Kansas City releases downtown convention hotel projections

Kansas City’s downtown convention hotel project would involve an estimated $235 million in debt and $73 million in equity, including $35 million from a city grant, according to financial records released Friday.

City officials released the documents after City Manager Troy Schulte signed a contract earlier this week with the hotel development team. The development group includes Kansas City attorneys Mike Burke and Roxsen Koch, along with Bob Swerdling, a Denver-based expert in convention hotel development, and unnamed investors.

Those documents provide more insight into the project’s financing and projections for the hotel’s occupancy and revenues. The projections are from HVS, a Chicago-based consulting firm.

Supporters have said the proposed 800-room Hyatt hotel, which would be built just east of the Bartle Hall Grand Ballroom, is needed for Kansas City to grow its convention business and regain some of the medium-to-large conventions it has lost in recent years.

On Thursday, Shriners International announced plans to bring 20,000 people to Kansas City for its 2020 national convention, in part because of the new hotel, which could be completed in 2018. The Shriners were last in Kansas City in 1976.

But skeptics have pointed out that HVS’ projections in other cities have often been overly optimistic, and they doubt Kansas City’s new hotel will perform as anticipated. A group of residents is gathering petition signatures to try to put the hotel project to a public vote, but state law says petition initiatives cannot overturn valid signed contracts.

While the city is contributing land and money to the deal, it is not guaranteeing the debt and the financing does not rely on the general fund.

Among the highlights from the new documents:

▪ The project is estimated to cost $308 million (other recent documents pegged it at $311 million), with nearly $235 million in debt and $73 million in equity.

▪ The equity includes $25.3 million in investors’ capital, $35 million in a city grant (which would actually be bonded over 25 years at $2 million annually in convention and tourism tax dollars), $8.5 million in “key money” from Hyatt and $4.5 million as the value of city-donated land.

▪ HVS projected that the hotel’s occupancy would rise from 62 percent in 2017 (although the projected opening isn’t until 2018) to 68 percent in 2019 and remain at that level through 2026.

▪ The average daily room rate was projected to rise from $174 in 2018 to $214 by 2026.

▪ The new hotel’s total annual revenue is expected to rise from $62 million in 2018 to $82 million in 2022.

This story was originally published September 11, 2015 at 1:46 PM with the headline "Kansas City releases downtown convention hotel projections."