The report finds that a convention headquarters hotel would not only keep the Oregon Convention Center from falling behind its competition, which would result in an erosion of its current convention volume, but also would attract more and larger conventions. That in turn, would boost traveler volume to the area, boosting the image of the city and providing more marketing dollars, according to the report.

As for its impact on existing hoteliers, which has been a hot topic, PKF vice president Gregory Crown told a small group of reporters it would be negligible. He says PKF's research found that future annual averages for occupancy and room rate for "relevant competition"--21 hotels housing 5,000 rooms--would be the same with or without the convention headquarters hotel, and that with it the OCC would generate 86,000 additional room nights annually by 2013, many of which would flow through to existing hotels.

The report was commissioned by the Portland Development Commission, the city agency that has been in charge of acquiring the land for the project, selecting a developer and negotiating a development agreement. The agency is currently in the negotiation phase with the developer team it selected in September 2005--locally based Ashforth Pacific and Garfield Traub of Dallas, who have aligned with Westin. If ultimately built, the hotel's likely completion date is 2010.

There has been talk of a convention headquarters hotel in Portland ever since the first phase of the convention center was completed in 1990. The recent catalyst was the $118-million expansion of the convention center that was completed in 2003 and is being paid for by increased taxes on the rooms of existing hoteliers. The OCC hosted a record 40 large conventions that year--ones that generates demand for 1,100 hotel rooms for three nights--and its economic impact was estimated at $481 million.

The OCC hosted 39 large conventions in 2004 and 35 in 2005. Without a convention headquarters hotel, Drown says the number of large conventions OCC hosts will continue to fall. With it, hey says OCC will get back to and possibly surpass its 2003 total shortly after the hotel opens.

The PDC issued its original request for qualifications for the convention headquarters hotel project in the fall of 2003. The subsequent request for formal proposals, issued in the fall of 2004, called for an 800-room hotel with a minimum of 600 units in the first phase. The reasoning was that most large convention planners require a room block of at least 500 rooms in a single location adjacent to the facility and the ability to block a total of 1,000 rooms in the immediate area.

In 2005, however, PDC commissioners reduced the requirement to 400 rooms. The change, which required an 11th hour addendum to the RFP, followed heavy lobbying from representatives of Downtown hotels such as the Hilton that benefit significantly from having an expanded convention center without a new convention headquarters hotel.

In addition to the lobbying, there has been concern that the public subsidy required to develop a 600-room hotel would be too high to gain the necessary support. PKF's report doesn't address the public subsidy issue; the PDC expects to have a better idea of the necessary public funds by late April or early May.

In explaining PKF's analysis, company vice president Gregory Crown says the reason a convention headquarters hotel would have no appreciable impact on the market's overall occupancy is that new hotel rooms will be built in the city regardless of whether they go across from the convention center or in the heart of Downtown. Average hotel occupancy in the central city here hit 70% in 2004 and is expected to hit 75% by the end of 2005, he says. Those kinds of percentages--an average occupancy of 65% is considered "healthy"--tell developers there's room for more hotel rooms.

Instant Insights /

UPDATE: Report Downplays HQ Hotel Impact on Existing Hoteliers

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