March 27–Massport is allowing development groups seeking to build an $800 million Seaport District hotel to team up with the same hotel partners, creating an unusual situation that critics say could be exploited and lead to collusion if a hotel chain was to share one bidder’s sensitive financial information with its competitor.
“If a bidder is clued in on another’s bid, the integrity of the process could be compromised and the public may wind up with a raw deal,” said Mary Z. Connaughton, director of government transparency for the Pioneer Institute. “I would hope there would be some type of firewall. The hotels themselves would be privy to two different bids and each one will be asking for some form of public subsidy … They need tight controls to make sure collusion does not exist.”
According to Massport, it has received six bids from developers to build the new headquarters hotel on two Massport-owned parcels at Summer and D streets as part of the planned $1 billion expansion of the Boston Convention & Exhibition Center.
One development group, Boston-based Fallon Co. and Capstone Development of Washington, D.C., has submitted three separate bids, each with a different hotel brand: Hilton Worldwide, Hyatt Hotels and Marriott International.
Another development team, Boston-based Accordia Partners and RIDA Development of Houston, has submitted two bids, one with Hilton Worldwide and another with Marriott International.
A third group, New Boston Hospitality, has teamed up with only one hotel partner, Omni.
Massport spokesman Matthew Brelis defended its request-for-proposals process, saying it will spur more bids and greater options for the authority.
“This is one of the hottest real estate markets in the country and the more bids we receive, the greater the competition and ability to negotiate on behalf of the public. Four different hotel brands expressed interest, including Hilton and Marriott, with more than one developer. That speaks to the strong market, and the national hotel brands’ eagerness to win,” Brelis said. “Each of the hotel bids are unique. If any evidence of collusion by national hotel brands surfaces in our review, then we will take appropriate action.”
David Tuerck of the Beacon Hill Institute said the “potential clearly exists” for hotel operators to share information between the different bidders, raising the issue of how the hotels could uphold a fiduciary responsibility to competing clients. It could also weaken Massport’s leverage, he said.
“It seems to me they have already lost bargaining power when they have permitted bids from companies that are sharing hotel operators in their proposals,” he said. “It creates a downward pressure because it is in the interest of the bidders to bid as little as possible.”
Fallon, Capstone and Marriott did not return repeated messages. Kirk Sykes, manager of Accordia, and RIDA both declined to comment.
A spokeswoman for Hilton defended its decision to partner with competing developers, saying in a statement, “This process was mandated by the MCCA and Massport … All parties involved were simply following the rules they’ve outlined.”
