A consultant hired to analyze the feasibility of a convention hotel downtown was hit with a blistering verbal attack by councilman and mayoral candidate Ed Shadid, but otherwise found a receptive audience among the remainder of the city council Tuesday.
Texas consultant Jeremy Stone, hired by The Alliance for the Economic Development of Oklahoma City, told the council his research shows the city can support a 735-room, $200 million conference hotel as part of development of a $250 million convention center south of the Myriad Gardens.
Looking at forecast occupancy hovering at 64 percent the first few years of operation, Stone also provided estimates of revenues and expenses for such an operation — but with the caveat he was making no assumptions on the project's financing.
“It is a profitable property at the end of the day,” Stone said. “A property similar to this would make sense in this market.”
Stone noted his report was finished before Louisville, Ky.-based 21C Museum Hotels announced its plans to redevelop the historic Fred Jones assembly plant into a full service hotel. Stone also said hotels downtown are approaching a healthy 80 percent average occupancy.
“We would have expected full service to occur regardless of the convention center,” Stone said. “And as we found out with 21C, the market is showing full service development is appropriate.”
Stone said his research included interviews with hoteliers, officials with the Oklahoma City Convention and Visitors Bureau, and a review of studies commissioned by the Greater Oklahoma City Chamber before the 2009 MAPS 3 election that provided $250 million for the new convention center.
Shadid rebuked Stone as soon as he finished his presentation.
“I expected a highly biased, poorly reasoned, poor methodology study, and I wasn't disappointed,” Shadid said. “I am deeply offended by the process.”
Shadid criticized the validity of the studies commissioned by the chamber and questioned whether the convention center, which is smaller than what consultants recommended in previous studies, will generate the attendance estimates used by Stone.
No proposals have been made for public financing of a convention hotel. The city council is set to be asked in January to hire yet another consultant to look at financial viability and whether public financing will be needed and how that might be structured.
Previous consultants, however, including a panel from the national Urban Land Institute, advised the city will likely face at least a $50 million gap that will require public assistance as part of any large conference hotel development.
“We're making decisions not just about a $50 million subsidy, but actually owning a $200 million hotel,” Shadid said, suggesting the city might look at using its general fund to back a revenue bond.
No other councilman or city official made such a suggestion during Tuesday's meeting, and other council members indicated they disagreed with Shadid's criticism and were satisfied with Stone's work.
“It gives me encouragement we should move forward with the next step of looking at a feasibility study,” Councilman David Greenwell said.
It is a profitable property at the end of the day. A property similar to this would make sense in this market.”