After years of false starts, New Orleans Convention Center has a new plan for a major hotel
By Anthony McAuley
Source: The Times-Picayune | Nola.com
May 22, 2024
The Ernest N. Morial Convention Center’s oversight board OK’d a new proposal Wednesday that could finally make a “headquarters” hotel a reality after more than a decade of failed attempts.
However, the proposed hotel would not be built on the preferred upriver site but on a block much closer to the downriver end of the complex.
The board approved a non-binding agreement with Omni Hotel and Resorts that would effectively begin the process of developing the hotel project, which hotel and Convention Center officials estimated would cost about $570 million to build.
The board also gave a green light to convention center management to buy ā€” for about $20 million ā€” the block currently occupied by The Sugar Mill event space and an adjacent parking lot. That land, bordered by Andrew Higgins Boulevard, South Peters Street, John Churchill Chase Street, and Convention Center Boulevard, would be the site of the hotel and related parking space.
The site currently is owned by John J. Cummings III and his partners.
Convention Center CEO Michael Sawaya, who had been trying to get the hotel project off the ground since he became head of the center in 2018, said it was overdue.
“It’s long been a high priority for this community, for the industry itself and for the state and city,” he said. “It’s really our top priority to get a headquarters hotel for many reasons.”
Sawaya has argued that a hotel is necessary to compete with comparable convention centers, which typically have at least one attached hotel. It’s often required by large booking parties as a condition to bring their event to a city.
Tom Morsch, a consultant advising the Convention Center, said talks over the details of the hotel development are likely to take until the end of the year. If successful, it would then take around 30 months to build.
$70 million investment
The hotel would be financed mainly by Omni Hotels, but would require about $70 million of direct investment by the Convention Center, which is primarily funded by a share of the city’s taxes. There would also be a package of tax-break incentives that would include reimbursement of various sales taxes, Morsch said.
The Convention Center board is largely comprised of members chosen recently by Gov. Jeff Landry. That includes the new chair, Texas businessman and major Landry campaign donor Russell Allen, who was installed in March. Several members who voted to approve the hotel project on Wednesday are general managers of local hotels, including Jim Cook, who oversees the Sheraton and Marriott hotels on Canal Street, and Steve Caputo, who runs the Monteleone in the French Quarter.
Walt Leger, CEO of New Orleans & Company, the city’s main tourism marketing agency, was on hand to voice his support for the project.
“With the addition of a convention center hotel like this one, it will allow us to be as competitive as we need to be with those cities out there that are trying to (compete with New Orleans),” Leger said.
One example of a competing city is Atlanta, which last year completed a new 976-room Signia Hilton Hotel at the Georgia World Congress Center Authority. That was started in early 2021 and cost an estimated $500 million.
The New Orleans Convention Center’s management have pointed out that the Atlanta center now also has embarked on a $1 billon project to add various adjacent retail, residential and office buildings, echoing the $1 billion River District project currently being built on land owned by the New Orleans Convention Center.
The “headquarters” hotel has been seen as a key part of the River District development, which includes 50-plus acres that have been barren and undeveloped for decades.
The River District envisions building an entirely new New Orleans neighborhood over the next decade, with millions of square feet of office space, 900 residential units, hotels, restaurants and entertainment venues. The first project to be delivered is expected to be a new Topgolf entertainment complex, which is scheduled to be completed next year.
However, Omni hotel officials rejected the 8-acre upriver site that had been set aside for the project. Mike Smith, Omni’s executive vice president in charge of real estate, said development of the surrounding acreage at that end of the Convention Center was still too uncertain.
Sawaya said that site would still be reserved for future hotel development.
Critics of subsidy
Critics of previous proposals have argued that the public subsidy, in terms of tax breaks and lease terms, were not justified. A proposal to build a 1,200-room hotel was abandoned at the end of 2020 when the pandemic’s negative impact on the hotel sector led the project’s financial backer, Preston Hollow Capital, to pull out.
Just over a year ago, the Convention Center revived the hotel project after hiring consultant HVS to study prospects for a scaled-back, 600-room hotel with a 51,000-square-foot meeting space along with restaurants and lounges.
At the time, Sawaya said it might be best to start small and add to the hotel over time.
The Convention Center also has considered building a hotel at the downriver end of the complex next to the 1,200-room Hilton Riverside Hotel, but that was never Sawaya’s preference. He said Wednesday that the owner of that site, Park Resorts, rejected the idea in any case.
How is the New Orleans convention business doing?
A brighter outlook for conventions and business travel more generally could help sell the new hotel project.
After the deep slump and slow recovery after the pandemic, business travel is trending up, according to the latest Global Business Travel Association’s outlook report.
The trade group expects spending by business travelers to be back to pre-pandemic levels this year, at $1.4 trillion globally and rising to $1.8 trillion by 2027.
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