AT A GLANCE
Today, the Convention Center board revised the financial structure of the planned Omni headquarters hotel in a way that could save the public millions of dollars.
Instead of decades of future payments totaling more than $800 million, Omni would receive a $120 million payment upfront, a structure that provides equivalent value because the money is available immediately. This change is in line with BGR’s recommendations in a December 2025 report, although it’s still too early to calculate the final savings as some details remain unresolved.
BGR has not taken a position on the project itself, but has urged a financial structure that significantly reduces costs for the public.
FULL COMMENTARY
Today, the New Orleans Ernest N. Morial Convention Center board restructured the public subsidies for a planned 1,005-room Omni hotel next to the Convention Center. The original deal would have provided Omni an estimated $836.7 million over 45 years from hotel-generated tax revenues.
Under the new terms, Omni would instead receive an equivalent upfront payment of $120 million. Convention Center officials cited two main reasons for the change:
- The State of Louisiana and the state entity that operates the Superdome and Smoothie King Center have not yet agreed to redirect their shares of hotel-generated tax revenues to Omni as originally envisioned, and;
- The Convention Center wants to reduce the public costs, as BGR recommended in a December 2025 report.
The Convention Center’s decision would improve the deal for the public, while still achieving its goal of building a convention headquarters hotel.
BGR’s analysis of the original deal identified four options that could each save the public roughly half a billion dollars over 45 years, with little or no effect on Omni’s projected profits. On a present-value basis, those savings range from $85.1 million to $117.6 million. Because the funding sources for the newly negotiated $120 million lump-sum payment to Omni have not been finalized, the public savings cannot yet be calculated. However, BGR suggested a similar option involving a $118.6 million lump-sum payment funded by Convention Center bonds backed by hotel-generated tax revenues. That approach would save the public an estimated $471.7 million over 45 years, or $98.8 million on a present-value basis. The new terms could likewise result in substantial public savings.
BGR’s cost-saving options take advantage of the fact that revenue received decades in the future is worth far less to Omni than to the public. As a corporate entity, Omni is seeking an 11% annual investment return because it can invest in alternative deals with similar risks and returns. It discounts future revenues by that 11% rate to determine their present value. As a result, the estimated $504.4 million that Omni would receive from hotel-generated taxes during the final 25 years of the original deal is worth only $20.7 million today. By contrast, that same revenue stream has a present value of $105.8 million for the public, which can expect a lower 5% return on its conservative range of investments allowed by law.
By letting the public keep more revenue in later years in exchange for an upfront payment to Omni, BGR’s options can save substantial public resources while keeping Omni financially whole.
BGR recognizes the hotel’s strategic importance in the Convention Center’s efforts to compete with other cities, many of which have added convention headquarters hotels. BGR has not taken a position on whether the project should proceed. Rather, our goal has been to secure a better financial structure for the public if the project moves forward.
Given the community’s pressing needs for drainage upgrades, street repairs and improved services, the public has a strong interest in ensuring the hotel project does not waste limited tax dollars. BGR is encouraged that the Convention Center has made progress working with Omni and state officials to reduce public subsidies for the headquarters hotel project. We look forward to learning more about the deal as it comes up for further review by state and local entities.
Besides the $120 million upfront payment, other public contributions toward the $600 million project include:
- An $80 million investment by the Convention Center, which will receive a share of hotel profits. (Omni will pay the balance of hotel construction and development costs.)
- $23.7 million for the Convention Center’s purchase of the hotel site. (Omni would pay an estimated $29.2 million in rent over 45 years.)
- A payment in lieu of property taxes (PILOT), the value of which has yet to be determined.