After years of false starts, New Orleans Convention Center has a new plan for a major hotel – NOLA.com

After several failed attempts to build a new hotel at the upriver end of the Ernest N. Morial Convention Center, the building’s oversight board is expected to vote on a new proposal that could finally make the project a reality.

The board on Wednesday will consider a formal, non-binding agreement with Omni Hotel and Resorts that would effectively begin the process of building the hotel, according to the public meeting notice ahead of board’s monthly meeting. They are also expected to vote on a resolution related to a purchase of the eight-acre site where the proposed hotel and adjacent parking garage will be built.

Details about the size of the proposed hotel, its cost and financial terms were not immediately available.

However, Convention Center CEO Michael Sawaya told the board in January that Omni, which has long been interested in having a third branded hotel in New Orleans, was interested in building a new property with up to 1,000 rooms. The deal would require a public-private partnership with the Convention Center, which would have to make a major direct investment, Sawaya said.

The agenda for Wednesday’s meeting also includes a proposal for the Convention Center to issue tax revenue bonds, though it doesn’t specify an amount.

Building a dedicated hotel has been a long-held dream of the Convention Center’s management and was first proposed in 2014. Sawaya has argued that a hotel is necessary to compete with comparable convention centers, which typically have at least one attached hotel.

The estimated cost of building the hotel has soared over time. In January, Sawaya said the cost of building new hotels at Omni’s level was about $600,000 per room.

That would put the proposed hotel at around $600 million. For comparison, a 976-room Signia Hilton Hotel that the Georgia World Congress Center Authority in Atlanta opened last year.

That project, which started in early 2021, cost an estimated $500 million. The New Orleans Convention Center’s management have pointed out that the Atlanta center now also has embarked on a $1 billon project to add various adjacent retail, residential and office buildings, echoing the $1 billion River District project currently being built on land owned by the New Orleans Convention Center.

The “headquarters” hotel is seen as a key part of the River District development of 50-plus acres adjacent to the center that have been barren and undeveloped for decades.

The River District envisions building an entirely new New Orleans neighborhood over the next decade, with millions of square feet of office space, 900 residential units, hotels, restaurants and entertainment venues.

The board that will vote on Wednesday is largely comprised of members chosen recently by Gov. Jeff Landry. That includes the new chair, Texas businessman and major Landry donor Russell Allen, who was installed in March over the objections of some in the hospitality industry.

Critics of subsidy

Critics of previous proposals have argued that the public subsidy in terms of tax breaks and lease terms were not justified. A proposal to build a 1,200-room hotel was abandoned at the end of 2020 when the pandemic’s negative impact on the hotel sector led the project’s financial backer, Preston Hollow Capital, to pull out.

The Bureau of Governmental Research, a government watchdog, said the previous proposal offered too much in sales tax rebates and would potentially compete directly with other hotels for business.

Just over a year ago, the Convention Center revived the hotel project after hiring consultant HVS to study prospects for a scaled-back, 600-room hotel with a 51,000-square-foot meeting space along with restaurants and lounges.

At the time, Sawaya said it might be best to start small and add to the hotel over time.

The Convention Center also has considered building a hotel at the downriver end of the complex next to the 1,200-room Hilton Riverside Hotel, but that was never Sawaya’s preference.

How is the New Orleans convention business doing?

A brighter outlook for conventions and business travel more generally could help sell the new hotel project.

After the deep slump and slow recovery after the pandemic, business travel is trending up, according to the latest Global Business Travel Association’s outlook report.

The trade group expects spending by business travelers to be back to pre-pandemic levels this year, at $1.4 trillion globally and rising to $1.8 trillion by 2027.