Does downtown Tulsa need a new $50 million full-service convention hotel?
The city’s recently released Arena District Master Plan says yes — but.
The 160-page report recommends that a 400- to 600-room hotel be built to help attract the kinds of conventions the city’s been losing to communities with sufficient convention hotels.
But first, the master plan cautions multiple times, city officials should have an independent analysis done to determine whether the investment would generate enough convention business to not only fill the new hotel but also to bolster sales at other hotels.
“Evidence from other markets indicate that it is possible to absorb a convention hotel without sacrificing overall occupancy, provided convention business increases in tandem,” the master plan states. “However, given increasingly competitive convention and meeting dynamics in the state and nation, independent analysis of the potential for expanded convention center activity will be necessary to confirm that a convention hotel can induce additional demand that grows the market.”
Nick Doctor, the city’s chief of community development and policy, said the city has no immediate plan to commission an independent study like the one recommended in the master plan but that one would be done before any public dollars are used to help fund the project.
“If building a convention hotel in Tulsa would require public incentives, we will conduct a feasibility study to ensure the project is a benefit to the city’s tourism industry and that it is viable financially,” Doctor said. “This due diligence is work the city undertakes whenever public incentives may be involved in a project.“
MKSK, the consulting firm that created the Arena District Master Plan, used VisitTulsa’s Lost Business report and other market data to support its recommendation that a full-service convention hotel be constructed as one of the catalytic projects for the area.
“According to the Lost Business Report commissioned by VisitTulsa, the city has lost a significant amount of revenue due to large conventions booking elsewhere as a result of two major issues: 1) insufficient space in the Cox Business Center (21 percent); or 2) insufficient number/block of hotel rooms under one roof (43 percent),” the master plan states.
VisitTulsa — which contracts with the city to provide tourism services — has been the leading advocate for the redevelopment of the Arena District. From the start, that vision has included the construction of a full-service hotel, expansion of the Cox Business Center and the repurposing of the Page Belcher Federal Building.
Ray Hoyt, president of VisitTulsa, said it is common for organizations like his to provide government entities and potential private investors with market data “in the interest of retaining and attracting more economic impact and development through tourism in the future.”
The Arena District Master Plan makes clear Tulsa’s hotel market is saturated and growth in revenues is slowing. Downtown has 10 hotels with a total of nearly 1,850 rooms, 40 percent of which came online in the past 10 years, according to the plan.
“Despite this pace of new hotel room deliveries, there has been minimal growth in room nights sold since 2014,” the plan states. “In addition, revenue per available room has flattened out while the occupancy rate has declined over the past few years.
“While these indicators suggest that the market is oversupplied, six new projects are in the works.”
The bulk of the city’s downtown hotels, however, are what are known as select service hotels. These businesses typically do not have enough rooms or the needed amenities to accommodate a large convention.
“Future hotel offerings that should be explored include alternative products that are currently lacking in the market, such as full-service hotels or a convention center hotel,” the master plan states.
Hoyt said VisitTulsa recently hired a third party — Smith Travel Research — to conduct a comprehensive hotel market study of the entire city, including hotels in proximity to the Cox Business Center.
“It is important to say that we had a lot of new inventory downtown, but it is not convention center, full-service product,” Hoyt said. “And in this Smith Travel report, they basically say the same thing.”
Construction of a convention hotel is not expected to happen anytime soon. City officials have estimated the public-private project could cost $50 million, and the master plan recommends that the hotel be built on property now occupied by the Police Courts Building.