A Bad Idea's Slow but Merciful Death
For the past six years, the convention and tourism industry has warned that the new Washington Convention Center would not live up to its promise without a $750 million, 1,400-room hotel right next door.
It was always a bad idea, based on the faulty presumption that Washington could, and should, compete for conventions just like every other city, with an unending stream of government subsidy and sterile, hermetically sealed convention environments. And even with $135 million committed by the District, the high-profile development team of Marriott International and BET founder Bob Johnson could never figure out how to turn the project into the goldmine they had anticipated.
Now, as a result of endless delays, the cost of the project has escalated, the economy has peaked, the credit markets have turned unfriendly and a new mayor has made it clear that the city won't commit another dime to the project. Despite all the brave denials, it looks like this monster project is dead. May it rest in peace.
There are many people to thank for the project-killing delays.
We could start with the convention center authority itself, which, having failed to include enough meeting and ballroom space in the new center, demanded that it now be included in the hotel, adding significantly to the cost and complexity of the project.
There is Linda Cropp, the former D.C. Council chair, who got it in her head that the hotel should be located not on Ninth Street NW but on the site of the old convention center, taking up prime land that former mayor Williams wanted for high-end housing, retail and a new central library.
And Kingdon Gould III, owner of some of the land needed for the Ninth Street hotel, who held out until the District finally agreed to give him a portion of the old convention site in return for his much less valuable parcel in what can only be described as the sweetest of sweetheart deals.
Some credit goes to Marriott, which kept pushing up the number of rooms in the project until it nearly collapsed of its own weight.
And let's not forget Johnson, who has become one of the country's biggest independent hotel developers. Johnson apparently wanted all the benefits of owning a convention center hotel without committing a sizable block of rooms to penny-pinching conventioneers during peak seasons, when he could sell them at higher rates to someone else. And it was Johnson, in search of hedge-fund-like returns, who finally turned the new mayor against the project with his demand that the District sweeten the deal with an additional $50 million in subsidies or waive the obligation to include housing in the project.
It remains possible that Marriott could still develop a sizable hotel on Ninth Street, with or without Johnson as its partner. Flying the Marriott flag next to the convention center is of keen interest to company Chairman Bill Marriott, who sees it as a high-visibility symbol of commitment to his, and his company's, home town. A more modest project would be cheaper to build and easier to finance and would require less subsidy.
Moreover, by scaling back the size of the hotel and bringing closure to the issue, it is likely that other, smaller hotels would be developed. There has been talk of putting a hip, upscale hotel somewhere on the old convention center site, which is also within hailing distance of the front entrance to the new convention center.
And visionary developer Douglas Jemal, who has acquired control of two blocks of Seventh Street on the other side of the convention center, is eager to include a boutique hotel as part of a development that also includes a cinema complex, live music venues, restaurants, bars and shops.
The three hotels might still come up short of the 1,400 rooms that Marriott and Johnson had proposed and would not offer the administrative convenience of a "headquarters" hotel so beloved by convention planners. But they could easily add 1,000 rooms within a block of the convention center, in addition to the 2,700 existing rooms that are also within easy walking distance. Even if the city were to provide free umbrellas, galoshes and coat checking to all convention goers whenever it rained or snowed, I'm sure the tab couldn't come anywhere close to the public subsidy being contemplated for a headquarters hotel.
As for the additional meeting space that a headquarters hotel would have provided, the solution is also close at hand: the lovely and vacant Carnegie Library, right across New York Avenue from the convention center entrance. One can imagine the library building and the surrounding park being developed as a Washington version of New York's Tavern on the Green, with several floors for ballrooms, dining rooms and meeting halls below.
This is a crucial moment for the new convention center. As my colleague Dana Hedgpeth documented earlier this year, convention center bookings have fallen far short of what was expected this year and last. And while 2008 bookings look a bit better, the center will begin to feel the competition from the new Gaylord convention complex rising on the banks of the Potomac at National Harbor in Prince George's County. The D.C. center no longer has the luxury of another two years of figuring out how to structure and finance a 1,400-room hotel so it can meet Bob Johnson's ambitious hurdle rate.
"The city needs to move on," one frustrated industry official told me. The District needs to allow other developers to move into the area and build the additional hotel rooms that can reduce record-high hotel rates, which are beginning to price Washington out of the convention market.
And it needs to accelerate development of what is now a depressing dead zone around the convention center and create the kind of exciting and sophisticated urban environment that should be Washington's competitive advantage.