Convention hotel in Kansas City moves ahead with City Council ordinance
Hyatt will not be the operator of Kansas City’s planned downtown convention hotel after all.
Development attorney Mike Burke announced Wednesday that New York-based Loews Hotels and Co., a well-respected luxury hotel operator, will be a joint venture partner with KC Hotel Developers LLC to build the hotel, and that its investment will be “substantial.” It will also be the hotel operator.
“We have all the equity investment we need to make this hotel a reality,” Burke said. “They are making a huge investment in Kansas City.”
While Loews is not as well known as Hyatt, Burke said the company has become a leader in distinctive properties that cater to conventions, business, leisure and family travelers in major urban and resort destinations in the U.S. and Canada. It has 24 properties, all three- or four-star hotels in cities including Chicago; Seattle; Orlando, Fla.; and Miami Beach, Fla.
“They will be the operator,” Burke said of the 800-room hotel, which will be called Loews Kansas City Convention Center Hotel. “They’re a great fit for Kansas City.”
Jonathan Tisch, chairman and CEO of Loews, said his company reached out to Kansas City’s hotel development team about a year ago, seeing Kansas City as a dynamic tourism and convention opportunity. He said he is a very hands-on executive and will work to create an exemplary four-star hotel in Kansas City.
“We think this is going to put Kansas City on a whole new map in terms of opportunities to bring meetings into what is becoming one of America’s great cities,” Tisch said in a telephone interview. “We are not about pins on a map in the U.S. We are driven by the opportunity to create something very special and unique, which Loews Kansas City will be.”
Burke had announced in May 2015 that Hyatt was the proposed operator of a planned hotel next to Bartle Hall. He said Wednesday that Hyatt was very engaged in negotiations for the project but had not yet signed an operating agreement. In the end, he said, Loews brought more money to the table as a direct investor and joint venture partner to bring the project to fruition.
“Hyatt and Loews are great brands,” Burke said. “Either one would do great for Kansas City, and they were both in the mix until we signed last week with Loews.”
It was not a matter of Hyatt giving up on Kansas City, Burke said.
“I think they very much wanted to be in Kansas City,” he said. “They still may end up in Kansas City.”
Burke said Hyatt is a terrific operator “but at the end of the day, our obligation was to get a convention hotel financed, built and operating. We believe that partnering with Loews gives us certainty,” he said. “That’s most important. This deal has been kicked around for six years.”
Burke and Tisch declined to provide details of how much money Loews is investing in the project, which has had a total estimated cost of $311 million.
Burke said that in addition to Loews’ sizable equity investment, the development team is close to wrapping up details on the debt financing and construction loan. He said he expects to close the deal in August or September and have a groundbreaking in early October, with a grand opening slated for early 2020.
Despite the change in name, the basic details of the $311 million convention hotel project remain the same. Along with 800 rooms, the hotel is slated to have 60,000 square feet of meeting and event space on a site bounded by Truman Road, Baltimore Avenue, 16th Street and Wyandotte Avenue, right near Bartle Hall. It would be the first new convention hotel built in Kansas City since 1985.
Burke said Loews officials have been involved in discussions about the building’s design and other details along the way so are up to speed on the project.
The hotel plan has been on a roller coaster ride since it was announced more than two years ago. It was the subject of a citizens petition challenge that tried to put the hotel to a public vote in late 2015. The city refused to hold an election on the hotel, and a judge upheld that decision. The judge found the petition measure was unconstitutional.
It is currently the subject of a referendum petition drive that just received word it had enough signatures to try to force an election. That referendum challenge seeks to overturn an ordinance that the City Council approved in April for the zoning and development agreement for the hotel.
But Burke said a new ordinance adopted by the council June 8 affirmed the zoning and development agreement and gives the hotel all the regulatory approvals it needs to move forward. That ordinance had an immediate effective date and cannot be subjected to a referendum.
He said all of the city’s agreements were with KC Hotel Developers LLC, not Hyatt, so there is no change that needs to go back to the City Council. The deal does involve a catering agreement in which the hotel operator provides catering for the Bartle Hall Ballroom, and it was anticipated earlier that Hyatt would have that catering business.
Burke said Loews would now have that catering business, but he was confident the company would work well with Kansas City’s local restaurants.
“Loews is stepping into the same shoes,” he said. “They are great people. I know they will work with local people. They’re very community oriented.”
Tisch said he was aware of the citizen petition challenge to the project but was not concerned about it.
He said his company selectively chooses where to put its properties and was impressed with Kansas City’s progress in recent years.
“Kansas City is very much a metropolis that is on the rise,” he said, adding that it was under-resourced from a convention hotel perspective, creating an attractive market. “We know we are smaller than some of our very well-known competitors. But we bring more than just equity to an opportunity like this. We are extremely involved in the community.”