Hotel Online News for the Hospitality Executive By Lori Weisberg and Roger Showley, The San Diego Union-Tribune May 16, 2011
San Diego Mayor Jerry Sanders called on the city’s hoteliers Thursday to contribute up to $30 million a year through a hotel room surcharge to help finance an expansion of the downtown convention center, a project now estimated to cost 24 percent less than the original $711 million price tag.
In a meeting held in his office, about 30 hotel managers and owners got their first look at the financing plan, which relies on a new hotel room levy that would tack on between 1 percent and 3 percent to guests’ bills, depending on how close or distant the properties are from the bayfront center.
The contributions from the industry, if approved, would be the linchpin of the financing scheme for the expansion, which would add 961,187 square feet of floor area to the nearly 1.8 million-square-foot center. What remains murky, however, is how the city and San Diego Convention Center Corp. will come up with the full $35 million to $38 million that will be needed annually to finance the $550 million project.
Photo by K.C. Alfred The city of San Diego is seeking the hotel industry’s help in financing a proposed $550 million expansion of the convention center. “As I have said from the very beginning, the expansion of our convention center should be paid for by those who will benefit from it,” Sanders said. “Given that the hospitality industry stands to gain substantially, it’s only logical that they should fund a significant portion of this.” Convention Center expansion by the numbers
- $550 million: Expansion cost, including $115 million to cover unforeseen cost increases
- 961,187: Additional gross square footage (the center currently occupies 1,763,876 square feet)
- 225,000: Added square footage for exhibit space
- 100,101: Additional square footage for meeting rooms
- 80,000: Additional square footage for new ballroom
- $35 million to $38 million: Annual cost to pay off 30-year bonds
- $28 million to $30 million: Projected annual revenue from proposed hotel surcharge, with the remaining financing coming from restaurant and taxi patrons and other sources.
- 1 percent to 3 percent: Surcharge on hotel bills, depending on distance from convention center.
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San Diego Mayor Jerry Sanders called on the city’s hoteliers Thursday to contribute up to $30 million a year through a hotel room surcharge to help finance an expansion of the downtown convention center, a project now estimated to cost 24 percent less than the original $711 million price tag.
In a meeting held in his office, about 30 hotel managers and owners got their first look at the financing plan, which relies on a new hotel room levy that would tack on between 1 percent and 3 percent to guests’ bills, depending on how close or distant the properties are from the bayfront center.
The contributions from the industry, if approved, would be the linchpin of the financing scheme for the expansion, which would add 961,187 square feet of floor area to the nearly 1.8 million-square-foot center. What remains murky, however, is how the city and San Diego Convention Center Corp. will come up with the full $35 million to $38 million that will be needed annually to finance the $550 million project.
Photo by K.C. Alfred The city of San Diego is seeking the hotel industry’s help in financing a proposed $550 million expansion of the convention center. Convention Center expansion by the numbers
- $550 million: Expansion cost, including $115 million to cover unforeseen cost increases
- 961,187: Additional gross square footage (the center currently occupies 1,763,876 square feet)
- 225,000: Added square footage for exhibit space
- 100,101: Additional square footage for meeting rooms
- 80,000: Additional square footage for new ballroom
- $35 million to $38 million: Annual cost to pay off 30-year bonds
- $28 million to $30 million: Projected annual revenue from proposed hotel surcharge, with the remaining financing coming from restaurant and taxi patrons and other sources.
- 1 percent to 3 percent: Surcharge on hotel bills, depending on distance from convention center.
Contact: Lori Weisberg, Staff Writer San Diego Union-Tribune 350 Camino de la Reina San Diego, CA 92102 619-293-2251[email protected] Also See: California Lawmakers to Address Hotel Sheets: Flat or fitted? Union-backed bill intended to cut down on worker injuries / Lori Weisberg / May 2011 Hotel Room Discounting Appears to be Coming to an End, Particularly for Upper End Hotels / Lori Weisberg / March 2011 Want to Run a Hotel? Take Calculus / Lori Weisberg / March 2011 Pacifica Host Hotels Acquires the 135-room Aloft Ontario-Rancho Cucamonga for Roughly $8 million, Property was the Debut of Aloft for Starwood / Lori Weisberg / February 2011 Manchester Grand Hyatt San Diego to be Sold to Host Hotels & Resorts Inc. for $570 million / February 2011 Following Two Years of Deep Discounting, U.S. Hotel Outlook Improving / Lori Weisberg / January 2011 San Diego’s Hotel Occupancies May be on the Rise but so are Foreclosures with a 433% Increase Over 2009 Bank Owned Properties / January 2011 Strategic Hotels and Resorts Granted Extension to Retire More than $600 million of Debt on San Diego’s Hotel del Coronado / January 2011 Bankrupt 5th Avenue Partners LLC, Owners of the Sè San Diego Hotel Along with Adjacent Building Housing the House of Blues, Could be Put up for Sale; Estimates Claim Could go for $50 million, Significantly Less than the $150 million Development Cost /January 2011 San Diego County Hotels Looking to a Healthier New Year as RevPAR Rose by 4.2% and Occupancy 5.4% in 2010, Gains Expected to Continue / January 2011 Three San Diego Hotel Properties that Were Returned to Lender by Sunstone Hotel Investors Now Up for Sale / December 2010 San Diego Hotel Performance May Mirror the Rest of Nation Says Starwood Hotels and Resorts CEO Frits van Paasschen / October 2010 San Diego Leads California with Hotels in Distress; Numbers Surge 160% Over Same Period a Year Ago / October 2010 Questions Surround Why the City of San Diego Has Permitted the Swanky SE San Diego Hotel to Continue Operating Without a Valid Certificate of Occupancy / September 2010 San Diego’s Manchester Grand Hyatt Deal with Sunstone Hotel Investors Goes Sour / September 2010 Skin Care Concierges Protect Hotel Sunbathers – The Newest in Amenities? / August 2010 Traveler Preferences are Changing: Upscale San Diego Hoteliers are Increasingly Becoming Pet Friendly Offering Pet Amenities From Surfing Lessons to Pet Psychic Sessions / August 2010 Former Owner of San Diego’s W Hotel, Sunstone Hotel Investors, Wants to Acquire Manchester Grand Hyatt / August 2010 San Diego’s Downtown W Hotel Now Owned by Lender / July 2010 During Downturn San Diego Hotel Owners Face a Delicate Balancing Act in Calculating When and How Much to Invest in Restorations / April 2010