Consultant says Dome hotel ought to work

I swear, there have been so many ups and downs and twists and turns in the Astrodome Redevelopment story that I find it hard to guess at what's coming next. The latest development, which comes on the heels of some actions by County Judge Ed Emmett that made the plan seem doomed, now makes it sound like it's gaining traction.

A convention hotel at the Reliant Astrodome could net nearly $50 million annually four years after opening, a consultant said in a report released by Harris County Friday.

"Reliant Park is transforming into one of the largest, most versatile sports, entertainment and conversion complexes in the United States," hotel consultant John Keeling, vice president of PKF Consulting, wrote. "To our knowledge, there are no other hotels like the proposed (hotel) adjacent to" a major stadium and convention center.

Astrodome Redevelopment Co., which has proposed reinventing the Dome as a convention hotel, hired PKF to do the study last year.

A consulting firm hired by the county, Convention Sports & Leisure, found that PKF's study conformed with analyses of financial prospects for large hotels.

Dick Raycraft, county budget and management services director, said the PKF report sheds light on whether hotel analysts believe that a Dome hotel would be profitable.

Raycraft's office included it as part of an analysis of financial and legal issues related to the convention hotel plan.

The analyses were given to Commissioners Court as it prepares to discuss next week whether the county should continue pursuing the Dome hotel plan.

PKF estimated that the Dome hotel would have a 72 percent occupancy rate in its third year.

I suppose my way of looking at this is that if a bank is willing to throw a couple hundred million bucks at a project like this, they must feel there's some hope of recouping their investment. Doesn't mean their judgment is sound, of course, but it certainly counts as objective evidence of the thing's feasibility.

They may not feel quite the same way now, however:

In a letter to the county, Astrodome Redevelopment president Scott Hanson said the company had a letter of intent from a bank saying it would lend $360 million for the project, but that agreement expired in October.

Since then, the economy has worsened, and some banks have tightened lending practices, Hanson said.

Astrodome Redevelopment still can obtain financing, but lenders may ask that the county rebate its share of hotel occupancy taxes generated by the hotel to the developers, Hanson said.

I don't think I'd realized that. It certainly explains Judge Emmett's negativity towards ARC's ability to gt financing lately. Of course, now Emmett is saying that condition for financing isn't necessarily a deal-breaker, so there we go on the roller coaster again.

City officials last month said they were exploring the idea of building or helping facilitate the building of a second downtown convention hotel. The idea could involve the city selling the Hilton Americas.

So I'll ask again: How many convention centers do we need in Houston? I can believe we're big enough for two, and I can certainly see reasons why there might be different purposes for a center downtown and a center near Reliant Stadium, but are we sure about this? We did ask an expert, and that expert said sure, it's viable, but what assumptions were they making about the two locations' ability to draw in business?

It's a mess. I guess I'm where I started on all this, which is that I don't care one way or the other if a private investor wants to spend a bunch of money rehabbing the Dome. I don't want the county to do that, but given that it's on the hook for $1.5 million a year to keep the place in mothballs, I'm okay with there being some public involvement in whatever happens. The rest is details. We'll see what happens.

Posted by Charles Kuffner on February 16, 2008 to Elsewhere in Houston