GRAND RAPIDS — The Grand Rapids-Kent County Convention/Arena Authority has hired a consultant to lead the process of weighing concepts for developing a full-service hotel to serve the downtown convention center.
While the consideration for the project comes amid a boom in hotel construction in the county, studies as recent as 2018 have recommended the CAA move forward with the concept in a move to boost convention business and accommodate more visitors in the downtown area.
The CAA, a public body that owns Van Andel Arena, DeVos Place Convention Center and DeVos Performance Hall, assembled a task force to continue researching the project through the end of the year. It also hired K Corner Consulting LLC in April to drive the process.
“The work we’re doing includes digging a little bit further into the engineering of it, and the feasibility and engineering challenges we might face, and how that could affect the budget,” said K Corner Consulting founder Chris Knape.
Conversations about a new convention center hotel date back to 2016, when the Grand Action Destination Assets Study recommended the body begin a planning process for developing the facility.
Since then, developers have added 902 rooms in Kent County alone, according to data from Experience Grand Rapids. The county’s convention and visitors bureau expects that activity to ramp up, with developers bringing online more than 1,300 rooms across the county in the next couple of years.
Even taking into account that planned new inventory of hotel rooms, a 2018 study from Chicago-based HVS Convention, Sports & Entertainment Facilities Consulting showed demand for a 400-room convention hotel in downtown Grand Rapids, possibly between DeVos Performance Hall and the Windquest Building on Monroe Avenue NW. Recent iterations show the expansion taking shape on top of DeVos Place Convention Center.
“In terms of new business from a convention and meeting perspective, a full-service hotel has a much bigger impact than a smaller hotel,” said Rich MacKeigan, regional general manager of DeVos Place and Van Andel Arena. “If you look at all the other inventory, none of it comes close to all of those qualifications.”
The CAA recently formed the task force to use the studies and conduct further research into the feasibility of building the convention center hotel, including identifying possible funding sources, a location and engineering challenges of building atop DeVos Place.
The task force’s charge is to “determine if the return on investment or hotel business identified in the HVS study can come to fruition,” said Doug Small, president and CEO of Experience Grand Rapids and chair of the task force.
“There have been two studies completed, and both concurred that an additional convention-style hotel is needed to maximize convention space and increase new business potential,” Small told MiBiz via an email. “While I feel that has great merit, I want to work along with the task force members, CAA project manager and board before confirmation of those findings can be realized — or not.”
The HVS study estimated development costs between $140 million and $180 million, with an annual economic impact of $82.3 million. The study assumed a 400-room, full-service property with a restaurant, lounge, coffee shop, 40,000 square feet of meeting space and a 20,000-square-foot ballroom, among other amenities.
The study projects the hotel, in its first year of operation, would generate 87,700 room nights, half of which would come from visitors for conventions, trade shows and other events. The hotel also would attract 11 additional events to the city in its first year, increasing to 45 additional events within four years, according to the study.
HVS recommended the city issue a request for qualifications to develop the hotel attached or adjacent to DeVos Place.
Small told MiBiz in February that the concept would fill gaps that smaller hotels can’t address, and would pave the way for booking larger, city-wide conventions, or possibly two convention groups simultaneously.
The task force’s study also comes as visitors booked 1.8 million rooms in Kent County last year, up by more than 12,000 from 2017, according to Experience Grand Rapids. As well, hotel room revenue grew 2.1 percent to $216 million, a record for the county. Still, as the new inventory came online, overall occupancy at 66.8 percent decreased by less than 1 percent from the prior year.
MacKeigan expects the task force will examine how the project would be funded, including whether it would require public money to complete.
Grand Rapids City Manager Mark Washington, Downtown Grand Rapids Inc. President and CEO Tim Kelly, The Right Place Inc. President and CEO Birgit Klohs and Small from Experience Grand Rapids sit on the task force.
“They’ll put together any number of ways it could be funded,” MacKeigan said. “No decision has been made aside from looking at what funding mechanisms could be in place.”
Knape, whose work is funded by the CAA, will help the task force compile its research. The task force also will speak with other cities that have gone through a similar process and assess how their projects have performed, Knape told MiBiz.
The goal is to have the research submitted to the CAA by the end of the year so it can begin making decisions about whether to move forward with the project.
“We’re looking at finance mechanisms that are used in different cities and how they go about building the projects from a financial standpoint, and pulling together the resources they need,” he said. “It’s basically pulling together a bunch of different data points that go beyond that feasibility study.”
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