Never built Omaha Marriott Hotel

Proposed Development Projects that got Minarded.

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Brad
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Never built Omaha Marriott Hotel

Postby Brad » Mon Feb 06, 2006 6:37 pm

Hotel Debate

http://www.wowt.com/home/headlines/2266651.html

"The problem is not the Qwest Center. It's the hotel and its' size," said former Omaha Mayor Hal Daub.

In Daub's final days as mayor in 2001, he announced the Marriott would be the anchor hotel to the Qwest Center and there would be 528 rooms in it.

Days later, when Mike Fahey took office, he announced that the new anchor hotel would be a Hilton -- smaller with fewer rooms, in order to lessen the burden on tax payers.

Daub, who's on the board that oversees the Qwest Center, said today's conversation had nothing to do with Fahey's reversal.

He says the smaller hotel with 450 rooms is costing the convention center business.


Very Interesting...
Last edited by Brad on Thu Sep 04, 2008 12:18 am, edited 1 time in total.
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Postby Poser » Mon Feb 06, 2006 11:07 pm

The developer who owns and operates the hotel under the Hilton name plate. Has said they are interested in building two more. On Cuming just east of the TipTop. The ground where the art scluptures now sit. Both will have different name plates. I belive one was to be an extended stay. The article I read went on to say, That they as the developer would not normally look to make this kind of play, but being in dt market they can monitor the occupancy load more closely because the own the Hilton already. I would say this supports Daubs original choice?

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Postby eomaha » Mon Feb 06, 2006 11:15 pm

It is the property manager of the Hilton Garden Inn (not the convention anchor Hilton) which is proposing to build these two new hotels. We had this discussion some time ago...

http://www.eomaha.com/forum/viewtopic.php?t=2875

And welcome to the forum poser! :D

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Postby nebport5 » Tue Feb 07, 2006 9:51 pm

and of course the article mentioned the envitable Hilton expansion that the city doesn't have money for. No doubt such an undertaking surely would cost more now.

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Postby Finn » Tue Feb 07, 2006 9:54 pm

And the city didn't have money for the Marriott back then!!!!!!!!!!!!!!!!!!!!!!!!

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Postby StreetsOfOmaha » Tue Feb 07, 2006 9:57 pm

I don't understand why it was the city's responsibility to come up with money FOR A HOTEL. And why didn't Marriott see that this was a major convention center and arena, and that they would have NO trouble keeping their rooms full?
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Postby Finn » Tue Feb 07, 2006 10:06 pm

Because Marriott (and Hilton) didn't want to take all the risk and the deals called for the city backing the project. In other words, they were not convinced of the market and wanted to reduce their risk.

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Postby eomaha » Tue Feb 07, 2006 10:14 pm

Even in much larger cities... most of these large convention center anchor hotels are owned by the taxpayers (you can almost think of them as mini baseball/football stadiums... the franchise owners, like the hotel brands, just end up being tenants). You see Aaron... Fahey was trying to save the city some money. As it happens though, in the end, it would have cost about the same to build the Marriott.. versus this expansion path.

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Postby Brad » Tue Feb 07, 2006 10:20 pm

Look at that hotel's ped bridge compaired to what we have?
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Postby Will » Tue Feb 07, 2006 11:02 pm

I have asked this before, and I am still unclear where the hilton plans to expand?
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Postby adam186 » Tue Feb 07, 2006 11:31 pm

Will wrote:I have asked this before, and I am still unclear where the hilton plans to expand?


I think they planed on adding 4 stories to the top of the existing building.

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Postby Omaha Cowboy » Wed Feb 08, 2006 12:46 am

jhuston wrote:. As it happens though, in the end, it would have cost about the same to build the Marriott.. versus this expansion path.


Which is the exactly reason why most of us back in 2001 supported the building of the larger Marriott (or a larger hotel than the original Fahey proposal which was initially 400 rooms..Later he conceded the addional 50 to make the current Hilton 450)..

Back to the future 2006..

(I wish I had saved some of my old Chamber Forum predictions on this topic from back in the day :wink: )..

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Postby Brad » Wed Feb 08, 2006 6:24 am

adam186 wrote:
Will wrote:I have asked this before, and I am still unclear where the hilton plans to expand?


I think they planed on adding 4 stories to the top of the existing building.


On the monday 6pm news on wowt channel 6 they said over the parking garage, no plans to make the current building taller. Also, they said nothing about 4 stories.
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Postby Finn » Wed Feb 08, 2006 7:36 am

Which is the exactly reason why most of us back in 2001 supported the building of the larger Marriott (or a larger hotel than the original Fahey proposal which was initially 400 rooms..Later he conceded the addional 50 to make the current Hilton 450)..


And the city probably would have defaulted on the loans with the economic conditions. And everyone would have complained about having to front additional costs. Fahey ws being fiscally responsible!

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Postby Big E » Wed Feb 08, 2006 8:19 am

At a certain point people (and cities) need to take the step from "fiscal responsibility" to "calculated risk", or else accept their role of sucking hind teat.

It's not like people suddenly realized this year that the capacity of the Qwest Center could not be supported by the anchor hotel. When you've green-lighted a $200M convention center, you've made projections of how many and what size conventions could be through there in a given time, and how many hotel rooms would be required at the anchor hotel. I can't believe that anyone could think the hotel was too big but the convention center was just right. REAL fiscal responsibility would have been trimming the size of the both the Qwest and the hotel at the same time, with a clear plan for growth/expansion of both. What happened then was short-sightedness. What happening now is CYA.

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Postby icejammer » Wed Feb 08, 2006 8:26 am

Government should be "fiscally responsible" - it is incumbent upon the private sector to take "calculated risk". You walk a fine line when government gets too far into private enterprise.

The current building WAS the fiscally responsible selection at the time, given the city's financial condition (and the downturn in convention business). A larger hotel isn't going to turn the convention center's business around without some more things changing.
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Postby Big E » Wed Feb 08, 2006 8:39 am

<<<<
You walk a fine line when government gets too far into private enterprise.
>>>>

I would agree with that statement 100%.

Now tell me: why is the city government building $200M arenas and convention centers, and helping fund 450 room hotels? Are you going to logically argue that spending $250 million on city improvements is fiscally responsible, but spending $275 million on slightly better city improvements (that would actually support one another) is irresponsible? Please.

Fiscal responsibilty would have been to let Qwest build the arena and let Hilton build the hotel. Know what we'd have right now? Jack squat.

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Postby Finn » Wed Feb 08, 2006 8:47 am

As cities get more involved with development projects in terms of tax abatement, infrastructure development, capital infusion and bonding it is increasingly difficult to extend the city budget for unknown returns much less rely on quantified predictions, especially in the negative return industry of conventions/arenas. This in light of negative public perception and taking years to even support a new facility. No projection could have nailed the numbers. Those numbers are also fluid and ebb and flow with many other factors. A larger hotel could have brought in more conventions and still not kept the facility in the black, especially with the economic conditions at the time. Remember, the money-maker has been the arena (less need for hotel rooms) not the convention center (and most conventions are planned years in advance, making it difficult to get new conventions in the first few years - we have now begun to capture interest and conventions without defaulting on bond obligations and will have ability/time for hotel expansion). There has already been a default and renegotiation of the bond as the convention remains in the red. Why would the city risk that every year and risk the city's bond rating, budget, etc. Hindsight is 20/20 but if they would have built bigger and defaulted and increased taxes, etc. the same people would be asking why the city did what they did!

REAL fiscal responsibility would have been trimming the size of the both the Qwest and the hotel at the same time, with a clear plan for growth/expansion of both.


Hmmm.....they did not build the 17,000 seats and instead scaled that back and stated they could expand pending sales figures....which is happening....and did not build the larger, more expensive hotel (including more city risk) and instead scaled that back and stated the Hilton could be expanded if the need arises....which is happening. I think you nailed it with that one!

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Postby loyalomahan » Wed Feb 08, 2006 8:48 am

A larger hotel isn't going to turn the convention center's business around without some more things changing.


It has already been established that we've lost out on convention business specifically because the anchor hotel had less than 500 rooms.

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Postby Finn » Wed Feb 08, 2006 8:50 am

And the few that we lost would not cover the costs or take the facility out of the red.

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Postby Finn » Wed Feb 08, 2006 8:53 am

Now tell me: why is the city government building $200M arenas and convention centers, and helping fund 450 room hotels? Are you going to logically argue that spending $250 million on city improvements is fiscally responsible, but spending $275 million on slightly better city improvements (that would actually support one another) is irresponsible?


Are you going to ask that question if the city can only take on an extra $260 million in debt?

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Postby loyalomahan » Wed Feb 08, 2006 9:21 am

And the few that we lost would not cover the costs or take the facility out of the red.


I don't think we can make that assumption, as long as we sit here while we remain out of contention on a hotel room count technicality. Every week/month/year that passes without fixing the situation, not only is lost revenue/sales&hotel taxes/etc/etc, but is also increased costs to add the same additional rooms we could have had in the first place (that is to say, an extra $20-$30 million a few years ago, could be $50 million in direct construction costs 'tomorrow').

The good news is, it's water under the bridge (let's hope inflation doesn't render that project unfeasible as well! :) ), we have a means and apparently the will to expand the Hilton.

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Postby Big E » Wed Feb 08, 2006 9:26 am

If the city can only take on $260M in debt, it shouldn't even be considering the first $200M worth of arena in the first place - especially if it's the lose/lose proposition people claim it is. If the difference is beg/borrow/steal the extra $15M to make the investment work vs. playing it safe, having a $10M cushion and the whole thing being a bust... I say go for it.

I know it's hard to justify that type of spending. Look at the naysayers for the project as a whole. But this is/was an opportunity for Omaha to step up on the national (or at least regioinal) scene. The arena nailed it. The hotel missed. Jury is still out on the convention center, but I think we can point an easy finger at the hotel for that one.

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Postby Omaha Cowboy » Wed Feb 08, 2006 10:07 am

Most likely, no matter how much one tries to defend it, the current Hilton will most likely have to be expanded beyond it's current 450 rooms..

AND the same question asked in 2001 still needs to be asked today: At what cost??..

We all get the 'fiscally responsible' argument and the woulda/coulda and if's and buts' on the POTENTIAL default of the loans..Ad nauseum..

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Postby Omaha Cowboy » Wed Feb 08, 2006 10:10 am

Big E wrote:At a certain point people (and cities) need to take the step from "fiscal responsibility" to "calculated risk", or else accept their role of sucking hind teat.
-Big E


Yep exactly..

And a point I've made time and time again (also ad nauseum) when discussing the arena/convention center hotel..

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Postby Big E » Wed Feb 08, 2006 10:44 am

One other point... while the arena/convention center/hotel all might not be strictly in the black, wasn't the point of building them to provide an economic impact to the metro? None of the money being spent at the zoo, the Old Market, airport, other hotels, condo development, etc etc, is going to MECA's bottom line. That's not what I would call a real fair way of quantifying their success.

If the convention center/arena comes in $X million short, but the economic impact on the city is a positive $5X million, isn't that a success? While a bigger hotel might bring in more convetnions/patrons, but not boost the profitability of the arena (essentially a fiscal wash), wouldn't all of those visitors be spending more out of town dollars here? That all HAS to be considered in the determination of success.

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Postby Omaha Cowboy » Wed Feb 08, 2006 10:48 am

Well stated Big E!..

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Postby Ingersoll1978 » Wed Feb 08, 2006 11:31 am

That was very well put. Almost all major convention centers lose money...period. It's the excess spending they bring to the community that counts.

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Postby Greg S » Wed Feb 08, 2006 11:41 am

What conventions have we lost becuase we had 450 rooms instead of 500? I have not heard of any.

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Postby icejammer » Wed Feb 08, 2006 12:07 pm

What conventions have we lost becuase we had 450 rooms instead of 500?


I can't remember the one I heard, but I doubt there has been more than a couple. And a couple certainly wouldn't offset the increased day-to-day cost of operations maintaining more empty rooms. And if Omaha wants to land the Big Kahuna-type conventions, we are going to need a lot more hotel rooms downtown than what currently exist.
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Postby adam186 » Wed Feb 08, 2006 1:06 pm

Brad wrote:
adam186 wrote:I think they planed on adding 4 stories to the top of the existing building.


On the monday 6pm news on wowt channel 6 they said over the parking garage, no plans to make the current building taller. Also, they said nothing about 4 stories.


That was the inititial plan that Fahey described back in the day when he first announced the Hilton would take the site. We even had a discussion about it too, I believe. I'm suprised you don't remember that.

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Postby Finn » Wed Feb 08, 2006 4:10 pm

I don't think we can make that assumption, as long as we sit here while we remain out of contention on a hotel room count technicality. Every week/month/year that passes without fixing the situation, not only is lost revenue/sales&hotel taxes/etc/etc, but is also increased costs to add the same additional rooms we could have had in the first place (that is to say, an extra $20-$30 million a few years ago, could be $50 million in direct construction costs 'tomorrow').


And every missed payment puts the city deeper in debt and increases the interest payment and hurts the city's credit rating, etc., etc. And I don't think we can make the assumption that we would have a lot more conventions to cover the costs - as stated, they are planned years in advance – besides, there are some perception issues that hinder Omaha for such large conventions.

Big E wrote:
At a certain point people (and cities) need to take the step from "fiscal responsibility" to "calculated risk", or else accept their role of sucking hind teat.
-Big E


Yep exactly..

And a point I've made time and time again (also ad nauseum) when discussing the arena/convention center hotel..


WRONG! The city needs to keep risks minimal and be fiscally responsible (for Cowboy). What the city undertook was risky enough. The city is not in the development business, it helps to facilitate investment and economic activity but not at the risk of sinking the budget. There were reasons Marriott and Hilton were not willing too take the full risk. What's next, budget surplus taken over to the casinos?


If the convention center/arena comes in $X million short, but the economic impact on the city is a positive $5X million, isn't that a success? While a bigger hotel might bring in more conventions/patrons, but not boost the profitability of the arena (essentially a fiscal wash), wouldn't all of those visitors be spending more out of town dollars here? That all HAS to be considered in the determination of success.


That's the point I've been trying to make. There has been growth and economic impact with the route the city has taken - that is why we can now expand the arena and add to the hotel. We would not be in this position if we couldn't fund our bonds and increased interest payments were eating up reallocated funds. This has been a success! The city is booming with investment and we are expanding. I'm sorry that some of you guys did not get your pretty, tall building (ad nauseum). But, if we are reallocating funds and eliminating line items to "cover our |expletive|' on debt payments, we wouldn't be paying for the demolition of the old UP building à and Wallstreet wouldn't be planned; and we wouldn't have been able to buy land on the riverfront and offer it discounted to Gallup and Riverfront Place à Gallup may still be in Lincoln and RFP may not have happened; and we wouldn't have been able to pay for the utility/parking/tunnel for the new UP building à and they may still be in their old building; and we wouldn’t have anything to close the gap on the pedestrian bridge à and $23 million dollars would go elsewhere. The city made a choice. The city is in good shape. Investment is being fostered with the help of the city through various means. I'd call it a success!

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Postby DTO Luv » Wed Feb 08, 2006 4:16 pm

Cost aside they still could have gone with a better design. I think that's still the reason many people are upset. Even if it was only going to be 7-stories and 450 rooms, the design could have complemented the Qwest Center, as was intended.
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Postby Finn » Wed Feb 08, 2006 4:18 pm

I agree.

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Postby Big E » Wed Feb 08, 2006 4:47 pm

Finn, you're acting like the budget for the Qwest/Hilton exists in a world all it's own. If studies and cities were run properly (ok, I admit that's a stretch), it should not have been difficult to come up with the additional funds necessary from the outset, especially in light of the extra value that difference in funds would have provided. Like I said, if the arena is losing $5 million/yr, but there's an extra $50 million/yr in the city budget, I don't see how we're "sinking the budget".

When someone comes to the city and says, "For $250 million you can get this, but for $275 million you can get THIS and it will actually WORK", what do you do? I say find the extra $25 million and make it work. Granted, I'm pulling numbers out of the air, but the point remains relevant. If the city told me, "You ARE going to be charged $250 dollars in taxes for this arena. Would you like to assume more risk and be charged $275?" You know my asnwer.

For the most part, we agree. I think where we diverge is in defining "minimal risk" and "fiscal responsibility". Neither is quantifiable and they're both certainly subjective. To me, building a $250 million arena blew the doors off "minimal risk" about $225 million ago.

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Postby Finn » Wed Feb 08, 2006 5:15 pm

E, I disagree, I think you are treating the budget for the Qwest/Hilton singularly and that is why you believe it can suddenly be expanded to cover a mere $15 million or so more. The budget for a large metro area is fluid but all increases must be allocable to different categories and large capital expenditures can wreak havoc on smaller items/general fund/etc. I am relating it to the rest of the city's budget and the impact that could be set off if quantified projections fall under outlined estimates - an unravelling of the city's ability to assist on other projects not to mention the city's regular expenses/programs/reserves! This would not only hurt the city's overall budget (not just the Qwest/Hilton budget) but also effect the economic climate as the city would not be able to assist in new investment projects - something cities have to do even more now (a la cover hotel bonds). Again, this was taking place during an economic recession and the city's budget was already being shifted, costs and programs cut to cover expenses and debt. The city could not afford to take on a mere $15 million?? more nor afford that money not meeting expectations and costing the city, while investment and the economy dried up.

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Postby NovakOmaha » Wed Feb 08, 2006 5:41 pm

Well, I posted this a while ago and I'll take my opinion to the grave, but I feel that while the interior of the Hilton is just fine and the management company and the local staff are working very hard and doing a fine job, the exterior design of the property reminds me of a suburban Baymont Inn or something like it.

As I stated over and over, Hal Daub had the passion and vision to see that the Qwest Center and its ancillary facilities needed to make a statement...a bold statement, if they were to compete. The Marriot made such a statement. The Hilton, in my opinion, does not make such a statement, nor does it necessarily complement the Qwest Center. It does offer a headquarters hotel that is connected to the Qwest Center, and that in itself does offer a weapon in the arsenal of the promoters of the Qwest Center, but it is a pebble when it could have been a rocket.

Just my opinion...

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Postby michaelsjewel » Wed Feb 08, 2006 6:11 pm

i think the design of the HILTON is pure crappy looking -

at least the marriot did complement the convention center - they looked like they fit to a T -

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Postby redfield » Wed Feb 08, 2006 7:03 pm

I agree, the number of rooms is less of an irritation to me than the hideous design and retarded layout are. The Marriott design complimented the arena well, even if they had brought it down several floors to reduce the room count.

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Postby eomaha » Wed Feb 08, 2006 7:52 pm

Okay, I think we all agree... the Marriott would have looked far better than the Hilton and it would have given us our 500+ rooms. Now it's time for us to move on.


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