Why Loews’ Memphis hotel project delayed
City says things are in 3-6 month holding pattern during outbreak
Loews Hotels planned to break ground on its 500-room skyscraper on Civic Center Plaza by early summer 2020.
Instead, the site of the planned $240 million convention center hotel is among the areas where activists have camped out in recent days. Infrastructure work — locating of utilities under the brickwork of Civic Center Plaza — has been done on the site during the pandemic, but the plaza remains undisturbed by construction.
City of Memphis Chief Operating Officer Doug Mcgowen and Downtown Memphis Commission CEO Jennifer Oswalt acknowledged that Loews and other hotel projects are in what they described as a three- to six-month holding pattern during the COVID-19 pandemic. Banks have been slow to sign off on loans for tourism-related projects.
“It’s a delay on the front end but not really in their overall plan. They’ll be able to make up for it ... The financing will be delayed a bit, but it’s not going to impact their end date (mid-2023),” Oswalt
said.
Mcgowen acknowledged the impact of COVID-19 on tourism, but he, like Oswalt, regard it as a temporary issue for the hospitality industry, not a paradigm-shifting event for the city.
“I’d be a fool to say that there isn’t going to be an impact.
The markets aren’t there for borrowing right now for hotels in particular. The lending market is not flush with cash because people are wondering what is going to happen to the tourism industry, so there will be some delays there,” Mcgowen said. “I think everybody is holding for the next three to six months total before we get moving again to see what happens with the economy.”
While construction on Loews remains stalled, work on the Renasant Convention Center continues — a $200 million city investment — continues apace. Mcgowen said the project will be substantially completed by September and finished by early 2021, which is roughly on schedule.
The twin projects of the convention center and Loews were touted as two projects that would open up the city to larger, more lucrative conventions.
Then the COVID-19 pandemic upended the in-person meeting and tourism industry nationwide, impacting the future of the public and private investments that promised to change Memphis skyline — at least in the short term.
Oswalt said, “I think all the reasons we were a city of choice and that those improvements raise us up higher on the list because people may not want to go to the (denser) New Yorks and Nashvilles. I do believe, long term, that the
prospect is even greater to recoup the return on our investment and see greater success.”
On Tuesday, the Memphis City Council approved the issuing of $31 million in debt to help finance a further $25 million for the convention center and $6 million in Pinch District infrastructure.
The city intends to pay down the $200 million-plus in debt related to the convention center with a combination of hotel and motel taxes and Tourism Development Zone funds.
Tuesday’s resolution that authorized the $31 million worth of bonds makes clear, however, that the full faith and credit of the city of Memphis is on the line to pay off the debt.
At present, there is widespread expectation from Wall Street and the White House that a COVID-19 vaccine could be available in early 2021. Several large pharmaceutical companies are bullish on early test results from vaccine candidates.
A vaccine for the virus could bring back the unfettered economic activity seen before the pandemic and allow the convention and tourism businesses a chance to return to normalcy.
Oswalt said a delay in vaccine would not change her long-term outlook on the Memphis tourism sector and the public investments made to enhance it.
“We still see interest, which is more of a reason why I think Memphis is going to be a city of choice coming out of this. We are investing in all of our outdoor assets and I think the lack of being a big city will also help,” Oswalt said.
She said the timing of the hotels still
A vaccine for the virus could bring back the unfettered economic activity seen before the pandemic. Oswalt said a delay in vaccine would not change her long-term outlook on the Memphis tourism sector and the public investments made to enhance it.
in the pipeline allows for delay in vaccine availability.
“These projects, most of them are going to take a while, especially Loews, (it’s) large and taking some time. But if we get to where it looks like years are going to go by then I think it will,” Oswalt.
“Whether or not it happens late 2021 or early 2021 won’t impact most of these projects.”
New York-based Loews did not respond to inquiries about their timeline for construction.
Samuel Hardiman covers Memphis city government and politics. He can be reached by email at samuel.hardiman@commercialappeal.com.