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Wednesday, June 03, 2009

Convention Center Hotels in the News

The Washington Business Journal reports that the people behind the planned $550 million, 1,100-room hotel convention center headquarters hotel slated for Ninth Street and Massachusetts Avenue have been unable to secure private financing. As a result, the Washington Convention Center Authority is seeking authority from the city council to sell as much as $750 million in bonds to cover the price of the hotel, interest during construction, insurance and other costs.

Although not the focus of the article, the article also mentions that Quadrangle Development Corp. and Capstone Development are still separately planning to build a Courtyard by Marriott at the northwest corner of Ninth and L Streets, NW (unlike in February 2008, the article does not mention planning for a Residence Inn also). I have been unable to find anything further on the planned development by Capstone and Quadrangle.

I am more eager to see the Courtyard by Marriott built than the mega-hotel, as the Courtyard by Marriott will occupy several highly visible, currently-vacant buildings on Ninth Street. I think these buildings are a major deterrent to attracting convention center pedestrian traffic north on Ninth. Here's to hoping it moves forward soon!

6 comments:

Anonymous said...

I'm confused. The $550 million dollar hotel cannot get built, so the WCCA (which, I assume, means DC) needs to issue $750 million in bonds to pay for the $550 million hotel? Where's the extra $200 million going? Isn't this the baseball stadium fiasco all over again? And why would we want to build a hotel that people who are in the business of building hotels (or at least financing their constuction) don't want to build? Doesn't that implly that the time right now is not right...or at least that thing won't be making much money (if any) right now?

Mr. Q said...

All good points Anon...

What a mess this has been and continues to be...to build such a big ass convention center and not have the foresight, financing, political will, etc to have a hotel even underway 5+ years later is a testimony to the ineptitude of DC government...and now they want to dive in when the major players in the industry are steering clear tells you they're not getting any smarter...as much as I would love to see a hotel there, this would be a humungous error on DC's part...

Anonymous said...

I think WCCA, which is publicly owned, is projecting that construction of the marriott will bring more convention business to the center. If it isn't built, WCCA fears it will lose business to National Harbor. On the other hand, the private franchise group coordinating financing for the marriott hotel doesn't want to take the risk that the hotel won't fill up and that they will be left with a loan they can't pay. WCCA is hoping it can issue the bonds to mitigate the risk to the marriott franchisers because, if they don't, WCCA will lose money.

Jbug said...

Do you know anything about the newly opened space (used to be a car lot) at Florida (6th) and T street?

Anonymous said...

I attended ANC 2C last night. The impression Jack Evans gave was that the problem wasn't so much with credit risk as such, but with the high capital outlay. He said that if this were a $30-$40 million project, financing would probably be available, but $400-$500 is more than the present market is willing to bear.

My own opinion is that the hotel is a far less speculative lower risk venture than the stadium or anything else that is going on at NoMA or SE waterfront which has gotten the lions-share of new development money lately. I do not normally like the idea of public financing of a hotel, but (a) given the reality that the credit markets are still dysfunctional and not behaving normally, (b) given the fact that the massive public investment in the convention center requires protection, (c) the hotel is a relatively low-risk venture when it comes to such massive undertakings, i.e., if we build it, I'm convinced people will come, (d) the hotel is of vital economic importance to the Logan/Shaw/Mt. Vernon Square neighborhoods in terms of cleaning up blight, enhanching property values and neighborhood amenities, my view is that we should do WHATEVER IT TAKES TO GET IT BUILT.

Shaw Rez said...

Thanks for the recap from the ANC meeting, anon!

I too am in support of the council approving of this request and think that this is a much different scenario than the stadium. There's a great WaPo article on it today.

All that said, I think many characterize the area around the convention center as looking shabby because of the vacant buildings slated to become the Courtyard by Marriot. As a result, I think the Courtyard by Marriot is a really important project also.