City of Oklahoma City conferring with large hotel chain 

click to enlarge Omni-Hotel.jpg

After years of talk about the prospect of a convention center hotel, the path toward a full-service facility with luxury amenities near the proposed MAPS 3 Convention Center became clear. Last week, City of Oklahoma City staff entered negotiation proceedings with Omni Hotels & Resorts.

The Dallas-based company proposes constructing a $235.5 million, 600-room convention center hotel between SW Third and SW Fourth Streets along S. Robinson Avenue. If the city and Omni strike a deal, the hotel tower would grace the skyline in 2019. Omni predicts a 71 percent occupancy rate and an average daily room rate of $193 after four years in service. Revenue from nightly stays and food and beverage is expected to top $51 million annually, according to figures provided by the city.

With Omni’s proposal comes a call for public money to flow into the project. The city could give $84.5 million in tax subsides to the hotel chain owned by TRT Holdings, one of Texas billionaire Robert Rowling’s companies.

The issue of subsidies raises debate among the nine Oklahoma City Council members, a group previously split on whether taxpayer dollars would be required for a convention center hotel. For years, optimism ran through the council horseshoe that public assistance wouldn’t be needed, despite repeated studies that suggested otherwise. 

Ward 2 Councilman Ed Shadid, a frequent critic of the perceived necessity of constructing a new convention center hotel, advises taxpayers will likely contribute greater than $85.4 million toward the project. Public funding for the hotel could include public borrowing, increasing the hotel-motel tax or initiating a rental car tax. The city could finance its share through tax-increment financing, known as TIFs.

Additionally, the city budgeted $7 million for acquiring the land where the hotel will be located. In late September, the city moved closer on parking for the convention center and hotel but is about $10 million short on estimated project funding.

“When you figure in the $7 million we will need for the land, the $10 million they are trying to get for the parking garage, the more than $30 million in interest we will have to pay on the loan and the $85 million in subsidy, we are in the $125 to $130 million range,” Shadid told Oklahoma Gazette.

In comparison, the city budgeted $131 million toward the MAPS 3 Streetcar project. During the Sept. 27 council meeting, Vice Mayor James Greiner stated the public funding piece could be a MAPS 4 project. Grenier joined Shadid in voting against the resolution authorizing further discussions. The vote was 7-2 in favor of negotiations with Omni, which is seen across the country as the convention magnet with its hotels positioned steps away from convention centers.

Supporters of convention center hotel development believe the facility will increase the success of the MAPS 3 Convention Center, which is more than double the size of Cox Convention Center. Many city leaders believe the hotel would attract groups whose members plug money into local restaurants, shops, attractions and more.

Oklahoma City joins a number of American cities in building convention centers or expanding existing centers.

Next month, city staff expects to return to the council with Omni negotiations complete. Tom Morsch, a city-hired consultant, advised the subsidy could be negotiated lower than the estimate. Although Morsch also said similar projects in cities like Kansas City, Louisville and Nashville called for additional public support. The City of Nashville paid $150 million toward an Omni project located near Music City Center.

Omni is well established in the convention center hotel market with developing and operating hotels in Fort Worth, New Orleans, Dallas and Nashville. Omni is constructing a site in Louisville, Kentucky, adjacent to a convention center.

“We are going to be competing against Nashville, Forth Worth, Louisville, Dallas and Denver,” Morsch said. “That’s where you want to be. ... We wanted to be with those cities, among those cities, competing like those cities and growing like those cities.” 

Print headline: Forward movement, OKC is in talks with Omni over a convention center hotel, but the deal wouldn’t likely come without public investment.

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