Convention Wisdom

BY KIM MOORE

After more than a decade of wrangling, construction on a convention center hotel in Portland is slated to start this summer. But debate over project financing continues.

 

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BY KIM MOORE

After more than a decade of wrangling, construction on a convention center hotel in Portland is slated to start this summer. But debate over project financing continues.

0215 spotlight02 250pxThe 600-room project, to spring up next to the Oregon Convention Center, is controversial because construction will be funded in part through public money. City planners have been unable to secure purely private investment because the hotel will be required to hold over the majority of its rooms for convention delegates. It will also be built on Portland’s Eastside, which has attracted less private investment than the city’s downtown.

Metro is spearheading the project and will issue a $60 million bond toward construction. Hyatt, the owner of the hotel once it is built, and developer Mortenson Construction, are investing $134 million. Revenue from room taxes will pay for the bond so that it has a “net-zero impact on the public,” says Scott Cruickshank, executive director of the Oregon Convention Center.

“We have finally been able to line up a combination of private investment and public cooperation that can deliver a product that is minimal risk to the public,” Cruickshank says.

The city’s private hoteliers beg to differ. The Coalition for Fair Budget Priorities, a group of local hotels, launched two legal actions against Metro, arguing it does not have the authority to finance the hotel. Both lawsuits are on appeal. Bashar Wali, president of Provenance Hotels, which owns the Westin and the Benson hotels in downtown Portland, says the project will be a “burden on taxpayers” and poses unfair competition to local hotels.

“Do I want a hotel built with this much subsidy that competes with my own business?  I say no.”

Supporters say the convention center hotel will generate extra business for local hotels because more conventions mean more demand for rooms. The convention center hotel’s 500-room block will not be enough to fill the demand for rooms from large conferences, says Cruickshank. “We are talking about conventions that occupy 1,500 rooms a night,” he says.

There is also hope the hotel will be a catalyst for further development of the Lloyd District, where the convention center is located. Several new apartment buildings are going up in the area, which will give the district a more residential feel. “With the development of the Lloyd District and the apartment complexes and the hotel, the face of the neighborhood changes, and the opportunity for smaller businesses to find good homes in this neighborhood becomes a lot more probable,” says Cruickshank.

Every year the Oregon Convention Center fails to attract conventions because it lacks a large hotel close by for out-of-town delegates, the hotel’s supporters claim. But Wali says the number of national conventions is declining, and that building a hotel “won’t change convention statistics.” 

Future growth of the convention business is debatable. The U.S. Department of Labor’s Bureau of Labor Statistics projects employment of meeting, convention and event planners to increase 33% from 2012 to 2022, much faster than the average for all occupations. “As globalization increases and businesses continue to recognize the value of professionally planned meetings, demand for meetings and events is projected to grow,” the bureau says.

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Kim Moore

Kim Moore is the editor for Oregon Business magazine.

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