A new waterfront hotel for New Orleans? Convention Center is again touting the idea | Economic news

Ernest N. Morial Convention Center management is renewing its efforts for a waterfront hotel, saying a strong rebound in the hospitality industry this year is helping boost the project’s prospects for success.

The center on Monday released a report from a consultant it commissioned that a new “head office” hotel, attached to the sprawling complex at its upstream end, would be profitable and help boost other hotels in the area. city ​​within three years of its construction.

Building a hotel dedicated to the convention center has been a longtime dream of the center’s management. The idea was first proposed in 2014. Center executives argued that a hotel is needed to compete with comparable convention centers, all of which currently have at least one hotel attached.

Critics of the plans have argued that the state subsidy in terms of tax breaks and lease terms is not warranted.

The Hilton Riverside-owned “whale lot” with surface parking, located across from the Ernest N. Morial Convention Center in New Orleans, Louisiana, is shown Thursday, Jan. 13, 2022. (Photo by Max Becherer, NOLA.com, The Times-Picayune | The New Orleans Lawyer)

A much-criticized proposal to build a 1,200-room hotel on uphill land belonging to the convention center was scrapped in late 2020 when the negative impact of the pandemic on the hospitality sector led the project’s backer, Preston Hollow Capital, to withdraw.

Monday’s report from hospitality industry consultant HVS recommends a scaled-down 600-room hotel, with 51,000 square feet of meeting space, plus restaurants and lounges.

A speculative design for a smaller version of the hotel was produced last year, envisioning a 13-story structure that would feature a 28,000 square foot “festival deck overlooking the river” on the Front Street side. south of the 6 acre lot.

“If we start small and build something with the ability to grow over time, I think that might be a better approach,” Michael Sawaya, the center’s president and CEO, said Monday.

Although the HVS report predicted that the hotel would be profitable by 2030, assuming it was built and ready to operate by early 2027, it left many big questions open, such as the specific location of the hotel. ‘hotel.

The report determined, for example, that it could be located on the uphill terrain that center management prefers. But the hotel could have the same success if it were built at the downstream end of the complex next to the 1,200-room Hilton Riverside Hotel, according to the report.

Rendering of a potential new hotel of the headquarters of a smaller convention center

An architect’s rendering of a potential headquarters hotel at the upstream end of the Ernest N. Morial Convention Center. The management of the center prefers to find donors for an upstream version of a 600-room hotel, with room for growth.

Sawaya and chairman of the convention center board of supervisors, Jerry Reyes, met with Omni Hotel Group executives earlier this year to discuss the possibility of quoting the hotel downstream on space currently used as a 1,000-square-foot garage. squares.

Dubbed the “lot of whales” because of a huge mural of the sea mammal adorning a wall bordering the space, it is owned by Virginia-based Park Hotels and Resorts, which owns the Hilton Riverside.

Sawaya said he was open to that prospect, but said he preferred the hotel to be located on the acres uphill from the center. This would mean that center managers could potentially grow the hotel to 900 rooms or more down the road if deserved.

The third possibility

A third option is for a group of developers already chosen by the convention center to build a new neighborhood on their upstream acres to also take over the hotel project.

The billion-dollar project, called River District, is led by local developer Louis Lauricella and was approved by the convention center’s board of directors in August. He now has to get town hall approval for infrastructure improvements as well as environmental clearance, which is expected to take until spring next year.

Once this is complete, the convention center has one year to set up its own hotel contract on the 6-acre site, or the River District Consortium has the option to take over the project.

Another big question still unanswered is how the project will be funded and how much government funding will be needed.

A good use of public money?

The previous 1,200-room proposal was criticized by public policy watchdog BGR for giving too many sales tax discounts, competing directly with other hotels for business and being far more expensive than if it was funded directly by the convention center.

Sawaya disagreed with BGR, saying financing the hotel would leave little room to fund the $557 million in upgrades currently underway for the main building.

This was justified by the fact that the center will have to visit the bond markets several times over the next two years to replenish its reserves, which had to be depleted by $40 million just to keep the lights on and cope with payroll during the pandemic. The center is also only halfway through its capital improvement spending.

“What this report does is say that pro forma a hotel would be very profitable once you do it and it stabilizes,” Sawaya said. “Now getting it funded is its own business.”

He said the center’s development partner for the hotel, Dallas-based Matthews Southwest, will begin discussions with potential backers in a few months, once the economic outlook becomes clearer and the midterm elections -mandate will be terminated.

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