Watchdog wants Convention Center hotel paused amid coronavirus concerns

By CityBusiness Staff Reports

April 9, 2020

The Bureau of Governmental Research says a proposed headquarters hotel at the Ernest N. Morial Convention Center needs reconsideration now that tourism and conventions have been affected by the coronavirus pandemic.

A report released Thursday by the public policy organization also suggests reducing the public’s financial contribution to the 1,200-room hotel. Initially proposed to cost around $557 million, BGR says more recent figures show $706 million in property and sales tax exemptions and other subsidies over 40 years.

Convention Center officials indicated at their March 31 board meeting that they are moving forward with the project. BGR, which questioned the financing package before the pandemic, recommended in its report that officials refrain from entering into any agreements while the pandemic is ongoing and that they commission a new or updated feasibility study once the pandemic subsides, taking into account its longer-term impacts on convention activity.

“They should pursue the hotel project further only if the study demonstrates a strong likelihood of success,” BGR’s news release said.

Of concern are recent forecasts that the pandemic and “stay-at-home” orders issued by the city and state will cost New Orleans around $100 in revenue and could require job cuts, the report said. BGR also called for more transparency on what they described as one of the largest public-private partnerships in New Orleans’ history.

“Moving forward with the hotel project now, and with financing terms that signal excess, fails to provide the careful stewardship of public dollars required by today’s extraordinary circumstances,” said BGR president and CEO Amy Glovinsky. “The Convention Center and its board should stop and take time to reassess the project’s feasibility, as well as its place as a strategic priority among the community’s many pressing needs.”

The Omni-branded hotel is being developed by Texas-based Matthews Southwest Hospitality and local businessman Darryl Berger. The Convention Center also is in the process of selecting a developer for an entertainment district, building a linear park and planning a renovation of its existing facilities.

Convention Center officials issued a news release Friday that indicated their plans to keep moving forward with the project after the pandemic subsides. The Center is serving as a medical monitoring facility currently for coronavirus patients not in the hospital.

“I firmly believe our first duty during these challenging times is to provide service to our community in its time of need, and to promote the public health and safety of our employees and the public at large,” Michael Sawaya, president and general manager of the New Orleans Ernest N. Morial Convention Center, said in a statement. “Additionally, the convention center will continue to play a major role as a driving force in the local economy, and will be a critical component to the economic recovery. Our plans to reinvest in our facilities and improve our competitive position is more important now than ever.”

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