Regions
Southwest | Dallas
Jun 23, 2009
By: Barbra Murray, Contributing Editor
For the most part, banks still aren't lending and business and leisure travelers--inhibited by economic decline and job losses--have not exactly been escalating their travel plans, but such conditions are not stopping the City of Dallas from moving forward with its plan to develop a large luxury hotel. In a unanimous vote, the Dallas City Council has green-lighted an ordinance that paves the way for the sale of $514 million in municipal revenue bonds for the development of the $346 million Omni Dallas Convention Center Hotel, which is now scheduled to deliver in 2012.
With a location on an eight-acre parcel at the corner of Young and South Lamar streets, the Omni Dallas will feature 1,016 guestrooms, 80,000 square feet of meeting space, restaurants, a spa and parking to accommodate approximately 720 vehicles. For quite some time, the plan for financing the convention center hotel development has centered on the selling of municipal bonds. "This project has been on the drawing board for 30 years," Phillip Jones, president & CEO of the Dallas Convention & Visitors Bureau, told CPN. "Various funding mechanisms were considered but the most feasible one was to sell bonds and use the revenue from visitors to the hotel to pay back the bonds."
The $514 million the city plans to raise from the bonds will cover development costs, the cost of the bonds over the course of the loan and a $50 million reserve. While the timing for obtaining major construction loans is all wrong at the moment, the timing for selling the bonds appears to be just right. "Municipal bonds, in fact, are priced lower than they were," Jones said. "There's a self-imposed interest rate cap of 5.5 percent, but it's now at 5.3 percent."
Presently, the call for hotel accommodations in Dallas is weak, as is the case in most other major metropolitan destinations. According to Smith Travel Research, the occupancy level for Dallas hotels was 54.9 percent for the months of January through April of this year. The numbers are grim but Dallas officials are hardly moving forward with the hotel project on a wing and a prayer. They anticipate very strong market demand by the time the project reaches completion three years from now. According to a commissioned study by global hotel consulting and services firm HVS, as corporations begin to stabilize budgets later this year and hotel companies produce advertising campaigns to change the negative perception currently associated with meetings and general travel, the Dallas hotel market will likely complete its recovery process during 2011 and 2012.
Positive ramifications of the anticipated economic recovery account for only a portion of the expected hotel market demand in Dallas. If local government and community leaders get their way, a new College Football Hall of Fame will sprout up at a site adjacent to the hotel, thereby drawing in additional tourist traffic, as well as sports industry-related meetings. Greater Dallas, the only metropolitan market in the Southwest that is home to five major professional sports leagues, already serves as an inherent magnet for the sports industry. Dallas is also the only major city in Texas that does not have a hotel that is connected or adjacent to its convention center; the Dallas Convention Center is one of the largest in the country, offering in excess of 1 million square feet of exhibit space.
The attraction of Omni Dallas is not just conjecture. "We've already booked 49 meetings--some definite, some tentative," Jones said. "If the response we're getting is any indication of the potential business we can bring to the city, then we're very pleased with that."
While financing has not been much of an issue for the new convention center hotel, some local resistance has. With a billionaire real estate tycoon leading the charge, a group strongly opposed to the development made quite a stir, presenting a significant challenge to the project's forward movement. Ultimately, money was no match for the swell of backers behind the endeavor. "We had over 120 associations, labor unions and groups across the city in support of the project," Jones noted. "We put together a solid coalition and grassroots effort, and despite the fact that we were outspent 7 to 1, we were able to prevail in the end because people saw the benefits of the job creation and tax revenue that would be generated by the hotel. And they saw that, in order for Dallas to be competitive, it would be necessary to invest in this project." As per the HVS report, the new Omni Convention Center Hotel could generate approximately $800 million in direct spending and produce about $2.6 billion in annual economic impact, in addition to serving as a cornerstone of downtown Dallas' revitalization.
By: Barbra Murray, Contributing Editor
For the most part, banks still aren't lending and business and leisure travelers--inhibited by economic decline and job losses--have not exactly been escalating their travel plans, but such conditions are not stopping the City of Dallas from moving forward with its plan to develop a large luxury hotel. In a unanimous vote, the Dallas City Council has green-lighted an ordinance that paves the way for the sale of $514 million in municipal revenue bonds for the development of the $346 million Omni Dallas Convention Center Hotel, which is now scheduled to deliver in 2012.
With a location on an eight-acre parcel at the corner of Young and South Lamar streets, the Omni Dallas will feature 1,016 guestrooms, 80,000 square feet of meeting space, restaurants, a spa and parking to accommodate approximately 720 vehicles. For quite some time, the plan for financing the convention center hotel development has centered on the selling of municipal bonds. "This project has been on the drawing board for 30 years," Phillip Jones, president & CEO of the Dallas Convention & Visitors Bureau, told CPN. "Various funding mechanisms were considered but the most feasible one was to sell bonds and use the revenue from visitors to the hotel to pay back the bonds."
The $514 million the city plans to raise from the bonds will cover development costs, the cost of the bonds over the course of the loan and a $50 million reserve. While the timing for obtaining major construction loans is all wrong at the moment, the timing for selling the bonds appears to be just right. "Municipal bonds, in fact, are priced lower than they were," Jones said. "There's a self-imposed interest rate cap of 5.5 percent, but it's now at 5.3 percent."
Presently, the call for hotel accommodations in Dallas is weak, as is the case in most other major metropolitan destinations. According to Smith Travel Research, the occupancy level for Dallas hotels was 54.9 percent for the months of January through April of this year. The numbers are grim but Dallas officials are hardly moving forward with the hotel project on a wing and a prayer. They anticipate very strong market demand by the time the project reaches completion three years from now. According to a commissioned study by global hotel consulting and services firm HVS, as corporations begin to stabilize budgets later this year and hotel companies produce advertising campaigns to change the negative perception currently associated with meetings and general travel, the Dallas hotel market will likely complete its recovery process during 2011 and 2012.
Positive ramifications of the anticipated economic recovery account for only a portion of the expected hotel market demand in Dallas. If local government and community leaders get their way, a new College Football Hall of Fame will sprout up at a site adjacent to the hotel, thereby drawing in additional tourist traffic, as well as sports industry-related meetings. Greater Dallas, the only metropolitan market in the Southwest that is home to five major professional sports leagues, already serves as an inherent magnet for the sports industry. Dallas is also the only major city in Texas that does not have a hotel that is connected or adjacent to its convention center; the Dallas Convention Center is one of the largest in the country, offering in excess of 1 million square feet of exhibit space.
The attraction of Omni Dallas is not just conjecture. "We've already booked 49 meetings--some definite, some tentative," Jones said. "If the response we're getting is any indication of the potential business we can bring to the city, then we're very pleased with that."
While financing has not been much of an issue for the new convention center hotel, some local resistance has. With a billionaire real estate tycoon leading the charge, a group strongly opposed to the development made quite a stir, presenting a significant challenge to the project's forward movement. Ultimately, money was no match for the swell of backers behind the endeavor. "We had over 120 associations, labor unions and groups across the city in support of the project," Jones noted. "We put together a solid coalition and grassroots effort, and despite the fact that we were outspent 7 to 1, we were able to prevail in the end because people saw the benefits of the job creation and tax revenue that would be generated by the hotel. And they saw that, in order for Dallas to be competitive, it would be necessary to invest in this project." As per the HVS report, the new Omni Convention Center Hotel could generate approximately $800 million in direct spending and produce about $2.6 billion in annual economic impact, in addition to serving as a cornerstone of downtown Dallas' revitalization.
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