As construction crews behind him worked in the chilly March air, Kansas City Mayor Sly James declared a new chapter in the city’s downtown development. Kansas City would no longer be overlooked for its limited accommodations.
“When we were chasing the Republican National Convention, they loved Kansas City,” James said at the groundbreaking ceremony for the $325 million Loews Kansas City Hotel. “But they were complaining a little bit about our hotels.”
Four years earlier, Kansas City was unexpectedly eliminated from the running for the 2016 Republican National Convention. One possible explanation at the time: a lack of rooms.
“And the one question that got me that I wish we’d had Loews involved in before — the one question that got me was when they said, ‘Mayor, where do you think we ought to put up our billionaire high-rollers?’” James said at the groundbreaking. “And I said, ‘Well, I can give you a couple of suggestions,’ and they said, ‘That’s not what they’re used to.’”
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With the addition of the Loews hotel, expected to be open in 2020, James said Kansas City’s hotel game would be strong.
But the boom in Kansas City hotel rooms has already begun.
With more than 15 hotels opening between the River Market and the Country Club Plaza by the end of 2020, according to Visit KC, it’s clear Kansas City is becoming a hospitality hotspot.
Mike Burke, a consultant with KC Hotel Developers, LLC, who worked on the convention hotel project, attributed the interest to the long-running effort to land a convention hotel in downtown Kansas City.
“I think the convention hotel announcement was a catalyst to other investors that Kansas City was under-served and that we had a great market that was going to expand,” Burke said.
According to data from Visit KC, the River Market-to-Plaza corridor has seen one to three hotels open each year since 2012 — about 160 rooms annually. But with the hotels on tap — including 800 rooms at Loews — the market will soon be flooded.
The hope and the expectation is that Kansas City can start landing conventions to bring dollars home.
Hotels are ‘critical’
Industry members, including Burke, said a lack of hotel rooms held the city back from landing conventions that would’ve brought out-of-town spending to the local economy.
“For years we had more and better meeting space than we did hotel space,” Burke said. “Bartle Hall had a capacity that exceeded the ability of the hotel community to support.”
“It’s critical,” agreed Kansas City Sports Commission and Foundation president and CEO Kathy Nelson. “It will make or break your bid.”
The commission works to bring large sporting events and conventions to Kansas City and is part of an effort to land 2026 World Cup games at Arrowhead Stadium.
Nelson said it’s now rare that downtown Kansas City can’t provide enough hotel rooms for large events, but there were times in the past that the commission couldn’t quite check the box and would have to look outside the “downtown footprint.”
Kurt Mayo, executive director of the Hotel & Lodging Association of Greater Kansas City, said occupancy rates for the city’s existing hotels have been climbing for a few years, giving developers confidence Kansas City is the “place to be.” The next step, he said, is landing the conventions to fill all these new hotel rooms.
“It’s a little scary sometimes with all this inventory coming on board,” Mayo said, adding it can be challenging to keep occupancy rates up with new rooms coming online.
But he and others thought there was enough business to go around.
“We don’t have any choice. We’ve got to make it work,” Mayo said. “I think with the increase in available rooms — that is going to help us book more conventions.”
Why Kansas City?
For hotel investors, a lot of factors make the Kansas City market attractive.
Alex Tisch, chief commercial and development officer for Loews Hotels & Co., said the shortage of high-end hotels in a city with a lot going on downtown made Kansas City a good match.
“What Kansas City has to offer is a lot of local culture that’s been really diluted out of a lot of other cities as a result of too much development,” Tisch said, noting the Loews hotel will have local food influence, including barbecue, and a design that reflects the city.
For the 21c Museum Hotel Kansas City — previously known as the Savoy — it was Kansas City’s art scene that made the project worth doing, said the hotel’s general manager, Tim Roby. Besides that, Roby said Kansas City is “already a tourist destination.”
“It’s very rare to see in a city the size of Kansas City, but in fact, if you look at the numbers, our occupancy is very healthy on the weekends, and that’s because there is a lot of activity in the destination,” Roby said.
He attributed that to the city’s sports, museums, theaters and entertainment zones at the Country Club Plaza, downtown and the River Market.
“I tell people about this often. I can tell that a city’s alive when at 9 o’clock at night, young people are walking their dogs,” Roby said. “You don’t see that in a lot of cities this size.”
Frank Lenk, director of research for the Mid-America Regional Council, attributed the boom to the investment in the streetcar and Power & Light District as well as the pent-up demand for hotels. But in other cities, he said, several hundred hotel rooms is not significant.
“In some sense, we’re playing catch-up with them,” Lenk said.
Whitney Kerr Sr., senior director at Cushman & Wakefield, said Kansas City had been deficient in hotel rooms compared to Nashville, Austin or Indianapolis. Loews is the first downtown convention hotel to open since the 1980s. He noted around the turn of the 20th century, Kansas City opened the Muehlebach Hotel and the Hotel Baltimore.
“When those two hotels opened ... they were two of the finest hotels in the United States, and we’ve built a lot of Chevrolets, but we haven’t built nationally famous, renowned hotels here like we did at one time,” Kerr said.
‘Finally paying off’
Kansas City is one of eight cities still in consideration to host the 2023 or 2024 NCAA Women’s Final Four basketball tournament, Nelson said. And during the site visit, NCAA representatives loved the city’s hotel flexibility.
Those huge sporting events don’t only bring the games. Nelson said the Women’s Basketball Coaches Association comes with the tournament, so fans would take over the Sprint Center at the same time coaches fill up Bartle Hall. By that time, the Loews hotel will be open.
“Having that breathing room and that capacity is a really big deal,” Nelson said.
When a convention comes to town, Burke said restaurants, cab drivers and other service industries and shops stand to benefit. The city expects to bring in $28 million from hotel room taxes between May 1, 2018, and April 30, 2019.
“The more outside money you can bring in the better it is for everybody,” said Marty Elton, vice president of the Greater Kansas City Restaurant Association, adding when it comes to restaurants, “butts in the seats” are key.
Elton previously ran Jazz, A Louisiana Kitchen, at 39th Street and State Line Road. He’s since set out on his own to build a mobile catering company. In recent years, he started to notice more out-of-town sports gear in restaurants.
“It used to be a sea of red for the Chiefs in the dining rooms, but now you see Broncos and Raiders and whatnot,” Elton said.
Hotels tend to come along after a commercial area has been established, Lenk said. Restaurants tend to lead when there are more people on the streets and retail can follow. But hotels can drive some economic activity.
“It’s an accelerator, I would say, more than a creator,” Lenk said. “There’s got to be something going on already before you get that hotel,” Lenk said.
In the case of Kansas City, an influx of hotel rooms is “a result of investments the city’s been making in and around downtown for a long time finally paying off,” Lenk said.