Details of the hotel management agreement are still being worked out. And the transaction will require Cuyahoga County Council's approval.
CLEVELAND, Ohio -- Add one more name -- a big one -- to the list of future hotel flags in downtown Cleveland.
Cuyahoga County officials have picked Hilton Worldwide as the likely operator of their planned convention center hotel, a $260 million project slated to replace the county's old administration building at Ontario Street and Lakeside Avenue.
Hilton executives will join County Executive Ed FitzGerald this morning at the new Cleveland Convention Center to announce their burgeoning relationship.
Details of the management agreement, which will outline Hilton's responsibilities and compensation, are still being worked out. And the transaction will require Cuyahoga County Council's approval. But the hotel company already is participating in discussions about the project, envisioned as a publicly owned and publicly financed hotel that will boost Cleveland's chances of landing large events.
"We had kind of a gaping hole in Cleveland, relative to our representation," said Ted Ratcliff, Hilton's senior vice president of operations for eastern North America. "We really didn't have a hotel in the city. Some of our brands are represented there, but not the Hilton flag in a significant downtown location."
View full sizeThe hotel would replace Cuyahoga County's old administration building, which is slated for demolition. The county owns the land and is playing the role of developer, lining up companies to design, build, stock and manage the hotel. The convention center hotel would be a Hilton, the company's full-service flagship brand.
Market research for the project identified demand for a 600 to 650-room property, with meeting spaces, a restaurant and a direct connection to the convention center and the Global Center for Health Innovation.
A selection committee comprised of county officials and consultants picked Hilton from a pool of six operators who responded to a request for proposals.
The other competitors were Hyatt; Omni Hotels & Resorts; Marriott, with its Renaissance hotel brand; Starwood Hotels & Resorts, with a Sheraton flag; and White Lodging, a hotel management company that proffered a JW Marriott.
"We wanted to have a first-class hotel, and we think they can deliver that," FitzGerald said.
Jeff Appelbaum, an attorney representing the county on the hotel project, expects to spend the next few weeks fleshing out the management agreement. Citing negotiations with Hilton, he would not discuss terms of the deal.
"It is not something that will be done in a week or two," he said. "In the meantime, in anticipation of getting this done, Hilton is engaged. They're participating in good faith in our design process."
In July, the county picked Cooper Carry, an architectural firm based in Atlanta, to tackle conceptual design for the hotel. Hilton would work with Cooper Carry and an unidentified design-build team that will carry out the plans.
City and county officials announced in June that they would team to support a wave of downtown projects, including the hotel and widespread improvements to public spaces. The Hilton, which could open in 2016, would be the city's largest hotel -- and a key attractor for large conventions.
"By naming an operator, it becomes real in the minds of the meeting and convention planners," said David Gilbert, who leads Positively Cleveland, the convention and visitors bureau.
"There are a good eight or 10 significant meetings and conventions that we're looking at that we have a strong shot at," he added. "A couple, we're certain we're going to land. A number of them we're very close to, but we've gotten the conversations as far as we can go until we announce who the operator is."
Gilbert highlighted Hilton's brand recognition, loyalty programs and national sales teams as factors playing in Cleveland's favor. Bringing in Hilton also adds depth to the downtown market, where Marriott has a strong presence and a Westin will debut on St. Clair Avenue next year.
Other hotels in the works or being discussed include a Kimpton brand, a Drury Plaza, a Marriott Autograph Collection hotel called the Metropolitan, a Le Meridien and a Crowne Plaza.
Most of those projects are much smaller than the convention center hotel. And none of them are easy, in an industry where development financing is hard to come by. Cities often offer developers huge public subsidies to take on convention center hotels, where large blocks of rooms have to be reserved at discounted rates to support events and conferences.
Cuyahoga County is taking a different approach, as the landowner and, essentially, the developer. A public entity, most likely one affiliated with the county, will own the hotel. Officials expect to pay for the project through bond financing, based on a portion of the hotel's revenues and anticipated new tax revenues; a sales-tax exemption on construction materials; a city contribution; and money left over from the convention center development.
"Doing a public deal like this is very similar to what we've done in other locations," Ratcliff said of Hilton, which operates a few dozen convention center hotels and manages publicly-financed properties in Houston, Baltimore and other cities. "It's very much in our wheelhouse to do this type of hotel."
The county picked its strategy after soliciting bids from potential buyers for the administration-building site -- positioned as a prime hotel location. Hotel developers didn't bite, and the only plan that cropped up involved a parking garage.
Even with Hilton and Cooper Carry in hand, county officials are sure to face some resistance. On Tuesday, Councilman Dave Greenspan sent his colleagues a letter advocating that the county should clear the administration-building site and solicit developer bids tailored to the hotel project. Greenspan, a Republican, is a frequent critic of FitzGerald, a Democrat who is running for governor in 2014.
In a phone conversation Thursday, Greenspan said he agrees that Cleveland needs a convention center hotel. But he doesn't believe the county should be in the hospitality business -- as a developer, owner or financier.
FitzGerald dismissed those concerns as political maneuverings, not practical objections.
"Is downtown going to move forward, or are we going to wait for somebody to come and rescue us?" he asked. "We just had this property out on the market, and there wasn't one single hotel developer inquiry. Not one."