Polk County to study new convention hotel?

[DMRyan]

The County will vote to study the need for a new convention hotel, which despite what the supervisors are initially saying, will require a county subsidy. A few of the skeptics in this article are basing too much of their arguement on the way conditions are in the downtown hotel market at this point in time, not a few year into the future when a need might truly exist. This will get interesting politically down the long stretch.

From the IowaChannel.com:

Polk Supervisors To Vote On Hotel Study
Officials Explore Market For Another Hotel

Polk County supervisors will vote Tuesday on spending up to $25,000 dollars for a study on whether the Wells Fargo Arena needs a hotel.

"The discussion about whether or not we should have a hotel will go on, but I think more importantly, the issue has to be what kind of hotel are we talking about," said E.J. Giovannetti, a Polk County supervisor.

Giovannetti said the county has no plans to build a hotel, but supervisors would like to know if there's a market for one at the Iowa Events Center site.

There are two hotels within blocks of the Events Center, most downtown hotel and meeting rooms are farther away.

The Greater Des Moines Convention and Visitors Bureau president said the Des Moines metro averages about a 62 percent occupancy rate.

At The Suites of 800 Locust in downtown Des Moines, the general manager said he's concerned about a tax-supported study.

Chris Gunnare, the hotel's general manager, said a private study has already shown that a hotel near the venue would not be feasible, and it could hurt the existing downtown hotel market.

"Given the current economic situation it doesn't make good business sense for a businessman, and it scares me if the county's going to have different motives and possibly do some county funding. Right now, I know they're not saying that, but this seems like step one," Gunnare said.

[Ingersoll1978]

I don't know what to think about this. We all know that the study is going to say Des Moines needs a convention hotel to compete with other cities in the midwest. Des Moines isn't going after large "national" events. We don't even have the space for that. I'd almost rather see a couple mid-rise hotels more towards the core than making our skyline off balance. Also, with most hotels connected via skywalk, temperature isn't even a problem to getting to the convention centers and arenas. I would like to see a high-rise though...but in the core!

[DMRyan]

A more in-depth article about this from the Register. I like how opposed the supervisors seem about not spending county money. Without the county chipping in an incentive on a convention hotel, this study will remain on the shelf.

Polk to decide on study for downtown hotel

County officials will vote today on whether they need a study of the
demand for lodging around the Iowa Events Center.

By KEVIN DOBBS
REGISTER STAFF WRITER
May 10, 2005

Polk County officials will decide today whether a $25,000 study is needed to determine if downtown Des Moines has enough hotel rooms to handle traffic generated by the Iowa Events Center.

Managers of the $217 million Events Center have pitched an attached hotel that they say would draw more conventions, concerts and sports events to downtown Des Moines.

The Board of Supervisors will vote on whether a consultant should be hired to gauge the demand for downtown rooms.

Andy Long, the Events Center's general manager, thinks the study will not only show a need for more rooms but also how more hotel space can benefit the new complex.

He said an attached hotel would make the Events Center more attractive to national entertainment acts and convention organizers because participants and fans would not have to walk or drive, a particular concern in the winter.

"We would love to see it happen, because we could expand the services we could provide and add a lot more to downtown," said Long, who works for Global Spectrum, the Philadelphia company hired to operate the center, which includes Veterans Memorial Auditorium, the Polk County Convention Complex, Hy-Vee Hall and the 17,000-seat Wells Fargo Arena.

The arena is scheduled to open in July.

[b]Long declined to estimate the size of a new hotel, but he previously told supervisors it would probably have 400 or more rooms.

Smith Travel Research, a Nashville, Tenn., firm, found that on any given day about 60 percent of the Des Moines metro area's 9,000 hotel rooms are occupied. That equals the average national rate, Smith researchers reported. Smith said the area's occupancy rate is healthy but does not show an immediate need for a major new hotel.

But Long said the Events Center will significantly boost activity downtown and draw more visitors, which will boost demand in future years.[\b]

The supervisors have said the best way to attract a major new hotel is with an independent report that shows customer demand.

"And a study will show how big it needs to be, what kind of amenities it needs, all those specifics that we don't know right now," said Supervisor Angela Connolly, a Democrat.

As a group, however, the supervisors have not wanted to pay for it.

Chairman Tom Hockensmith, a Democrat, said recently that "enough county money has gone into downtown construction. We need to turn our attention elsewhere."

But under a new plan, local taxpayer money would not be used for the study. Michael Freilinger, the supervisors' chief of staff, said the county would shift federal tax credits to the yet-to-be-determined consultant.

"I can see this as an economic development tool," said Supervisor E.J. Giovannetti, a Republican. "I'm seeing this as seed money . . . but after this, I'm not putting any money into new hotel construction, that's for darn sure."

[NOG]

As long as they take into account all the hotel traffic that will be created once the IEC is running full steam, I think there will be a need for a new hotel. Also like we have been discussing this is our next best shot for a new highrise that will impact the skyline. Eight years is just to long to go without a highrise being constructed.

[dmluvr]

Ok, this is nuts---it's 25K people. Frankly, I will agree with the county on this one---Global could easily pay for the thing. Unless there is some clause in their conctract with the county. Either way though, it's not worth the loss because of the cost of the study. Notice the little blurb about 'federal money' at the end? ryan, I disagree with you bud, there is no way this thing will get shelved.

and if you have noticed the hints coming from IEC:

Managers of the $217 million Events Center have pitched an attached hotel that they say would draw more conventions, concerts and sports events to downtown Des Moines.

Hmmmmm.......and thennnnn.........

He said an attached hotel would make the Events Center

Really?? An attached hotel? and to what would this hotel be attached?
that insurance building across from WFA---yeah--probably not

Vets is gone. Hotel will break ground in april of 2007.

[dogbo]

Really?? An attached hotel? and to what would this hotel be attached?
that insurance building across from WFA---yeah--probably not

Vets is gone.

I'm fine with Vet's being gone but that location, as well as Allied are not the only two options. In fact, if the desire is for a tall structure, than Vet's big footprint probably doesn't help the cause. On the other hand, if they put a hotel just south of the arena (taking out the non-descript office buildings that current reside there) it seems to me that it is more likely they'd need to build up to make a decent sized hotel. Working against a hotel on the south is the fact that the arena's main entrance is there so the question would be how would you connect the two. Finally, is it unreasonable to believe that the Quality Inn could be demolished and a new hotel located there?

[dmluvr]

I would think so, you know--you could always rip vets down---expand hy vee all and add parking and take the imc building across from WFA and put the hotel there----ooooooorrrr, you can rebuild the starlite.
probably is--I doubt they would tear it down.

[DMRyan]

Here's my arguement: Current hotel vacancy rates (I don't know of the downtown vacancy numbers) are 60%. A convention hotel comes with the added expense of having large banquet facilities, breakout rooms and other amentities. To build on the Vets site, or any other site nearby would require building demolition. Any convention hotel would have to have a premier flag as the operating company. None of this can be done on the cheap and will only escalate the costs.

Now what kind of developer would pay for a risky downtown hotel against those odds? Enter in the subsidy or development incentive from the county to get a hotel built.

BTW, I'm not being anti-progress here, I'm just saying that this has a lot of loopholes to jump through and I wouldn't be surprised to see the county end up paying for this hotel because I don't think the private market is lucrative enough for a company to pay for this with private dollars.

As for location, I still say you're all crazy for thinking it's going on the site of Vets, but that's just me. I like the idea of putting it along 2nd Avenue and tearing down the little 2-3 story bland offices nearby. The only problem this would pose is that a tall hotel would block the view of the IEC from the east.
There are plenty of sites to choose from nearby the events center. My pick would still be to develop the large surface lot to the north of Vets into a mix of parking garages and hotel.

[Lost Planet]

I think it would be great if they built a high rise hotel near the IEC. The building would appear about 5 to 10 stories taller from far away than it really would be because that area is on much higher ground than the rest of downtown's high rises.

[mistertwister]

Vets is gone. They're just laying the ground work and getting everybody used to the idea. It will be demolished to make way for a parking ramp and a hotel by 2010.

Just my guess.

[dmluvr]

Exactly. Are you thinking 2010 open date?? or begin date??
I'm thinking 2007 begining date.

[DMRyan]

Here's some hotel gossip from Cityview:

Eastern Iowa businessman Mike Whalen is back with his hotel idea for Court Avenue. Hensley is pushing hard for it and, we've heard, is picking up support from fellow council members. In other hotel news, look for Polk County to move on the one they are studying for the Iowa Events Center. Supervisors are being told that the million dollars they just paid for the deficit is only the beginning if they don't get a hotel to attract much more in the way of big-time convention business. The big question is: Will they be able to get Allied out of its location to make room?

[NOG]

The big question is: Will they be able to get Allied out of its location to make room?

Very interesting, and I think with Allied expansion plans this could work out. Plus I think this location would be much better than putting this on the northside. To me this location will make the area between the core and IEC more seemless.

[Ingersoll1978]

It would make more sense to be south of the complex. Also if its a mid-rise, it'll fit in better with the skyline. Sounds like the demolition of Vets is further away than what any of us thought.

[DMRyan]

This will get messy if the county is expected to pony up in a major way for a new hotel. Talk about a well publicized, uphill battle brewing if this pans out to be true.

[DMRyan]

The idea of a new "headquarters hotel" adjacent to the Iowa Events Center would get a big boost if this comes true.

The City of Des Moines will be applying for $150 million in New Market Tax Credits that if awarded, would make several marquee projects come to fruition, one of which being a new convention hotel. I don't know the finer points of the tax credits, but bascially it's a system that eliminates (for a period of time) Federal Income Taxes for businesses and developers that substiantially invest in projects.

Here's what Des Moines and Polk County are shooting for:

Iowa Events Center Headquarters Hotel

Polk County has recently completed the construction of the Iowa Events Center (IEC), HyVee Hall (exhibition hall), Vets Auditorium (arena and meeting room space), The Plex (convention space), and Wells Fargo Arena. A Headquarters Hotel (“Hotel”) located adjacent to the IEC would be an ideal enhancement to the project. A new hotel will include a minimum of 350 to 400 keyed rooms, 20,000 – 25,000 square feet of meeting rooms, 30,000 – 36,000 square foot ballroom, and be a full services professionally managed lodging property. The hotel project has been identified because it will be located in a LIC, is expected to generate a number of new jobs and have a positive economic impact.

The redevelopment of Riverpoint West and the redevelopment of the Younker's Building are two other marquee projects that could utilize the tax credits.

Riverpoint West

The Riverpoint West areas is located directly south of the Central business District and is bound by Martin Luther King, Jr. Parkway to the north, SW 9th Street to the east, and the Raccoon River to the south and west. The City has been working with developers to transform this area into an urban village with supporting commercial uses including office and retail space. This project will create 400,000 square feet for commercial use. The Riverpoint West project meets CDFI Fund’s Low-income Community (LIC) requirement. Additionally, this project will redevelop a federally designated Brownfield area, which has been identified in the NMTC application as a special geographic area. Riverpoint west was identified because it is in a LIC, redevelops a Brownfield area, will provide services to Low-income people, and will have a major impact on the community as a whole.



The Younkers Building

The Younkers building is located at 7th and Walnut Streets in downtown Des Moines. Younkers had been in the downtown area for over 100 years prior to closing its doors in August 2005. More than the sentimental lost of history and memories there is the real loss of jobs and retail business. This building is suited for mixed use with specialized retail and new housing units. Staff is optimistic that the building can be transformed to include; (1) retail on the second floor that connects to the skywalk system and (2) housing units on the remaining floors. New units can be leased or owned and will include affordable housing. Project costs have been projected at $40 million. This project has been designated, as one of the major pipeline activities because it is in a LIC, will create additional retail, and increase the affordable housing stock downtown. NMTCs can provide valuable incentives to possible developers. More importantly, this project will fill a void created by the lost of Younkers.

[Ingersoll1978]

Well if we get a new hotel that size, It would have to be a Hilton or Starwood Property (we already have a 33 story Marriott and a Marriott Renaissance).

In Monday's Business Record, there is a story talking about property that KC Real Estate, Knapp and Cownie, have bought land to the south of the Events Center. It includes the Two Rivers office that burnt down (which will be torn down and replaced with surface parking) between 3rd/4th and to the north of Watson Powell Parkway. They were saying that this is a "potential" hotel site.

For the grants, what are hurdles they have to go through? This could lead to Des Moines' next major wave in development downtown.

[dmluvr]

which will be torn down and replaced with surface parking)

What???

Oh--c'mon. your kidding right my friend? A surface lot is the absolute worst thing on this planet that we need to do downtown. Sorry, but in dense urban districts, you don't have surface lots!!! Midwest or not. There is too much goodness going on downtown to do something stupid like that.


So with a 400 rooms--what are we looking at?? I'm thinking 12 rooms per floor, plus service floors, plus ballroom--perhaps 40 stories not out of the picture???(that'd be hot by the way)

[Des Moineser]

Mariott has about that many rooms in 33 stories... so maybe a 28 story tower is the possibility. More likely we are looking at 150 room 5 story hotel not much different from the Embassy Suites.

[DMRyan]

I think we'll probably need an adjacent hotel larger than 150 rooms if the Iowa Events Center is to remain competitive in luring conferences, trade shows and conventions. The problems is that we've already got a convention hotel in downtown, and a new one of this size would probably be overkill for our needs in the near future. Who knows what we'll end up with, as long as the discussion continues to get something new built. I would defintely count on us getting at least one or two smaller hotels in the meantime, with the most likely location being a new one on Court Avenue.

[DMRyan]

Here's a DSM Business Record article about the ongoing battle on whether or not the county should get serious about building a convention hotel.

I'm pretty mixed on this issue. For the Iowa Events Center to be a facility that is competitive in luring conventions and trade shows, it will need a convention hotel facility in close proximity. However, I don't want to see a government supported convention hotel that ends up being a controversial burden on tax payers over the years. I'm so pro development that I can't believe I just typed that, but this issue will get ugly. The government will have to subsidize the hotel on some level, and if it is done, I hope the subsidizing is only done at the construction stage, and not yearly to keep the place open. Also, I don't want this project to loom as a black cloud over the hotel picture in downtown Des Moines for 2 or 3 years before all the politics get settled, etc. I do believe that downtown could see smaller private hotel announcements within the next year, but some developers may be skeptical of building if this convention hotel looms on the horizon.

Future of Events Center hotel still cloudy

By Sharon Baltes
sharonbaltes@bpcdm.com


As the owners of the Des Moines Marriott Downtown invest millions to renovate the property, the question remains of how long it will remain the headquarters hotel for the Iowa Events Center.

According to Polk County Administrator Mike Freilinger, the Board of Supervisors is expected to make a decision later this year on how to proceed with a study suggesting the need for a new 450-room hotel at the Iowa Events Center.

"We're probably going to make a presentation to the Board of Supervisors before the end of this year asking for permission to do our authorization to issue requests for quotes," Freilinger said. "If the board approves, we'll select a developer and then proceed with the project."

Last year, the supervisors hired a hospitality consulting firm called Pinnacle Advisory Group to complete a market and feasibility study to evaluate the need for a headquarters hotel for the Events Center. Supporters of a new hotel say it would help the center attract new convention business.

"More space gives you more opportunity," said Vicki Comegys, director of sales and services for the Greater Des Moines Convention and Visitors Bureau. "We talked with a couple of groups just lately that would not look at a bid from Des Moines because we did not have a hotel with 400 rooms or more attached to our convention facilities."

But several downtown hoteliers are concerned that a new hotel will only add to their problems with low occupancy.

"Building a hotel does not create a need for a hotel," said Bob Conley, owner of R.J. Conley Hotel Group, whose properties include the Holiday Inn Mercy Campus. "We have a marvelous headquarters hotel right now with the downtown Marriott. Eventually, the Events Center will have its own hotel, but the market can't support it right now."

According to data complied by Smith Travel Research, occupancy rates in downtown Des Moines averaged only 62.5 percent between 1993 and 2005.

[hawk61401]

I disagree totally with Bob Conley whose properties include the downtown Holiday Inn. He says that the market cannot support an Events Center Hotel. I say hogwash!

Between '93 and '05 occupancy rates have averaged 62.5 percent in downtown Des Moines. What does Mr Conley suggest? That we wait until occupancy rates reach 70 percent or more?

Des Moines is not Hawaii which enjoys 80.9 percent or Nevada which enjoys 73.5 percent. Des Moines isn't and never will be Hawaii or Nevada. So what are we waiting for? The Holiday Inn downtown is approaching it's 40th birthday. It ain't nothing special or exciting. The Marriott which is 25 years old is doing an overhaul. Really?, big deal. The lobby, six suites, and the bathrooms will be redone. That's not going to attract more business at the Events Center. It ain't gonna make me wanna use the new johns.

It's kind of like the ol' chicken and the egg. Which comes first? If you have an Events Center Hotel you will attract more business for the Events Center and for all hotels

Too often Des Moines will do something half ass or someone is more concerned about protecting their turf. Des Moines needs to ante up, jump into the competition with larger midwest cities, and build that Events Center Hotel.

[Philby]

I think the point about the demand and occupancy rates is valid. Granted we're not going to have comparable rates to the cities you listed, but there is a point that hotels have to hit to be profitable, and if DM isn't consistently above that point, then where would the business for a new hotel come from?

granted some would come from being able to support conventions, but would it be enough to sustain itself and not become a tax burden like Ryan said...

Perhaps they could tie the hotel in with the convention center/WFA so that if the convention center needs it to survive, they can assume the risk.

[Des Moineser]

We've already put so much on the line by building th arena. Why don't we have the guts to finish the job and assume a little more risk and start going to different hotel companies with incentives?

[Ingersoll1978]

I wonder what the occupancy has been over the last 2 years? Going back to 1993 seems to old data used for what is needed now. Downtown has grown quite a bit over the past 5 years. Are they using these numbers for their own advantage?

[Better Life dude]

I think with creative financing, the county could come out very well with a new hotel. The city of Minneapolis has done just that in the past. They spent their own money and built a convention size hotel a couple blocks from their convention center. The city owns the building and leases it to the hotel chain that occupies it. The city took the upfront risk to get the ball rolling. I believe they used the revenue to build from a sales tax increase in the downtown district. The sales tax for all downtown restaurants and bars - but I don't think retail - is 10%. The city outside the downtown district has the regular 6% sales tax. The extra 4% sales tax falls heaviest on the conventioneers and tourists who stay downtown.

Of course, the taxing situation is so different here in Iowa & Des Moines so maybe that solution wouldn't work here.

[dmluvr]

I don't know....but that tax idea seems like a pretty good idea BL dude.

The taxing set up here hasn't always been the on the up and up.

[Ingersoll1978]

I'm not sure if that is a good idea. The far majority of people in the Downtown area are not from convention traffic. It's mostly locals at work. I would think that taxing food and entertainment at higher rates downtown would keep more people out of the area or drive them to other parts of the metro after work.

[dmluvr]

even if it was just a penny or two?? c'mon now!! That's 2 bucks for every hunderd bucks. I'd gladley pay that. Just think of the money that would generate.

[Ingersoll1978]

I think most of us on this forum wouldn't mind it...but in general...people would know that you'll pay more to eat downtown than not. Currently, it doesn't have enough "hip" factor where people won't care. The downtown business owners would be at an unfair disadvantage over their "suburban" counterparts. When Court Ave, District 10, and the East Village are hopping...where there is no parking...and tons of activity...then I could see doing it. It currently isn't there yet.