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Why John Scovell Backs the Convention Hotel

The president and CEO of Woodbine has sent out a letter explaining his position (full text after the jump). It begins:

If there is anyone who should be against a new convention center hotel, it’s us — Woodbine and Hyatt Regency Dallas. We opened Hyatt Dallas in 1978, and it has served as the de facto convention center hotel ever since. FACT: A new hotel close to Hyatt Dallas will take business from our 31-year-old property, but we’re still in favor of a new convention center hotel.

It’s a pretty compelling argument.

Dear Neighbors and Friends:

If there is anyone who should be against a new convention center hotel, it’s us — Woodbine and Hyatt Regency Dallas. We opened Hyatt Dallas in 1978, and it has served as the de facto convention center hotel ever since. FACT: A new hotel close to Hyatt Dallas will take business from our 31-year-old property, but we’re still in favor of a new convention center hotel. We believe the short-term impact of losing business to the new competitive hotel is a small price to pay for the long-term economic boost to all businesses in Dallas. We’ve seen it happen in other markets where we have hotels: Bringing a new hotel brand to an area brings new business to the city. Area hotel owners who keep their properties competitive will ultimately earn their fair share of a larger pie.

So, let’s make this perfectly clear: Woodbine supports a publicly owned and financed convention center hotel. That means we will VOTE NO on both ballot propositions on May 9.

Here is how we respond to four of the most frequently asked taxpayer questions.

1. Does Dallas really need a convention center hotel?

Hotel owners need to make regular reinvestments in their properties, and convention center facilities must do the same to remain competitive. The $1-billion, City-owned Dallas Convention Center needs attached hotel rooms, because that is what its customers – meeting planners, convention delegates and visitors – are demanding. Without the new hotel, these customers will migrate to the 21 other major national markets that have the desired facilities. The stakes are huge and will ultimately affect the hospitality industry’s $2.6-billion annual economic impact, the more than 50,000 hospitality-related jobs and the City’s tourism-related tax receipts! Once upon a time, Dallas was a Tier One convention destination and hosted 28 citywide conventions. In 2008, Dallas hosted 15 citywide conventions as a Tier Two destination. Only 11 are booked in 2009. Without the new hotel rooms, Tier Three is right around the corner.

2. Why isn’t the private sector building the convention center hotel?

The question of hotel ownership is one of economics and sound financial investing. Cities have the advantage of financing projects with tax-exempt bonds not available to the private sector. The City of Dallas can borrow money at much lower rates than a private borrower and can construct the hotel at a much lower cost. Given current economic times, the private sector cannot raise the money required to build the hotel. Private ownership would require at least $125 million in public money to bridge the economic gap, and the city would be excluded from any hotel profits. Conversely, the city stands to share in profits if it owns the hotel. No major convention center hotel has been built since 1992 without significant public incentives or public ownership.

3. Will my taxes go up because of a new convention center hotel?

NO! Visitors to the hotel are paying for it, just as visitors to the American Airlines Center pay for that facility. Revenue from those hotel guests will be used to pay off the bonds – that’s why they’re called revenue bonds. These bonds are tax-exempt, have a much lower interest rate and have been used to successfully finance many competing convention hotels in cities including Houston, Denver, Baltimore and Phoenix. Most importantly, the city is NOT legally obligated to use its general fund or ask the taxpayer to pay off the bonds. The Dallas taxpayer is NOT on the hook, and taxes will not go up as a result of the convention center hotel. In fact, there is NO legal basis for the claims that we must choose between safer streets and hotel suites. It is more likely that Dallas will have safer streets because of hotel suites!

4. Should the City be in the “hotel business”?

In many ways, the City is already in the “hotel business,” indirectly as owner of the Dallas Convention Center and directly as majority owner of the Grand Hyatt at DFW International Airport. Just as the City didn’t develop and doesn’t operate the Grand Hyatt – a very profitable investment – the City of Dallas will NOT develop or operate this hotel. Matthews Southwest, selected by a comprehensive competitive bid process, is developing the hotel and managing its construction. Their responsibility is to deliver the project on time and in budget. Omni Hotels will run the hotel, just as they operate 43 first-class hotels throughout North America. The city will be the landlord and has authorized the legal contracts for the local companies and industry leaders to do what they do best: develop buildings and operate successful hotels. This arrangement of city ownership with private sector management is a successful and proven model.

Woodbine is not alone in this battle, as you will see from the enclosed editorial and other commentary. We have no hidden agendas, just a sincere desire to help Dallas succeed.

Early voting is under way through May 5. If you’re registered to vote in Dallas, please vote “no” on both propositions. If you’re not, please encourage every Dallas voter you know to do the right thing for this city and vote “no.” We’ve attached a column by Cheryl Hall of The Dallas Morning News that gives many civic leaders’ opinions on the matter. If you want to help share this information with Dallas voters, you can download copies of additional commentary and early voting locations at

http://www.woodbinedevelopment.com/downloads/VoteNo2009.pdf

Thanks for your time and attention to this important issue. Vote “No!” and let Dallas grow.