mybaycity.com
October 28, 2003
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Hotel/Conference Center Projected at $21 Million Annual Economic Impact
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Attorney Robert Sarow, board member of the non-profit Wenonah Park Properties, asks a question at the Tri-County Economics Club's presentation on hotel-conference centers.
David Ong, founder of Acquest Realty Advisors, Bloomfield Hills, speaks to the local crowd.
Bay City's new Doubletree Hotel/Conference Center is on the right track, according to professional real estate managers Joan Cleland and David Ong, of Acquest Realty Advisers, Inc., of Bloomfield Hills, Michigan.
"Everybody has every reason to have positive expectations for Bay City," said Ong, a former National Bank of Detroit executive. The Acquest firm he founded in 1980 now has about $300 million in assets, a third in hotel-conference facilities, around the country.
He described the150 room hotel and conference center under construction on the riverfront in downtown Bay City as "very conservatively financed," which gives it an edge over a similar project in Trenton, New Jersey.
For example, the Trenton project has 33 percent public equity out of $46 million being financed while Bay City's project has 58 percent public equity of $36 million financed.
Another positive is that both centers are approved by the International Association of Conference Centers (IACC), considered crucial to success in the small meetings market aimed mainly at meetings of less than 75 persons. Approved facilities must have 100 square feet of meeting space per hotel room, said Cleland.
The advisers projected the "global economic impact hotel-conference centers can bring to the community" as much as $25 million per year in Trenton and $21 million per year in Bay City.
The economic impact was described as "dollars spent in the community for the benefit of the community that would not otherwise be spent" and "the sum total of incremental spending that sticks to the ribs of the community."
The pair of real estate advisers analyzed the Bay City project for a presentation Oct. 27 to the Tri County Economics Club luncheon, attended by more than 100 members and guests at Saginaw Valley State University.
The real estate advisers were invited by Clifford Miles, former Midland city manager, who introduced the pair. Title of the presentation was "Conference/Convention Centers as Generators of Economic Development."They reviewed a variety of similar projects from around the country, including the 131 room Ashman Court Hotel and Conference Center in Midland, which the Acquest firm developed in 1992.
Hotel-conference centers like the one being built in Bay City "do have major economic impact on communities," said Ong. The economic development function of such centers is justification for public investment, he said. "The conference center creates the need for the hotel which creates the cash flow," said Ong.
Trenton is different from Bay City in that the New Jersey project has potential tax liability in case of deficits while Bay City does not, said Ong.
Ong said a conference center, in Kingsport, Tennessee, has an annual operating deficit and that a financial report is made annually. Reporting the finances of the center to the public each year "is not a bad idea to do in Bay City," suggested Ong.
He noted that conference parkingis "absolutely critical" and that "the parking must be addressed up front." Bay City is planning a parking structure and will have a total of about 400 parking spaces.
Ong described the process of development of the Bay City project as "an unusual set of circumstances and a tribute to the people of Bay City who stayed in as long as they did" to complete the project. He noted that "support from the local hotel community is important" to the success of the project. The Hilton Doubletree name on the hotel-conference center "will go a long way" toward insuring success of the project, he concluded.
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