Oregon Convention Center
Headquarters Hotel

Background

Development Proposals

Headquarters Hotel development proposals were received from four qualifying firm in 2006. Ashforth Pacific/Garfield Traub were selected as the preferred development team.

Project Update

PDC and the development team has met approximately every three weeks starting in January 2006 to discuss the process, program requirements, alternative financing approaches, and the conceptual design, cost and timing of the project.

In January, GTA and PDC executed a “Framework for Negotiations to Develop a Headquarters Hotel” (Framework) based on the direction received at the October 26 Board meeting. The Framework outlined the steps and process necessary to reach agreement on a Disposition and Development Agreement (DDA) by late 2006. The Framework defined two interim agreements prior to the DDA: a Memorandum of Understanding (MOU) and Agreement in Principle (AIP). The MOU was intended to describe generally the project’s preferred or expected program, cost, finance plan, and implementation schedule, including any alternatives. The AIP specifically described the expected deal for approval by various financing partners.

To guide the negotiation process, PDC staff developed a Project Negotiation Structure that defined the committees, roles and communication paths. The committees and groups listed below met to review project progress and provide direction and/or input to staff and the negotiating team.

Executive Group

The Executive Group was composed of executive staff of key project stakeholder organizations including PDC, the Portland Oregon Visitors Association, Metropolitan Exposition Recreation Commission, Metro, the City of Portland and Multnomah County. The Executive Group met three times to review project progress and provide direction to the City negotiation team.

Finance Committee

The Finance Committee was composed of senior staff and finance experts from key stakeholder organizations. The Finance Committee met four times to discuss the project negotiations and provide input.

Technical Advisory Committee

A Technical Advisory Committee (TAC), comprised of representatives from the hospitality industry, city-wide interests, and adjacent neighborhood and business groups, met twice. The TAC was oriented to the project and discussed issues such as the appropriate size of the hotel and room block, the results of the project market and economic impact analyses and OCC area development.

Technical Analysis

Two key efforts to analyze the economic impacts and feasibility of a HQ Hotel were completed. These are summarized briefly below:

First, the economic consulting firm of ECONorthwest was retained to review existing documents and research related to:

1) The state of the national convention industry
2) The performance of the OCC
3) The potential economic impact generated by a new Portland HQ Hotel

ECONorthwest reported the following findings:

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.
Use of the OCC has followed national trends, with a decline in the number of events in 2001–2002, followed by a recovery to pre-2001 levels in 2003–2004.
The HQ Hotel will generate a substantial increase in occupied room nights, visitor spending, jobs, and tax revenue in the Portland region.

ECONorthwest also been retained to conduct new analysis and research to estimate the regional economic impact of a 600-room HQ Hotel in Portland. Findings are:

Long-term economic impact is considerable
$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)
Estimate 1,500 new jobs created

* NPV = Net Present Value

Second, the hospitality consulting firm of PKF Consulting completed a market evaluation and analysis of the hotel’s first ten years of operations. This included 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.