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The idea of a full-service convention hotel in Salt Lake City has been kicked around for more than two decades. But during the 2014 Legislative Session, the idea finally caught hold, with legislators backing the concept to the tune of $75 million in tax incentives.
So downtown Salt Lake is about to get a $335 million hotel—one with up to 1,200 rooms, a huge addition in a city that currently has about 7,000 rooms total.
That’s not to say construction will begin tomorrow. Salt Lake County will issue an RFP for the convention hotel by July 1, and city leaders hope to break ground in the spring of 2015, with a grand opening in the summer of 2017.
The city’s new convention hotel will offer 850 – 1,200 rooms, along with at least 100,000 square feet of meeting space—all within walking distance of the Salt Palace Convention Center. It will be privately built and operated by a well-known national brand like Hyatt, Marriott or Westin. In addition, the brand will need to be willing to enter into a room block agreement with the city’s convention and visitors bureau.
While city leaders and tourism officials say the new hotel is necessary if the state is to attract large-scale conventions—and hang onto the lucrative, bi-annual Outdoor Retailer show—other hoteliers say such a large hotel will be devastating to their business.
Ready to Compete
Salt Lake County Mayor Ben McAdams says in order for Salt Lake to stay viable in the convention industry, a new convention hotel is non-negotiable.
McAdams was a proponent of a full-service convention hotel long before he took over as mayor in 2013. He believes a first-rate convention center needs a complementary hotel to encourage more localized events. Regional competitors already have convention hotels, or are in the process of constructing one, giving them a distinct advantage over Salt Lake.
“We really have a missing link when attracting conventions to the state of Utah. We concluded the hotel was a necessary addition to our market to compete with places like Phoenix, Denver or Albuquerque,” he says.
It wasn’t long ago that convention planners didn’t even glance in Salt Lake City’s direction when choosing a site to hold their big events. But the 2002 Olympic Winter Games changed all that. Suddenly, people around the country realized Utah leaders could organize, host and pull off a world-class party. For the first time, Salt Lake was on the convention map.
Three expansions to the Salt Palace increased the amount of meeting space available to 679,000 square feet, putting it in the top 10 percent of convention space in terms of size. The site now attracts big conventions from across the country, bringing in tens of thousands of visitors who spend money, and pay taxes, on food, hotel rooms, shopping and entertainment.
Just this year, a Melaleuca convention will bring in more than 7,000 attendees, the 2014 Triple Crown Sports Volleyball event will temporarily increase the city’s population by 8,000, and the largest trade show, the Outdoor Retailer’s Summer Market, will attract nearly 30,000 people to the city.
Basic math demonstrates the 7,000 downtown hotel rooms aren’t enough to accommodate such a crowd. Often, out-of-state attendees have to find rooms in West Valley or Sandy, and sometimes even Provo, or farther north in Layton or Ogden. This leaves conference attendees spread out, diluting the desired concentration of activities, meetings and events.
As expositions and conventions look at the Salt Lake area, the lack of hotel rooms is a big drawback. Organizers for Outdoor Retailer, the world’s largest outdoor gear trade show, have warned the city its convention needs more space—or it will be forced to look for a different site.
“We’ve surveyed groups who declined to come here, and for the most part, they cited they did not come to Salt Lake because of a lack of a convention hotel. That’s significant revenue we’re missing out on. With the size of the Salt Palace, and the amenities in Salt Lake, we should be doing better than we are,” says McAdams.
Helping or Hurting?
The legislation authorizing a tax incentive for a convention hotel promoted immediate and furious reaction from the state’s hotel industry. The backlash led to an amendment to the bill that created a mitigation fund of up to $8 million to help owners of existing downtown hotels, if they can prove the convention hotel negatively impacts their bottom line. It also includes a provision for funding a publicity campaign targeted at convention attendees, encouraging them to visit other parts of Utah during their stay.
But Rich Rosa isn’t convinced a mitigation package will do much to help existing businesses if the convention hotel is built. Rosa, vice president of operations for Utah Hospitality, has been in the hotel industry since 1993.