OMNI: Decision may come Tuesday
Omni where they are providing the equity financing for the remainder of the hotel cost and that gives the city a simpler structure to work with.”
The Omni proposal meets the city’s request for a headquarters hotel with 600 rooms, an upper upscale brand and at least 50,000 square feet of ballroom and meeting space.
Omni, a privately held company based in Dallas, owns and operates 43 hotels throughout the United States, and operates nine others involving partners and other owners. Only two hotels, located in Mexico, are franchised — deals struck before the company was bought by Texan Robert Rolling in 1996.
Mike Garcia, chief financial officer and senior vice president over acquisitions and development at Omni, told The Oklahoman that his company is committed to long-term ownership of the hotels it builds and manages. He said Omni frequently declines requests to build hotels in various markets.
Garcia said Oklahoma City has had Omni’s attention for the past few years as plans progressed for the convention center and a large city park across the street.
“We like the city,” Garcia said. “We like the trajectory the city is on with the new convention center and park. We see the city diversifying from what it was historically as an oil and gas community. We see diversification coming into the area, and long term, we like how that plays for Oklahoma City.”
The plans submitted to the city by Omni show a hotel that follows the company’s move to creating hotels “inside out” from the old traditional model of creating destinations for travelers and not for locals.
The company is building a similar size convention hotel in Louisville, Ky., that includes shops, cafes and restaurants that open up to the street on the ground floor. Instead of adding a Starbucks coffee shop at the Louisville hotel, Omni did a deal with a popular local operator.
“We want it (the Oklahoma City hotel) to be a part of the downtown area, and not an isolated hotel that is contained within four walls,” Garcia said. “We want to be a part of the park. We want to be a part of the convention center. We will be inviting people in.”
Garcia said he hopes if a deal is approved that construction can start in late 2017 with an opening in late 2019. Construction of the convention center is expected to start in late 2017 and be complete in 2020, while the north half of the park is set to be built and opened by early 2019.
A report to be delivered to the city council lists an array of options for funding the subsidy that include property, hotel and sales tax increment financing, a ground lease and revenues from the city’s mortgage and lease with Marcus Hotels for the Skirvin Hilton.
Those sources, along with potential funding from the city’s economic development bonds are estimated to total at least $72.9 million.
“The majority of the subsidy will come from taxes generated by the hotel itself,” O’Connor said. “That will be the first thing we will look at.”
If authorization is given to begin negotiations with Omni, O’Connor’s priority will be to lower the requested subsidy.
“We’re very confident Omni is interested in this market and willing to work with us to reach a conclusion that is agreeable to both of us,” O’Connor said.
The subsidies requested for the hotel weren’t unexpected.
Long-term plan
A convention center hotel was first suggested in 2008 as part of a report commissioned by the Greater Oklahoma City Chamber. A summary of the report suggested a hotel of at least 650 rooms would be needed to ensure success for a new convention center.
After funding for the convention center was approved by voters in December 2009 as part of MAPS 3, outside experts, including the Urban Land Institute, suggested the city likely faced a minimum subsidy of $50 million to complete a hotel deal.
Some debate is expected with the requested subsidy. Ward 2 Councilman Ed Shadid has been a frequent critic of the convention center and hotel, questioning whether the business model is still viable and worth public investment.
Advocates for the project, including Mike Carrier, president of the Oklahoma City Convention and Visitors Bureau, respond that the Cox Convention Center is more than 40 years old and will hit its 50th anniversary shortly after a new convention center is expected to open in 2019.
The Cox Center, Carrier said, cannot accommodate one convention starting on the same day another one ends, and it doesn’t have enough space to handle existing and potential customers.
O’Connor said the market’s attractiveness was proved by visits by top officials with Omni, and with Marriott, the brand proposed by the Marcus/ Mortenson team. She also noted the Omni proposal includes a $150.1 million investment in Oklahoma City.
“Both teams demonstrated that they were very interested in Oklahoma City as a market and they are confident in the city’s ability to perform and meet expectations,” O’Connor said.