Metro, the regional government that owns the Oregon Convention Center, today approved the final development agreement for a new headquarter hotel, allowing the project to proceed to the design and pre-construction planning phase.
The agreement between Metro, Minneapolis-based Mortenson Development and Hyatt Hotels outlines the financing arrangements to construct a Hyatt Regency convention center hotel located directly north of the convention center. The final plan follows early commitments by Metro to rely on the private sector to shoulder the burden of costs and risks during construction and operation. Initial project costs are $212 million. The budget consists of more than $130 million in private financing, $18 million in direct public investment and the issuance of $60 million in revenue bonds that will be repaid by lodging tax revenues generated by the new hotel’s visitors.
“When we set out over two years ago to find a private sector partner to invest in our community, we pledged to limit costs and maximize benefits for the public,” said Metro Council president Tom Hughes. “This plan achieves those original goals, targets strategic investments in our state’s tourism economy and promises generous returns for many years to come.”
The 600-room Hyatt Regency will mark the brand’s entrée into Portland’s robust hotel market which, in recent years, has witnessed marked increases in occupancy and room rates. The hotel, planned to open in fall of 2017, will offer an upper-scale product to local customers and international travelers alike, in addition to the convention center’s target client: mid-sized national conventions.
“The Portland market is uniquely poised to welcome Hyatt into the market,” said Scott Cruickshank, executive director of the Oregon Convention Center and former hospitality executive. “Demand exists among business and leisure travelers visiting the city and our national meeting planner clients who bring conventions to town rate the Hyatt Regency as a top choice among hotel products.”
The Metro Council also approved a room block agreement between Metro and Hyatt to maximize national convention business at the convention center. A block of 500 rooms is reserved for the convention center and the city’s convention and visitor services bureau, Travel Portland, to offer set rates for convention groups thirty-six months in advance and beyond. A smaller room block consisting of 300 rooms is also set aside for booking convention business between twenty-four and thirty-six months into the future.
In a 2012 survey, nearly 8 out of 10 national convention clients indicated that they were more likely to book the Oregon Convention Center with an adjacent hotel designed to meet its booking, networking and service needs. Travel Portland reports that, in 2013, 36 national association and convention groups bypassed Portland for other cities who offered an adjacent convention center hotel. The loss in potential citywide tourism spending is estimated to be $46 million as a result.
“The ability to offer an upscale convention center hotel with specific amenities designed for convention clientele is essential,” said Jeff Miller, president and CEO of Travel Portland. “As soon as we can, we’ll start inking deals with new clients who have been just waiting for this opportunity to host their national convention in Portland.”
A recent independent market study found that, once open, the hotel will help secure an additional five to 10 citywide conventions in Portland each year, estimated to increase regional convention-related tourism spending to nearly $600 million on an annual basis.
Today’s approvals move the Oregon Convention Center hotel project into the pre-development phase which will include key milestones such as design review, issuance of revenue bonds and finalizing the purchase agreement between Mortenson Development and Hyatt. Hotel construction is scheduled to begin in the summer of 2015, with a hotel grand opening in fall of 2017.
More information on the Oregon Convention Center hotel project can be found here
Metro, the regional government that serves 1.4 million people who live in the 25 cities and three counties of the Portland metropolitan area, provides planning and other services that protect the nature and livability of our region. For more information, visit www.oregonmetro.gov.
Stephanie Soden, Metro Venues