After nearly 20 years, HQ Hotel still in limbo
Daily Journal of Commerce
by Kennedy Smith
08/10/2007
It’s been nearly two decades since the Portland Development Commission identified a convention center hotel as its top goal to bring money and tourism to the area. Since then, the project has been intermittently studied, put on the back burner, sent out to bid and handed over to different agencies in town.
David Woolson, the new director of the Metropolitan Exposition Recreation Commission, says it’s still anybody’s guess whether the hotel will happen. Since he was hired four months ago, he has focused almost solely on working out the details of the yet-to-be-built Headquarters Hotel.
In February, regional government Metro took over the project from the Portland Development Commission. MERC’s role, Woolson says, is to advise Metro about whether building the hotel is a good idea.
His experience as an entertainment lawyer and director of the Oregon Film & Video Office comes in handy, he says.
“A lot of what goes on here is entertainment-related,” he says. “I am able to be a resource as far as my deal-making background.”
DJC: Heather Olson (MERC’s capital projects manager) told me you were diving head-first into the Headquarters Hotel issue. Where are you with it?
David Woolson: The Headquarters Hotel project has been talked about for 19 years. Before Metro took the project, this was a PDC project in earnest, really for about two years, where they did a variety of feasibility studies. In November of last year, the PDC came to the conclusion that they couldn’t make a deal under the private ownership model.
DJC: That’s when they switched to a public ownership model.
Woolson: Yes. When you look at the private equity that was being put up, with the public subsidy they had to pay, there was at least a $20 million gap. It wasn’t voted down by anyone; they just couldn’t make the numbers work. At that point, the decision was made that, since there was a lot of work done already, Metro would take it from there, exploring a public ownership model, which has been used in other markets like Denver, Austin and Chicago.
DJC: When you were at the Planning Commission (in June), one of the commissioners asked whether this is about filling a $20 million gap. Are you having to start from square one on financing on this?
Woolson: There was a square-one financing. The OCC operating is a separate issue.
But, if we do more convention business because of a headquarters hotel, does it help the OCC? Yes. It’s good business. Should we build a headquarter hotel solely to help the finances of the OCC? I don’t think so. It’s a by-product; it’s a secondary issue. The evaluation, the analysis, is really on its own. Does this thing make sense as a feasible project?
DJC: What’s the answer?
Woolson: We’re getting the data on this as far as the need, the demand, the economics, etc.
DJC: It’s 19 years in the making. Why has it taken so long?
Woolson: I don’t have an answer for that.
I haven’t been working on it 19 years. I’ve been working on it since May 1. For Metro, President David Bragdon made it very clear when I came in that we are not going to spend months and years talking about the Headquarters Hotel. We are going to very quickly gather the data and make a decision. I can’t address what’s happened before, but Metro took this on in February and will make a decision by the end of September.
DJC: Do you get a sense that the public even cares whether this happens or not?
Woolson: I don’t know. My sense is that they should because the fact is that as far as the tourism industry, as far as the convention business, it’s great business for Portland and for Oregon.
It was Tom McCall’s rallying cry. They come, they spend, they go home. It is also a gateway to introduce people into the community as far as other tourism, other business relocation, coming back for tourism-related things. The convention business is good business for the community.
DJC: With public financing and private management, is it unfair to private hotels in this area to compete in that way?
Woolson: One of the things that (various studies)will address is what the impact on the local hotel industry will be. The experience in other markets is that it’s a dip in occupancy as rooms come in the market, and then those are absorbed and it can induce demand.
But I understand that certain hoteliers raise that question. It’s a fair question. I don’t have a specific answer for it.
DJC: In talking with hoteliers, what are their concerns and how do you quell them?
Woolson: Understand my position on this thing. I’m not here to advocate or sell a hotel. It’s my job as been asked by Metro to evaluate whether this is a good tool for the market as an economic development driver to help maximize economic impact. Then the question is, is it feasible? It’s really presenting the data of what we have found out. I am not, my job is not to sell this Headquarter Hotel. It doesn’t make sense. It’s helping to make the right decision.
DJC: Do you feel pressure that the only answer you’re going to be able to give is, “Yes, this is feasible”?
Woolson: No. I don’t feel that, because I don’t think we’ve accomplished much if, at the end of the day, we’ve got it built but it’s not the right decision, and two or three years later we regret it. We need to come to the right conclusion up front.
DJC: Will there be fallout if Metro does decide that it is not feasible?
Woolson: I don’t know how to answer that. The fact is that while there are some hoteliers that are concerned about the impact, a fair concern, at the same time there are a lot of folks that very much feel when conventions are in town that’s a positive thing. It’s a mix, in fairness.
Will some folks that have been advocating this for 19 years say we need this? I can’t really speak for them. That isn’t my job. It is purely to ask how we get through this complicated issue and come to the right decision, and we’re helping Metro do that.
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