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Recommended best practices for public development and ownership of hotels

Convention center hotel development is complex. How can public groups most effectively develop and manage these assets?

May 09, 2019

In spite of regular scrutiny, public ownership in convention center hotels provides numerous benefits and municipalities across the country continue to embrace public ownership, including when it is a complement to convention center development. With the exception of the degree of debt leverage, elements of successful hotel development are the same for public and private groups.  

However, as with all initiatives, there are best practices. Here are the public sector hotel development strategies we view as particularly effective:

Strong leaders, strong alignment

The most effective public initiatives for convention center hotel development and ownership require strong leadership, collaboration and a shared agenda among stakeholders, including politicians, private sector leadership and community advocates. Additionally, the agenda needs to be transparent and agreed upon from the start to avoid derailment among stakeholders.

Understanding the public sector agenda

The public and private sectors’ agendas naturally vary — otherwise, a public group wouldn’t likely develop and/or own a convention center hotel. So, whether it’s diversity and inclusion requirements, labor strife mitigation or promotion of community outreach initiatives, it is important that private sector partners truly understand and support the public sector’s civic and social agenda as well as objects that are attainable and measurable.

Assembling the right team from the get-go

Hotel development and ownership is a niche business. Having a realistic understanding of the market prospects from the start is critical for a successful hotel development process. And having a strong development consultant and surrounding them with experienced planners, architects and construction professionals begins in the request for proposal stage. Bringing together a strong, appropriately qualified team from the start will help ensure that the right direction is being taken from the start.

Credit support and reserves

Convention center hotels are incredibly complex, large-scale investments that experience the effects of extreme cyclicality, while also being a cash flow business entity that requires working capital daily and regular reinvestment. In the event of liquidity issues, it is important to have backstops. Additionally, creating multiple levels of reserves should be considered.

Read our full take on public development and ownership of convention center hotels here.

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