New Orleans Convention Center to revive riverfront hotel project; here’s what it could look like

By Anthony McAuley

Source: The Times-Picayune | The New Orleans Advocate

August 17, 2021

The Ernest N. Morial Convention Center’s plans for a riverfront hotel crumbled in October when its financial backers pulled out, citing worries about the long-term health of the city’s tourism industry amid the pandemic.

Less than a year later, the controversial hotel project is back.

Convention Center officials are pursuing a new proposal from Texas-based developer Matthews Southwest, according to documents received through a public-records request. The massive, 1,200-room hotel that was planned before the pandemic has shrunk to 500 rooms, but the rationale is the same: creating an anchor project at the upriver end of the Convention Center as part of a multi-acre retail, residential and entertainment district, all aimed at helping New Orleans compete for event business with other cities.

The plan now calls for a 13-story structure that would feature a 28,000 square-foot “river view festival deck” on the South Front Street side of the six-acre lot. The hotel would be connected to the Convention Center by an elevated pedestrian walkway and include restaurants and retailers.

Also included is a parking garage.

The financial details of the public-private project were redacted. Michael Sawaya, the center’s president and general manager, said the expected costs would be more or less in line with the previous proposal but would reflect the smaller scale.

“This is a conceptual idea of what a smaller hotel would look like, not a fully-fledged new proposal,” Sawaya said. But he added it was important to keep the momentum going on the project. While the new hotel was much smaller than the 1,200-room tower envisioned in the original plan, he said it could serve as the first phase of a larger project if the convention business bounces back in a few years.

Sawaya and other Convention Center officials have long-pursued the construction of a large “headquarters” hotel at the upriver end of the vast convention center complex. New Orleans has the only major convention center in the country with no attached hotel, they’ve argued, which puts the city at a disadvantage when pitching for big conventions and other gatherings.

The plan for a convention center hotel was first put forward in 2014 and approved by the state legislature that year. But the initial proposal by the Howard Hughes Corporation faltered, largely because it was just a component of the huge $1.5 billion plan to build a new entertainment-focused neighborhood on the Convention Center’s nearly 50 undeveloped upriver acres.

In 2019, center management proposed the deal with Dallas-based Matthews Southwest and local developer Darryl Berger, which seemed poised for board approval after a deal earlier that year between city and state officials had cleared political obstacles over the use of taxpayers’ money.

Still, that proposal was criticized by the Bureau of Governmental Research, a watchdog for public-sector spending, for giving away too much in tax breaks as well as offering up the publicly-owned riverfront land too cheaply. BGR also argued that the hotel would draw guests away from other New Orleans hotels.

Then the coronavirus hit and business travel and convention-going came to a standstill, putting a cloud of uncertainty over the hotel industry. The Convention Center itself started burning through millions of dollars in reserves and BGR called for the project to be abandoned altogether.

In October 2020, convention center officials said that Matthews Southwest’s financial partner, Preston Hollow Capital, had pulled out amid the economic uncertainty and said they would shelve the hotel plans indefinitely.

The pause ended up lasting about 10 months. The latest plan was put together for Matthews Southwest by AECOM Hunt, an Indianapolis-based contractor, and Dallas-based architects Nunzio Marc.

Sawaya noted that the uncertainties in the hotel market and the broader economy make it impossible to estimate what the hotel might cost to build now, not least because the supply chain disruptions of the pandemic have sent many building materials’ prices skyrocketing.

During the pandemic, the Convention Center has forged ahead with some of its upgrade program, with $112 million spent so far on construction of a “linear park” that runs along the Convention Center Boulevard front of the complex, as well as a transportation center and IT upgrades.

Management recently proposed that AECOM Hunt and local developer Broadmoor be the master contractor to complete the rest of the $557 million upgrade project, though that has been stalled for now because of controversy about how the contract was awarded.

In spring of this year, the convention center’s oversight board approved a consortium led by local developer Lou Lauricella to lead an additional project that envisions spending another $500 million of mostly private funds to develop the bulk of the upriver acreage. That would include building a civil rights museum, as well as a major new music venue, restaurants and a mix of luxury and affordable housing.

The public contribution to the vast new development includes the value of the convention center’s upriver acres, which like most real estate in New Orleans and around the country has continued to increase during the pandemic.

The land for the hotel site is now worth about $33 million, according to an appraisal done for the center by The McEnery Company in June of this year. That is up 10%, or $3 million, since the previous appraisal by the same firm in October 2018.

The entire site is now valued at about $192 million, compared to $179 million three years ago, according to the appraisal, which also was obtained via a public records request.

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