The Enid News and Eagle, Enid, OK

February 19, 2013

The final piece: Commission to consider hotel agreement

By James Neal, Staff Writer
Enid News and Eagle

ENID, Okla. — When Enid City Commission convenes Thursday night, commissioners will consider a master development agreement to build a downtown hotel, the final piece in Enid Renaissance Project.

Commissioners heard a proposal Feb. 5 from LodgeWell LLC to construct a $14 million Hilton Garden Inn, adjacent to the new $18 million Enid Event Center and renovated Convention Hall.

Commissioners are expected Thursday to consider an agreement that would entail LodgeWell developing, managing and operating the hotel. LodgeWell previously presented the city with two ownership options for the hotel: for the city to own the hotel as a not-for-profit venture, or for LodgeWell to put up the development cost and retain private ownership.

LodgeWell managing members David Owen and Dave Mashburn told commissioners Feb. 5 they were prepared to go ahead with the development under either ownership scenario. In either case, LodgeWell would manage the daily operations of the hotel.

City Manager Eric Benson said city ownership is not a likely option, but it is one that needs to be examined and kept on the negotiating table.

“We are going to examine every option, and we will embrace the one that is in the best interests of the citizens of Enid,” Benson said. “I don’t think there is any support for public ownership, but if it’s something that is in the best interest of the people of Enid, it’s certainly something we want to examine.

“Hotel management is not a core service function of the city of Enid, but if it were a profitable option for the community and citizens, we’d be foolish not to examine it.”

Benson said a number of incentives will be up for negotiation with LodgeWell, including utility preparation, building fees, permit costs, infrastructure support and land ownership. Benson said negotiating options for the land on which the hotel will set include leasing the land to LodgeWell or deeding it to the developer.

He said the monetary value of any incentives will not be known until after negotiations are complete with LodgeWell.

“We will fairly examine the value of all the items up for negotiation,” Benson said.

Benson told commissioners Feb. 5 the LodgeWell proposal is the first proposal the city has received that met all of the city’s guidelines, and did not require a cash incentive or equity investment from the city.

He said previous proposals filed with the city required the city to put as much as $7.4 million in cash equity to attract a developer, and the least amount required before LodgeWell was about $1 million.

“We truly have a great opportunity here, and I’m very excited about it,” Benson said of the proposed development agreement with LodgeWell.

Benson said the addition of a hotel is essential to making sure Convention Hall and the Event Center attract business and revenue to Enid.

“Every element we have examined in convention, spectator or community usage has underscored the need for an on-site hotel,” Benson said. “Every feasibility study and every element of market research has affirmed that.”

Benson said he, staff members and commissioners looked at a number of communities during the Renaissance planning phase, to examine the dynamics between convention and meeting space and on-site lodging. Visits were made to Lexington, Va.; Sioux Falls, S.D.; Des Moines, Iowa; Bowling Green, Ky.; and Pueblo, Colo.

“We saw the same outcome in each of those cities, and that was the combination of a venue, convention space and dedicated lodging were closely linked together as complementary assets,” Benson said.

He said events already are booking space at the Event Center and Convention Hall, but the facilities will not meet their potential until an on-site hotel is added.

“We could be booking twice as many events right now if we could guarantee there will be a hotel there,” Benson said. “We are turning away huge events because we don’t have a hotel there. But, we’re going to remedy that.”

Enid Convention and Visitors Bureau Director Marcy Jarrett said the proposed hotel would be “essential to our efforts to go after meetings and conventions, and to be able to bring in new groups — groups that before would not have considered Enid as a possible location.”

“It will help us reach into new markets and go after those new dollars coming into town,” Jarrett said.

State and regional convention and lodging sources agree with Benson’s and Jarrett’s assessment of the ties between convention space and on-site hotels.

“Having an on-site hotel is a key ingredient in being able to attract statewide and regional conferences,” said Mita Bates, senior vice president of the Ardmore Tourism Authority.

The city of Ardmore built a 45,000-square-foot convention center in 2004.

“We’ve been very successful with it,” Bates said, “but one of the things we learned trying to market to statewide and regional groups is they wanted a hotel adjacent to the center, preferably connected to the center.”

A private developer built a SpringHill Suites on the lot next to the convention center in 2006.

Bates said convention and event planners still wanted a hotel directly attached to the event center, and another private developer in 2009 built a 125-room Holiday Inn connected to the center.

Bates said both hotels are staying busy, and the conference center is booking into 2015.

“Without an adjacent hotel, you don’t even get to the table to talk about those events,” Bates said. “If we can get to the table we can get an event, but if you don’t have that hotel, you don’t even get to the table.”

Bates said convention centers without attached hotels have to “get very innovative” in order to compete for convention bookings.

Loisdawn Jones, director of the Duncan Convention and Visitors Bureau, has found innovative ways to bring conventions and events to the Simmons Center, a 105,000-square-foot convention and recreation facility.

The Simmons Center, built in the early 1990s, is split evenly between convention space and a recreation center, with indoor pool, fitness centers and recreation space.

Jones said the need for an adjacent or attached hotel wasn’t as prevalent in the early 1990s.

Since then, as event planners have come to expect and require adjacent lodging, Jones said the Duncan CVB has gotten creative, using incentives such as a free shuttle service to attract bookings.

She said the Simmons Center also is unique because it is attached to the recreation center, and all convention visitors get a free pass to the recreation facilities.

“It is a challenge that we don’t have a hotel adjacent to the facility, but on the flip side, there aren’t many convention centers that have a world-class recreation center adjacent to them,” Jones said.

She said the Simmons Center stays booked through the weekends, with only occasional down time mid-week. Still, she said her job would be a lot easier if the center could offer adjacent lodging.

“If somebody came to us tomorrow and said, ‘I would like to build a 150-room hotel,’ I would jump for joy,” Jones said.

Stephen Koranda, executive director of the Norman Convention and Visitors Bureau, has seen firsthand how addition of a dedicated convention hotel can boost convention and event travel to a city.

In 2008, John Q. Hammons Hotels and Resorts completed construction of the Norman Embassy Suites and John Q. Hammons Conference Center, a 50,000-square-foot conference center attached to a 283-suite, 10-story hotel.

The hotel and conference center originally was slated to benefit from $16.5 million in tax increment finance incentives over a 25-year term. Hammons opted instead to let the city out of the TIF in exchange for building a nearby overpass.

Koranda said the hotel and conference center are bringing a whole new market to Norman, giving the city greater exposure, and boosting local sales and bed tax revenue.

“It has given us a completely new set of tools to work with, and a completely different audience,” Koranda said. “Prior to the Embassy Suites coming here, this office was primarily concerned with sports and leisure travelers. This has opened Norman up to a whole new set of people.”

The appeal of increased sales tax revenue from out-of-town convention visitors is not new, nor is it a new reason for cities to invest in convention centers and hotels.

Conflicting sources point to a resurging convention market, or a continued decline in the industry, in larger cities such as Dallas, Chicago and St. Louis.

Increased cost of travel and reliance on virtual conferences often are cited as factors in the decline of large-market conferences.

But, some of the same factors that are hurting large-market conferences also are boosting smaller, regional conference centers, such as the Enid Event Center, said Sheila Scott-Halsell, associate director of the School of Hotel and Restaurant Administration at Oklahoma State University.

“More and more people, if they’re going to conferences, they don’t want to go as far away from home and they don’t want to be gone as long, and that’s why some of the regional convention centers are doing so well,” Scott-Halsell said.

But, even if travelers don’t want to travel as far, most still want to find an attached or adjacent hotel when they arrive at the convention.

Scott-Halsell said convention centers and hotels have to “go hand-in-hand” to attract out-of-town events and their money.

She said regional convention centers in cities like Enid, Clinton and Ardmore are doing well, with projected growth, because people don’t want to travel to conventions in larger markets.

“From a regional standpoint, if you look at Enid, the nearest facility is going to be in Oklahoma City, and a lot of local and smaller organizations aren’t going to want to travel to the city,” Scott-Halsell said.

Regional markets also are competing well against Oklahoma City and Tulsa, she said, because smaller markets are able to offer rooms, shopping and amenities at a lower cost than their larger counterparts.

“The convention industry in Oklahoma is kind of untapped, because many of the regional communities don’t have convention centers,” Scott-Halsell said.

City commissioners will consider tapping into that resource during their meeting, 6:30 p.m. Thursday in commission chambers of the city administration building, 401 W. Garriott.