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White Lodging Services Corp. has Secured Financing to Develop its $275 Million
1,000-room JW Marriott Austin Convention Hotel in Austin, Texas

Work to Begin in Mid-June 2012

By Shonda Novak, Austin American-Statesman, TexasMcClatchy-Tribune Regional News

April 26,2012--White Lodging Services Corp. has financing in place for its $275 million, 33-story upscale convention hotel planned along Congress Avenue and is preparing for a June launch for the project.

A top company executive provided new details about the project -- one of largest developments in downtown Austin's history -- in an exclusive interview with the American-Statesman.

On June 15, crews are expected to start work to relocate underground utilities at the site on Congress Avenue between Second and Third streets, said Deno Yiankes, president and CEO of investments and development for White Lodging, a hotel development, ownership and management company based in Merrillville, Ind.

White Lodging is aiming for an Aug. 1 start for construction on a three-story underground parking garage with 458 spaces that will take nine to 10 months to build, followed by construction of the hotel, a JW Marriott with 1,012 rooms, up from 1,003 previously planned. The project's cost could go as high as $300 million, Yiankes said.

"We're going to go as fast as the city can give us permits," Yiankes said. "All systems are go."

The hotel will be the largest hotel White Lodging has built and its most "dramatic architecturally," he said.

The JW Marriott will generate 2,500 construction jobs during its two-year construction and create 750 permanent jobs with an average wage of $38,000 a year once it opens in early 2015, Yiankes said.

White Lodging said the project can be expected to generate an estimated $16 million a year in property and hotel bed taxes, with $5 million to $6 million of that going to the city annually.

White Lodging released renderings showing a sleek tower covered with gleaming glass windows on the sides facing east and south. The building also will have limestone and a copper-colored metal wrapping it.

The renderings also highlight changes incorporated as the development made its way through the city planning and design process, including more restaurant space on Congress Avenue.

"We're extremely excited about the design of it," Yiankes said. "The collaborative effort with the city planners, while undoubtedly challenging at times, has helped to create a better designed project."

The hotel will have two full-service restaurants, one at Congress and Second and one at Brazos and Second. There also will be a walk-up burger or taco bar.

In the first year it's open, Yiankes said, the hotel will generate enough tax revenue to offset the concessions the project received from the city -- $3.8 million in waived development fees and $500,000 as its share of the cost to move a wastewater line on the site.

Yiankes said the concessions were a show of support from the city that was key to White Lodging's decision to move forward with the project last year, in a more uncertain economic climate and as White Lodging was weighing spending substantial sums on architectural drawings.

"The fact that the city stepped up meant the world to our owners. It absolutely pushed the project over the start line," Yiankes said.

White Lodging first announced plans for a 1,000-room hotel on Congress in 2006. But in late 2008, it postponed the project during the economic downturn.

Hunt Construction Group and Hardin Construction are forming a joint venture to build the JW Marriott.

The hotel complex will have 110,000 square feet of meeting and banquet space.

White Lodging affiliates are financing the cash portion of the project amounting to more than $100 million. Yiankes said the company has obtained debt financing but would not disclose details, citing confidentiality agreements. White Lodging is funding one-third of the cost, while two-thirds is debt financing, he said.

The hotel is expected to help Austin attract bigger meetings and conventions.

As of Jan. 1, the hotel had advance bookings for just over 19,000 room nights, with about half representing business booked in conjunction with the Austin Convention Center, said Jay Spurr, director of sales and marketing for JW Marriott Austin.

Steve Genovesi, senior vice president of sales for the Austin Convention and Visitors Bureau, said the future JW Marriott "is doing exactly what we had hoped.

"Many meeting planners already had a very positive perception of Austin and were just waiting for this missing element of a second large hotel," Genovesi said in an email. "There's no question, Austin is now receiving the well-deserved buzz as a new choice for national and international conventions."

Randy McCaslin, vice president and practice leader for the Texas and Louisiana markets of PFK, a hospitality industry consulting firm, said the pre-bookings are "simply a sign of the pent-up demand for conventions in Austin. The (Austin Convention and Visitors Bureau) has had a list of lost groups due to the lack of adequate room blocks for years."

The JW Marriott is one of two convention hotels being planned downtown. Manchester Texas Financial Group is planning a $350 million high-rise hotel project with about 1,000 rooms on land just east of the convention center along Waller Creek. Company officials continue to say their project is moving forward.

The two new hotels, along with the Hyatt Place under construction, would bring downtown's hotel room count from about 6,000 to more than 8,330 rooms.

Douglas Manchester, president of Manchester Texas Financial Group, said the company commissioned a study that "not only concluded the market could support two new large hotels but that such an addition will help Austin attract larger conventions."

PKF's McCaslin said few convention hotels are under construction due to the cost to build them and the lack of funding since the recession.

"However, it is true that the reason Austin is getting this done is the bullish outlook and the popularity of the Austin market," he said.

Contact Shonda Novak at 445-3856


(c)2012 Austin American-Statesman, Texas

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