More Info Needed on Proposed Convention Center Hotel

On Wednesday, the Council voted on two matters related to the proposed convention center hotel: The first was to fund an analysis of refinancing the convention center debt (which could provide the city’s funding of the hotel). The second was to approve placing an option on the hotel site.

I voted against both items. Here’s why:

I am not against a convention center hotel, but I have not gotten the facts I need to make an informed decision.

Here are the arguments I’ve heard for why Dallas needs a convention center hotel: The lack of an adjoining hotel is preventing Dallas from attracting large conventions. All the other top 20 convention cities have (or are building) convention center hotels, so we need one to compete.

These are good arguments, but these arguments alone do not substantiate the immense taxpayer-supported, public investment that will be required to construct a convention center hotel. Pertinent information is lacking, primarily economic information about the actual benefits of a hotel to our city.

Some who oppose a convention center hotel point out that if it were a profitable enterprise, the market would have already built one. I disagree. I think a reasonable argument can be made that a convention center hotel is a “loss leader” — an item sold below cost to stimulate other, profitable sales. In other words, the convention center hotel would lure more visitors to Dallas who would shop at our stores, eat at our restaurants, and drive our rental cars, yet use few city services. These additional visitors, the argument goes, will provide a net gain to Dallas, though the convention center hotel itself may operate at a loss.

The loss leader issue in itself doesn’t trouble me. A net gain is a net gain. The problem is, I don’t have the data to prove to me that there will actually be a net gain.

Last fall, when this issue came up, I explained to city staff that I had not made up my mind on whether to support a convention center hotel because I didn’t have the following information:

what are the actual (not projected) direct, indirect, and infused economic gains experienced by other cities that have built convention center hotels in the last ten years? What are the before and after numbers for visitors, conventions, rental car usage, sales tax, retail sales, and restaurant sales (five years before and five years after)? Were there substantial gains, and if so, did those gains justify the significant public investment? Because analysts’ predictions are often much rosier than subsequent reality, obtaining actual numbers from other cities can give us a more realistic expectation of the economic impact that could result from a Dallas hotel.

Also, what about hotels that have “failed” financially? Who picked up the bill? How were those financial deals structured? Why did they fail? What can we do to avoid those pitfalls?

How much might a hotel cost Dallas and how would we pay for it? Would we have to raise taxes? If so, by how much? Again, would the economic gain justify taxpayer investment?

I still haven’t gotten the answers to any of these questions, and until I do, I cannot give my support to the convention center hotel. I again requested this information from staff yesterday, and am hopeful that it will be provided soon.

By moving forward without this information, I think we are putting the cart before the horse, which may end up putting Dallas in a precarious financial situation. No one wants Downtown to succeed more than I do, but I need more facts to jusify supporting such an immense public investment.