07/10/03
By GINA HANNAH and JOHN PECK
Times Staff Writers johnp@htimes.com, ginah@htimes.com
The mayor could barely contain her delight. City Council members were grinning, too.
When John Q. Hammons walked to the podium in the City Council chambers Wednesday morning to announce his plans to build a $40 million hotel next to the Von Braun Center, the crowd of politicians and business leaders stood and applauded.
What a difference a decade makes.
Hammons, who sued the city in 1994 over a botched hotel deal downtown, said he wants to build a 300-room Embassy Suites beside the VBC South Hall. The announcement was welcome news for city officials and merchants in the area.
"It's going to be fabulous for Huntsville and the surrounding area," said Sandra Steele, president of Enfinger Development and a member of the Huntsville Downtown Redevelopment Authority.
Steele knows firsthand how difficult it has been to recruit conventions and other meetings to the city; years ago, she was the VBC's marketing director.
"We've been handicapped," she said Wednesday. "This will put us over the top to getting some of the groups that have been resistant."
Judy Ryals, executive director of the Huntsville-Madison County Convention & Visitors Bureau, said she has a list of groups she will notify about the new hotel, which is expected to open in fall 2005. Because large groups make meeting arrangements at least a year in advance, the visitors bureau will immediately launch a marketing plan already in place, Ryals said.
"We're excited to have a new product to sell," she said. "I often hear from groups who are wanting more space."
Mayor Loretta Spencer said the day before Hammons' announcement, she was approached by two people in the aerospace industry asking when Huntsville's downtown would have more hotel rooms.
"I told them, 'Come to the press conference,'" Spencer said Wednesday.
Hammons' proposal awaits City Council approval.
In 1994, Hammons sued the city after it backed out of a deal to build an Embassy Suites near the current site. The city had agreed to spend about $7 million on the project, then backed out after some residents protested.
Council President Sandra Moon said Wednesday that Hammons not only is willing to forego public financing this time, he's also asking for less in infrastructure improvements.
Hammons plans to lease back parking spaces the city will provide. In the original incentives offer, the city was willing to absorb the cost of a parking deck. The city has also tentatively agreed to spend up to $1 million sprucing up the never-finished South Hall meeting rooms, and add a climate-controlled walkway linking the Embassy Suites to the VBC. The city also would lease Hammons the 2.5-acre hotel site on Monroe Street for $1 a year.
"It's a win-win for the city and for our taxpayers,'' Moon said.
Councilman Mark Russell said the hotel will be a big plus. "It's precisely what Huntsville needs. It's a good fit,'' he said.
Council members Bill Kling and Glenn Watson also had glowing praise for the latest development. Councilman Richard Showers, who supported the failed proposal in 1994, said Hammons is offering everything the city wants in a downtown hotel.
"Redemption, redemption, redemption,'' Showers said, referring to nabbing the hotel he said the city never should have lost. "I can't wait until we break ground.'' Showers said the hotel should "jump start'' other investments such as restaurants and entertainment projects.
The city has been trying to get a downtown hotel for more than a decade. Last month, the mayor said the city was halting its request-for-proposals process. She said none of the eight hotel companies that responded to the request agreed to build the type of hotel the city wanted for the $37 million in incentives the city was offering.
Hammons said he will pay to build the 10-story hotel, which would be run by his company, John Q. Hammons Hotels & Resorts Inc. of Springfield, Mo. The development agreement will ensure that the project would be finished if Hammons, 84, dies before it's complete, said City Planning Director Dallas Fanning.
Vini Gupta, general manager of the 288-room Hilton Huntsville across from the VBC, said a new hotel near the civic center will be good for downtown. But he said he's concerned about the city's occupancy rates, which have been running about 60 percent for a few years.
"Somehow we need to find a way to bring more business into Huntsville," Gupta said. "At the end of the day, this is still Huntsville. It's not Atlanta or Nashville ... the convention market is very competitive, and if you have a choice between Huntsville and Orlando, where are you going to go?"
Gupta and other industry professionals say the low per-diem rate paid by the federal government for employees on the road - currently about $67 - makes it difficult for hotels here to maintain profits. Ryals and other city officials say they want to bring in more large groups, such as industry and professional associations, that will pay market rates.
Hammons said room rates at the Embassy Suites would range from $119 to $130.
Should Huntsville need further testimony of what an Embassy Suites can mean for a city its size, it need look no further than Montgomery.
Anna Buckalew, senior vice president of the Montgomery Area Chamber of Commerce, said Wednesday that Montgomery's convention business began to boom after Hammons completed a 237-room hotel next to the city's civic center in the mid-1990s. The $22.5 million project was financed partly by the state retirement systems. The city of Montgomery paid for the ground floors, a financing deal much like the one Huntsville reneged on nine years ago.
Buckalew said the Embassy Suites "filled a tremendous market need.''
"It's been a great asset to our civic center and has given our convention and visitors bureau a great tool to market the city for conventions and big events,'' she said.
Buckalew said many groups demand block rooms close to meeting space. The capital city is now looking to build another downtown hotel to complement a planned expansion of its civic center, she said. The new hotel would adjoin the civic center.
Montgomery's downtown is undergoing a renaissance of sorts with construction of a $26 million baseball stadium and a multimillion-dollar riverwalk along the Alabama River.
The new hotel could lead to more development in Huntsville's downtown. The hotel is expected to have a $15 million to $20 million annual economic impact on the city.
Scott McLain, a local developer and the owner of the Heart of Huntsville at MarketSquare Mall, said he can now begin looking at redevelopment possibilities for that property. The mall, which sits next to the Embassy Suites site and west of the VBC, was fingered as a potential spot for an entertainment complex built by the Peabody Group of Memphis, with Peabody also building a hotel.
Peabody officials have said they may still be interested in building an entertainment center even if someone else built the hotel, but McLain said Wednesday he has no arrangements with Peabody.
McLain said he will hire a consultant to look at options for developing the MarketSquare site.
"We have never had a base map of what MarketSquare could look like," he said. "As of today, we can explore further development."
