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Oregon Convention Center hotel’s ill-timed debut scuttles backers’ lofty hopes

By Jamie Goldberg, oregonlive.com
Published: August 14, 2020, 8:30am

PORTLAND — The long-awaited Hyatt Regency at the Oregon Convention Center, a project which took years to plan and required millions of dollars in public funding, finally opened its doors last December.

Its timing could scarcely have been worse.

The regional government Metro, which runs the convention center, hoped the new 600-room hotel would quickly draw new convention-goers, bring in millions of dollars for the region and generate enough in tourism taxes to pay off $60 million in publicly backed revenue bonds used to fund the project.

Instead, the convention center stopped hosting events March 12 when Gov. Kate Brown banned gatherings of more than 250 people in an effort to stop the coronavirus spread. The Hyatt shut its doors soon after and will remain closed until at least Sept. 1.

“We look forward to resuming operations and welcoming guests in the near future,” a spokesman for the hotel said in an email. “The most important element of welcoming back guests and colleagues to Hyatt Regency Portland at the Oregon Convention Center is doing it safely.”

The closure of both the convention center and the new hotel could have deep economic ramifications for the region.

The total construction cost for the hotel came to $224 million, with hotel developer Mortenson Co., footing the majority of the bill. But the project also included $74 million in public investment — in addition to the $60 million in revenue bonds, backed by lodging taxes paid by hotel guests throughout the city, the hotel drew on $10 million in state lottery funds and $4 million from Metro.

The bonds are being paid off with money from the Visitor Facilities Trust Account (VFTA), a fund generated by lodging and car rental taxes in Multnomah County. The money in the VFTA is used to pay off debt and support visitor facilities, including the Oregon Convention Center, Portland’5 Centers for the Arts and the Veterans Memorial Coliseum.

Metro said during the planning phases for the hotel that the additional tourism tax revenue generated by the Hyatt would be enough to pay off the bonds. But opponents of the project at the time worried that lodging taxes from other hoteliers would be needed to backfill the funding for the project if the Hyatt didn’t live up to projections.

Of course, the Hyatt hasn’t come close to living up to expectations since its opening in December because of the pandemic. Hotels across the region have suffered as well, depriving the county of key tourism taxes.

Heather Back, a spokesman for Metro, said officials from the City of Portland, Multnomah County, Metro and Travel Portland are now in the process of reviewing multi-year projections and determining whether changes must be made to the amount of annual operating support allocations that the VFTA fund makes to venues and programs to ensure there are sufficient reserves left to make debt payments.

Back said Metro remains confident that the hotel will be able to deliver in the long-term as events return to the convention center.

“With business far out in the future, we believe in 2022 and 2023, we are going to be able to deliver the packages that we intended with having a convention center hotel nearby,” Back said.

Roughly 40 events per month take place at the Oregon Convention Center in a typical year, but no events have occurred since March due to the pandemic. Back said that the convention center still has 40 events on the books for the fall, but whether those events take place will depend on when Multnomah County is allowed to move out of Phase 1 of Brown’s reopening plan. Gatherings are limited to 25 people or fewer for counties in Phase 1.

Still, Back said that 85% of the groups that have canceled events at the convention center this year have rescheduled their events for future years. She also said that the convention center started receiving more requests in July from organizations planning events and conventions in 2022 and beyond.

But the economic outlook for the convention center remains bleak in the short-term, as well as for local businesses that benefit from travelers’ spending.

“This economic generation is critical for our region and throughout the state of Oregon as convention attendees travel and thereby support small businesses in Portland and beyond,” Back said.

With large events banned, the convention center transformed into a temporary homeless shelter in March. The temporary shelter is still in operation, although Portland and Multnomah County have been working to move some people housed at the convention center into motels.

The convention center finished its fiscal year on June 30 with a decrease of $14 million in earnings due to the pandemic. Metro projects that the convention center’s earned revenue will be just $2 million in the upcoming fiscal year, down precipitously from $55 million in the 2018-19 fiscal year.

The amount of money the convention center contributes to Metro’s budget will be decreased by $3.3 million this year, Back said. Metro announced in March that it was laying off 700 workers due to the pandemic. The Hyatt then announced in June that it was cutting 181 hotel staff positions.

The job creation and indirect economic impact the convention center has on the region will also come to halt until events return.

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“We know when people come for their conventions, they often plan trips to visit the Oregon Coast, wine country, Mount Hood, the Gorge and central Oregon,” Back said. “So, there are a lot of hotels, restaurants, live event planning businesses and small businesses that really benefit from that traffic that (the convention center) brings to our state.”

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