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Metro president says it could stimulate an extra $120 million in Portland metro's economy

A plan that's been in the works since the Oregon Convention Center opened in 1990 finally celebrated a groundbreaking at the end of last week, after being postponed from mid-July.PAMPLIN MEDIA GROUP: JAIME VALDEZ -  The long-awaited groundbreaking of the Hyatt, a hotel that's been planned to go near the convention center since 1990, finally occured last Friday.

The Hyatt Hotel's groundbreaking occurred last Friday at the site between Martin Luther King Jr. Boulevard and First Avenue, north of the OCC.

Scott Cruickshank, general manager of Metro Visitor Venues and Metro President Tom Hughes gave an exclusive interview to the Business Tribune.

"There are pictures of the grand opening of the convention center where you can see the sign in this property across the street that says future home of the OCC Hotel," Hughes said. "People were thinking even then that would be a good location."

It's a Metro, City of Portland, Multnomah County and Prosper Portland partnership intended to boost jobs and tourism, and leverage future private investments. Prosper Portland only invested in the garage development.

The two-block development will include 14 floors and 600 rooms with a ballroom and event spaces. The garage plans are for a six-story, 419-space development with ground floor bike parking and a commercial area. The total cost is projected to be $228 million.

The hotel will be located directly north of the Oregon Convention Center and is anticipated to open in late 2018.

Metro officials settled with the opposition coalition in January, deciding private investment from Hyatt and Mortenson Development will be above 60 percent, around $150 million. Public investment from Metro ($4 million from the OCC reserves), the PDC ($4 million from the OCC urban renewal area) and lottery funds ($10 million) will total less than 10 percent. Construction funding from the Metro revenue bond, to be repaid by visitors staying at the OCC hotel, will contribute $60 million.

"The Oregon Convention Center basically stimulates about $750 million worth of income in the Portland metro area as it is," Hughes said. "We think this will add another $120 million to that, a significant increase."

The OCC is an economic machine, and those numbers represent spending on an annual basis.

None of the other hotels in town are partnering with the OCC in a room block agreement.

"We do get hotels to participate and provide rooms for convention delegates to the extent that we need for these folks to be able to stay," Cruickshank said. "Some of our clients actually contract with 10-12 hotels when they come to town because most of our hotels are not that large. Having this large block of rooms right next to the OCC is really what our clients tell us is the main thing keeping them from coming to Portland — it brings business that was unwilling to come here."PAMPLIN MEDIA GROUP: JAIME VALDEZ - Portland Mayor Ted Wheeler addresses the crowd at the groundbreaking ceremony on Friday.

Hughes said sometimes it's not the conventions themselves that are unwilling to travel to the OCC, but the participants who set up booths — they don't want to schlep their materials on the MAX.

"Many have said we're not going someplace that doesn't have a hotel adjacent to the convention center," Hughes said. "They happen to be the ones who make the decision about where the convention goes. They will now listen to their own clientele who are wanting to come to Portland."

Business plan

Cruickshank thinks about one-third of the hotel's business will be OCC-related.

"When you take their whole business model, they're actually bringing more business into Portland than is currently coming," Cruickshank said. "While some hotels in town are sharing existing business, this hotel will generate its own that will definitely help with the amount of visitors spending in our community."

The Hyatt's business plan includes having their own, single-hotel conventions in its built-in ballrooms and conference halls.

"Portland is an interesting place ... a hot spot right now, one of the places that's mentioned frequently on most desirable cities lists," Hughes said. "We do really well with tourism during the June-August months — you can look outside like it is today and say wow, this is a really gorgeous place to be."

Hughes said he's heard from a number of people who said they'd love to come here with their conventions — if only there was a hotel next door.

"Where we really need help is October-November through the February-March months, and that tends to be convention seasons," Hughes said. "Conventions help us fill voids in our schedules and to spread that around to other hotels: it helps fill hotels at a time when weather might dictate against it."

Bringing people to the hotels boosts the metro area's economy as a whole.

"We would expect enough people coming in to Portland to continue to fill many of the hotels — they already do," Cruickshank said. "The typical conventions that would be coming are 1,500 to 2,000 people. A 600 room hotel is not going to accommodate that entire group."

Design

The designs include guest room riverfront views three to four blocks from the Willamette, improvements to pedestrian experiences walking and using the light rail, plentiful bike parking, using wood at primary entrances to connect with users and capture Portland's vibrancy, using superblock geometry to reinforce smaller elements and pedestrian mid-block crossings, and creating a significant plaza at the corner of Holladay and MLK.

"We're fond of the design. The Hyatt team and our architects and more developers spent a lot of time with the (city's) design review team to come up with that design," Hughes said. "If you've ever looked at that parcel from above, you can see it's not a rectangular lot — it's narrow and widens out. For them to be able to create that design on such a challenging lot is pretty spectacular."PAMPLIN MEDIA GROUP: FILE PHOTO - A rendering of the hotel design by Minneapolis-based ESG Architects and Mayer/Reed.

The designs offer an internal pedestrian link connecting the first floor public areas with the corner crosswalk leading to the OCC.

"You also have to consider their main entrance is on Multnomah, on the other side of the hotel from the Convention Center, but they had to design a face facing the convention center that looks like the front of a hotel, also," Hughes said.

The plans for the hotel's third-floor ballroom are 32,000 square feet. The hotel will also have meeting room space on the third floor to complement the events at the OCC, and public spaces including a restaurant, bar, lobby and 24-hour retail market planned for the first floor along MLK and Holladay.

Commercially leased space totalling 13,608 square feet surrounds most of the street frontage, and there are plans for a 740 square foot kiosk in the bike parking plaza on the south side, which could be a bike rental or repair service.

Park and eat

The hotel has an adjacent parking structure in the plans.

"The hotel will need parking whether for conventions or for regular business," Hughes said. "The hotel is going to have meeting space and ballroom space of its own, and those people will need parking even when there's not a convention in town. The ease of parking to access a hotel in this part of the country is essential to the success of the hotel."

The parking garage is planned to be a 175,000 square foot concrete structure with 444 parking stalls and 130 bike spaces shared between Metro users, retail customers and Hyatt guests — with 419 spaces for the guests.

Tentative plans include seven floors of leasable office space integrated with the parking garage, an expansion expected to begin after the garage completion.

Construction on the garage is slated to begin in late 2017.

As for the restaurant, it is going to seat about 160 people, one of the largest in the Lloyd District.

"Until recently, it's been a food desert up here," Hughes said. "It's getting better because people know this hotel is finally going to go in — they're beginning to anticipate that by upgrading some of the other hotels that are around and adding pretty decent restaurants."

Some of the seating will be outdoors, too.

"We're beginning to grow our way out of a food desert into a destination district where a lot of people in town will want to go grab a new meal," Hughes said.

Job creation

According to Metro's outsourced independent analysis, the hotel will create 3,000 jobs (2,000 construction and 950 hotel and hospitality), attract five to 10 new mid-sized conventions to Portland each year, boost annual hotel business by 70,000 to 110,000 new room nights, increase convention-related tourism spending to $600 million per year and generate $5.6 million in new state tax revenues and $4.7 million in new local tax revenues annually.

"Because there is public involvement at the level that both we and the state are involved, it will be a prevailing wage project," Hughes said. "Those will be the top level construction jobs and will create a lot of them."PAMPLIN MEDIA GROUP: JAIME VALDEZ -

The hotel will create 600-700 jobs directly.

"We think a total of about 900 additional jobs in hospitality in the area ... restaurants would have to hire more people, plus this hotel itself will hire a staff of about 600," Hughes said.

Not only that, but the hotel signed a labor peace agreement so the workers can choose to unionize if they'd like.

"We insisted early on in our negotiations with Hyatt that they become a union-friendly operation, and up until that point in town they really hadn't been," Hughes said. "They agreed to enter into a peace agreement with the hotel workers' union here in town. As a result of that, it was negotiated worldwide, and actually contributed to making Hyatt a union(-friendly) hotel all around."

And there's more: Metro is also making sure Mortenson works with Portland's disadvantaged people to provide a pathway into the construction sector.

"Here, that will mean those 600 jobs will be decent jobs that could lead to careers in the hospitality industry," Hughes said. "We're also going to spend some time going back to construction: the contractor (Mortenson) has agreed to work together ... to create a pre-apprenticeship program in order to recruit women, people of color and other disadvantages minorities to work them into the construction trades and hopefully, eventually get them construction jobs."

By Jules Rogers
Reporter
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