City officials are reexamining a major downtown project.
The Columbus Redevelopment Commission has voted to engage Hunden Strategic Partners of Chicago to complete an update to their previous market and feasibility study for a hotel and conference center in the downtown area. Redevelopment Director Heather Pope said that the update, which will cost $21,600, is expected to take about seven weeks and be completed by mid-April.
She noted that the hospitality industry was “crippled” amid the pandemic, which put the development on hold.
“That (study) was in 2018; it’s now 2022,” said Pope. “And we just felt like it’s a good time to maybe have that market and feasibility study updated.”
The city’s current plans call for the Bartholomew County court services building, located in the former Elks Club at 507 Third St., to be torn down. That would empty an entire county-owned block for the hotel and conference center between Second, Franklin, Third and Lafayette streets.
The city will receive that property as part of a land swap and is, in exchange, largely handling the construction of the new court services building.
“Anything associated with travel and events was completely changed by the pandemic, and we’re coming out of it now,” said Rob Hunden with Hunden Strategic Partners. “…We’re assessing what the long-term changes are to the hotel market in general, in terms of business versus leisure versus group. So we have a lot to look at; it’s not just sort of a cookie-cutter recast of the situation.”
He said that the firm will go through the same process as last time and make a revised assessment, though he’s not sure whether or not their recommendations will change. The company will also speak with the firm chosen for the project, Sprague Hotel Developers, to gauge if they “still remain interested in the process.”
“We’re very, I think, optimistic to restart the process and see where it takes us,” said Hunden. They will also be speaking with Cummins, Inc about employees and travel for the future.
City Director of Administration and Community Development Mary Ferdon added that the firm should take into account expected sports tourism from NexusPark, the health, wellness and recreation center to be based at the former FairOaks Mall in Columbus. The development will include an 150,000-square-foot fieldhouse for sports and other events.
Ferdon said they’re projected to have “40,000 unique visitors per month” coming to the center just to use the fieldhouse.
“That’s a lot of visitors to come to the community on a monthly basis,” she said. “Many of them will be day trips, but … with the tournaments, there’s also a large number of overnight stays.”
Many of these visitors will want to stay downtown because it will provide other things for parents to do during their weekend trips, she said.
City Councilman Tom Dell also spoke at the commission meeting and voiced his support for the update.
“To some degree, we might be starting over just because of the pandemic and what effect it has had on the travel industry,” he said.
Dell said he’s in favor of completing the update to see what’s viable in the current market, which should help move the project forward. He also commended the firm on their previous work.
Following the demolition of the Clarion Hotel and Conference Center, Hunden Strategic Partners was hired by the commission in June of 2018 to evaluate where a new hotel and conference center could be placed downtown. The contract was not to exceed $36,000, and the cost was split between the city and the Columbus Area Visitors Center.
Pope said the firm was asked to make recommendations on sizing, possible locations for the project, and whether or not the community could support such a development.
Hunden Strategic Partners recommended that Columbus could support a 140-room hotel with about 4,000- to 5,000-square- feet of conference room space and a 9,000-square-foot ballroom. Their market analysis also stated the city could support a conference center hotel located within walkable access to downtown amenities.
In January of 2019, the commission hired the same firm to help them seek a developer, this time with a not-to-exceed amount of $62,600. The commission later voted to select Columbus-based Sprague Hotel Developers for the project in November of that same year.
However, things slowed amid the pandemic. Pope reported in June of 2020 that while Sprague was “still very interested in the project,” the company was going to hold off on moving forward until the hospitality industry “starts revamping.”
Despite its delayed status, the project was included in the South Central Indiana Talent Region’s application for a Regional Economic Acceleration and Development Initiative grant. The region — made up of Jackson, Bartholomew and Jennings counties, along with the town of Edinburgh — proposed a plan with a total budget of more than $378 million, with $49.5 million coming from READI funds. It was later announced that the region’s award would be $30 million.
The original proposal, submitted in fall of 2021, listed the hotel conference center as one of several key projects to promote quality of place throughout the region. Under the plan, the project had an estimated budget of $44.4 million, with $3 million from READI funding, $14.76 from the public sector and $26.64 from private investment.
“The Columbus Redevelopment Commission will gift the land and create a separate tax increment finance district for the hotel/conference center project,” said officials. “A tax increment finance bond will be used to pay the necessary gap in construction costs, and the development’s property tax payments will repay the tax increment finance bond. The Redevelopment Commission will also build a 400 space parking garage as part of the development, estimated to be an additional $10,000,000.”
Tax increment finance districts allow the commission to siphon increasing property taxes from a selected area in order to fund local projects and improvements. A similar funding mechanism is being used to help fund the downtown urban grocer and apartment complex.
The region’s READI proposal stated that the hotel conference center project could be “shovel ready in 24 months from funding.”
Mayor Jim Lienhoop mentioned the project in his recent State of the City Address, saying that it is still seeing delays.
“While many of our initiatives have moved forward, this is hampered, due to its reliance on business travel,” he said in February. “We have maintained contact with the developers and continue to monitor the status of business travel, but anticipate a few more months will pass before resuming progress.”
According to a 2022 State of the Hotel Industry Report from the American Hotel and Lodging Association (AHLA) in collaboration with Accenture, indicators show that the hotel industry will continue to recover in 2022, but a full recovery is still several years away.
Analysis by Oxford Economics shows that hotel room night demand and room revenue are estimated to almost return to 2019 levels this year. However, the industry is still facing a number of challenges.
“Hotels across the country are continuing to dig out from a two-year period where they lost a collective $111.8 billion in room revenue alone,” the report stated. “A partial recovery in 2022 will not be enough to allow hotels to completely pay back lenders, fully rehire staff, invest in delayed property improvements, and refill business cash reserves.”
Due to inflationary pressure, STR and Tourism Economics expected that it might take until 2025 to see “true adjusted recovery.”
It was also unclear, at the time of the report’s creation, what impact the industry might see from the omicron variant.
Furthermore, while leisure travel is expected to make a full return, business travel is projected to stay “significantly below pre-pandemic levels,” though Kalibri Labs estimated that it would reach 80% of 2019 figures by the third quarter of 2022.
“While a full recovery isn’t expected until 2024, global business travel is projected to increase by 14% in 2022, with the United States and China seeing the largest upswing—both are projected to grow by 30%,” the AHLA reported.
Hunden said that his firm is seeing shifts in leisure, business and group travel.
“Leisure has actually expanded during the post-COVID time with sort of the ‘work from anywhere’ idea …,” he said. “And so weekends start on Thursdays, and we’ve seen them continue onto Mondays, so that’s mitigating some of the pain from the corporate side. … The group business is not dead by a long shot; in fact, it can’t wait to get back together and has been doing so, wherever allowed.”
