It’s a universal belief among convention center backers: Once the Music City Center is built and thousands upon thousands of people pour into the city, they’ll need a new place to stay.
Proposed is a 1,000-room, $300-million high-rise headquarters hotel, conveniently positioned at the southeast corner of the sprawling SoBro convention center footprint. It’s been touted as a linchpin, an anchor, an absolute necessity to the success of the MCC.
Early indications from Metro government were that the hotel would be built with some form of a public-private partnership. A September presentation by Finance Director Richard Riebeling emphasized that only two convention center hotels in non-gaming cities in the last decade were built solely with private funding.
It looked as though it was a foregone conclusion that the city would have some skin in the hotel game — whether through subsidies or tax-exempt bonding.
But last week Mayor Karl Dean seemed to equivocate on the need for city involvement. He told The City Paper he planned to roll out details on the hotel “around the same time” the administration asked the Metro Council to approve the financing plan for the convention center itself — by early December. But he added he wasn’t “going to force something that would be a mistake.”
“I’ve made a commitment to myself and the city: We’re not going to build something we can’t afford. We’re not going to try to force something we can’t do given the nature of the market,” he said.
Asked to clarify what sounded like a hedge, Dean spokeswoman Janel Lacy said the mayor was simply reiterating the position he’s taken all along. She also said Riebeling’s presentation laid out “what other cities have done” to get a headquarters hotel off the ground and was not an administration endorsement of a public-financing option.
Riebeling, too, equivocates, saying the $300 million project would not necessarily be part of the financing package presented to the Metro Council. “Mayor Dean has said, ‘We’re not going to do a hotel deal just to do a hotel deal,’ ” Riebeling said.
Tennessee Hotel and Lodging Association CEO Walt Baker is among those who say a hotel is vital to the convention center — just as the convention center will be vital to the hotel. He sees public backing of the hotel as a crucial first step.
“Let’s assume the city is the 100 percent owner. That gets us in the game. As the market changes and it starts to perform … it becomes an attractive property [for private investors],” Baker said. “I don’t look at the city being the owner of this for 30 years.”
Baker added that the hypothetical is not the dream scenario — he’s not in favor of a hotel that is totally Metro-ized, so to speak — but, he said, if it works, then why worry?
“Even if we do it that way and the revenues pay for it, who cares? As long as the taxpayers don’t have to pay for it, what’s the problem?” he said.
The key to a successful convention center hotel has little to do with how the construction is bankrolled, he said. It is more important to have it built and ready to open around the same time as the center and to have it “right-sized.”
The opposition points to St. Louis’ convention center hotel as an example of a faltering convention industry. That property was so wildly unsuccessful that’s it’s now in foreclosure just six years after opening. But Baker dismisses the criticism. St. Louis opened its convention center in 1988, with the hotel coming 15 years later. He said St. Louis’ experience is a cautionary tale only in the sense that it argues for building a center and headquarters hotel at the same time.
As if to assuage fears of a government takeover of the hotel industry, Baker suggests a new convention center hotel might actually increase competition.
“There will be other development around this project, private development. There are other companies, and they may eventually build hotels if we are under-supplied,” he said.
So if the hotel will indeed stimulate private development, if it’s a sure-thing success, why not rely on private investment to get it done?
“That’s a complicated question,” Baker said.
And one Mayor Karl Dean soon will have to answer.