has the financial wherewithal to get the job done.

He said Harmony appeared to have the ability to get the required financing for the $30-$40 million project.

Even before the two other proposals for a convention center hotel fell through, the one for the Sheraton was leading the pack, Peterson said.

The two other proposals that came to council in April along with the Sheraton have since been dropped. Wilmington Prime Hotels LLC dropped out of the running in July, saying it was taking council too long to decide and investors felt they had a slight chance at getting the deal to build a Hampton Inn. Cape Fear Investments and Development LLC dropped out last week, saying they might have trouble getting financing to build a Crowne Plaza.

It's not easy for local governments to lure an upscale hotel, Peterson said. It often takes a financial sacrifice on the part of the city. Washington, D.C., for example, used a $176-million grant package to get a 1,000-room Marriott, and it took 10 years. Charlotte spent $25 million for its convention center hotel, and Raleigh spent $20 million, Peterson said.

Council urged Peterson to keep the members updated as the negotiations with Harmony continued and to do what he can to get a final development agreement by the city's Nov. 15 meeting.

The four developers dropped plans in the past for inability to get financing and other issues. And in the meantime, the convention center is losing business without an adjacent hotel.

"Time is of the essence," Councilman Charlie Rivenbark said.

Shelby Sebens: 343-2076

On Twitter: @ShelbySebens

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To see more of The Star-News or to subscribe to the newspaper, go to http://www.starnewsonline.com/.

Copyright (c) 2011, Star-News, Wilmington, N.C.

Distributed by McClatchy-Tribune Information Services. For more information about the content services offered by McClatchy-Tribune Information Services (MCT), visit www.mctinfoservices.com.




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