Restaurant and Lodging Association Kicks Headquarters Hotel

The Oregon Restaurant and Lodging Association raised concerns today about the 600-room headquarters hotel Metro President Tom Hughes is proposing to build next to the Oregon Convention Center. ORLA is one the state's largest and best-financed trade associations,

Metro, which operates the convention center, has already approved a $198 million hotel deal, which includes about $80 million in public money. Because the city of Portland and Multnomah County are partners with Metro in the 11.5 percent hotel tax visitors pay, all three governments must approve the deal.

City council will hold its first hearing on the deal tomorrow and Multnomah County takes it up on Thursday.

Today Bill Perry, ORLA's vice president of government affairs, wrote (PDF) to Mayor Charlie Hales and County Chairwoman Marissa Madrigal.

Perry expressed support for the idea that the convention center needs a hotel to succeed and that the hotel will help generate additional tourist spending but he objected to the way the deal has been structured and pitched.

"I do not believe this proposal has been presented to the public in an honest fashion," Perry wrote. "I do not believe there is a headquarters hotel in our region that has ever met the governments prediction of the revenue projected before construction.  I don't believe this project will either."

Perry also expressed concerns about three specific parts of the deal:

1. Like downtown hoteliers, he says he worries that when there are no conventions in town the hotel, which is to be operated by Hyatt, will have an incentive to discount rooms and undercut other Portland hotels. "Unless the language is very specific about prohibiting the Hotel from selling rooms as a lower rate, I doubt the process can be very effective," Perry writes.

2. Perry is not buying Metro's projections that the 600 room hotel will create 900 permanent jobs. "The employment numbers are inflated," he writes, saying that most big hotels try to keep headcount to half an employee per room. "Therefor the Convention Center Hotel will likely need to employ less than 300 people to make the hotel profitable."

3. Finally, Perry objects to the financial structure which calls for tourism taxes collected at other hotels to cover any losses at the Hyatt. "If you do not meet the 'conservative' projections as they have been characterize, then the hotel should cover those losses," Perry writes.

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