Oregon Convention Center
Headquarters Hotel - UPDATE

On Nov. 8, 2007, the Metro Council unanimously adopted a resolution to authorize Metro to enter into a development agreement for the development of a 600-room publicly owned, privately operated headquarters hotel across from the Oregon Convention Center (OCC) with the project development team led by Garfield Traub and Ashforth Pacific.

The Nov. 8 decision is not a final commitment to build the hotel. The development agreement calls for several phases of pre-development activities which the Metro Council will continue to review and approve, such as staged architectural drawings and progressive project budget projections, which will culminate with a final, not-to-exceed price for the architectural designs and construction of the headquarters hotel. The initial feasibility phase of the development agreement calls for the payment to the project team of $600,000 for its feasibility period work.

In the initial pre-development feasibility period authorized by the development agreement, Metro's Chief Operating Officer Michael Jordan, Metro's Chief Financial Officer Bill Stringer, and the Metropolitan Exposition and Recreation Commission (MERC) Chief Executive Officer David Woolson will oversee the review and financial analysis of initial design and cost projections by the development team and financing options by project underwriters.

The Metro Council approved the development agreement and this initial expenditure after receiving letters of support from a majority of the members of the Portland City Council and the Multnomah County Commission. Metro staff will continue to work closely with the city of Portland, Multnomah County and other identified beneficiaries of the hotel project to secure funding and other support for the development of the hotel. At the conclusion of the feasibility period in Summer 2008, the Metro Council will review the finalized budget, financing agreements and other project deliverables and will consider authorization of further work and payments towards further development of the hotel project.

Project Overview

With the formation of the Oregon Convention Center Urban Renewal Area in 1989, the Portland Development Commission identified the need for a Headquarters Hotel to maximize the economic impact of the Oregon Convention Center.

PDC completed assembly of two blocks bounded by NE Martin Luther King, Jr. Blvd, NE Grand Ave, NE Holladay and NE Oregon Streets adjacent to the OCC to support the development of a HQ Hotel. In September 2004, PDC issued a Request for Proposals (RFP) seeking a developer for the project. The development team of Ashforth Pacific and Garfield Traub wase selected and the PDC Board of Commissioners authorized exclusive negotiations with the development team in October 2005.

Through October 2006, PDC staff explored, with the development team, many alternatives to the hotel. In all cases it was found a privately-owned hotel could not be done without a very large public subsidy. Therefore, in October 2006, the PDC Board of Commissioners directed staff to explore, with regional partners Metro, Metropolitan Exposition Recreation Commission (MERC), Multnomah County and the City of Portland’s Office of Management and Finance, the feasibility of a publicly-owned convention center hotel. To that end, the Metro Council recently took action to assume project leadership. The Metro Council has requested additional analysis and information on the HQ Hotel, as well as sufficient time to understand the project and its implications prior to making a final decision on whether to proceed. That decision is expected in Summer 2007.

If approved, the new headquarters hotel will be located
adjacent to the Oregon Convention Center.

Technical Analysis/FAQs

What market evidence supports a Headquarters Hotel in Portland?

In April 2006, the economic consulting firm, ECONorthwest, completed a market study for the HQ Hotel. Their findings report:

The HQ Hotel will generate a substantial increase in occupied room nights, visitor spending, jobs, and tax revenue in the Portland region.
Nationwide demand for convention and exhibition space is expected to grow at rates close to historical averages over the long run but the market will become increasingly competitive.
The national/international meeting market represents the primary opportunity to increase use and economic impacts of the OCC.
The lack of a HQ Hotel is the primary obstacle to attract more national/international conventions. Without a HQ Hotel, the OCC’s share of the national/international market will decline. With a HQ Hotel, the share will increase.

What impact will the Headquarters Hotel have on the Portland Regional Economy?

According to a separate ECONorthwest June 2006 economic impact study, the economic impact of a 600-room HQ Hotel in Portland would be:

$49 million estimated annual new expenditures by delegates, organizers and exhibitors
$104 million in annual business sales; $1.4 billion over 20 years (NPV)*
$41 million annual personal income; $580 million over 20 years (NPV)
Approximately 1,500 new jobs created

* NPV = Net Present Value

What are the market conditions for a Headquarters Hotel in Portland?

In Spring 2006, the hospitality consulting firm of PKF Consulting completed a market evaluation and analysis of the hotel’s first ten years of operations (create link to document). This includes a review of local market conditions, recommendations related to the program and amenity package of the proposed HQ Hotel, and projections of the facility’s performance. PKF’s key HQ Hotel findings include the following:

Hotel occupancy in the Central City has risen from 64 percent to 74 percent since 2001 through 2005.
The OCC HQ Hotel size should be 600 rooms to capture the minimum 500-room block required by most large meeting planners.
The OCC HQ Hotel should contain 41,000 s.f. of ballroom and meeting space.
A HQ Hotel will be neutral or beneficial to competitor hotels.
Approximately 104,000 net additional room nights should be captured annually by the addition of a headquarters hotel (61,000 convention-driven, 43,000 in-house group).

Portland’s competition for conventions (Denver, Phoenix, Vancouver, Seattle, and San Diego) is expanding convention centers and/or constructing new headquarters hotels. A HQ Hotel in Portland avoids OCC’s falling further behind the competition and will prevent an erosion of convention volume beginning as early as 2009.