Hotel Proposal Is Pouring Good Money After Bad

CascadeNewLogoLast week the Metro Council unanimously approved two resolutions in favor of subsidizing a Headquarters Hotel near the Oregon Convention Center in Portland. The original idea behind the Convention Center was that with the right package of amenities, people would come to Portland and spend money eating and shopping when not attending meetings. When the Convention Center didn’t generate the hoped-for revenue, it was expanded. When occupancy rates still dropped, Portland officials started planning a hotel.

Other cities have tried this strategy, and it hasn’t worked. Subsidized convention hotels elsewhere have had disappointing results. Not only have they not increased convention business significantly, but they haven’t made their occupancy projections, either. Now those cities are saddled with money-losing convention centers and money-losing hotels.

In 2007, the Portland Development Commission (PDC) rejected the only hotel proposal that didn’t require government subsidies. The Grand Ronde Indian Tribe offered to build a hotel with private money if they could include a casino. After the PDC turned them down, a tribal spokesman said, “We refuse to raid taxpayer dollars for any project.”

The core functions of government are to protect our lives, liberty, and property, not to provide our entertainment and build convention venues. Instead of throwing more taxpayer money at the Convention Center, Portland officials should consider the advice of management guru Peter Drucker, who warned: “There is nothing so useless as doing efficiently that which should not be done at all.”

Steve Buckstein is founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

Learn more at cascadepolicy.org.

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Posted by at 05:00 | Posted in Portland, State Budget | Tagged , , , , | 1,405 Comments |Email This Post Email This Post |Print This Post Print This Post
  • Bob Clark

    Thanks for the perspective, Steve. I suspect this new attempt at the Convention Center Hotel is really a type of political favor. Tom Hughes, Metro president, shortly after being narrowly elected in 2010 with the vital financial support of construction and other unionists; took the convention center hotel out of the “proverbial” recycle bin, and started touting it. The initial estimate now for this new proposal is $18 million in public subsidies to hand over to a private hotelier with $10 million in state lottery funds, $4 million in City of Portland loans or funds, and another $4 million from Multnomah County. Actually, the cost to taxpayers will be much more. Metro in its forecast of users of the proposed Convention Center Hotel projects many will be government planners, as they come to Portland to have Planning love-fests (no doubt). The government class gets fatter while taxpayers everywhere are treated as chump like ATM machines.
    Of course, the fix might be in with the City of Portland, as I hear the Mayor’s wife is a “sustainability” chief or officer at Portland State University. And of course, when the Mayor is through running Portland, he probably moves back to Washington state where he lived before being elected last year.
    Of course, the City of Portland already has a tattered recent history with non performing hotel loans, what with the much delayed repayment of its loan to the down town 9s hotel (as I recall from Oregonian reports).

    • Metro taxpayer

      IMO, MP Tom Hughes can be trysted, er, trusted like MCC Jeff Cogan. Both merit close 24/7 scrutiny.

  • thevillageidiot

    unlike private money when there is no skin in the game there is no incentive to be profitable.

    As for the Hotel “The Grand Ronde Indian Tribe offered to build a hotel with private money if they could include a casino. After the PDC turned them down, a tribal spokesman said, “We refuse to raid taxpayer dollars for any project.”” Sounds very free enterprise and free market yet they too depend heavily on the government for protection against competition. How else do you explain how they can build Casinos and hotels on the reservations and no one else can put one anywhere in the state?

  • JackLordGod

    So Portland went into the convention center business, didn’t run that so well, and now wants to go into the hotel business? That’s the calculus here?

    Look, I do a trade show/convention every year at the convention center and thus have some familiarity with it. That’s right, there is an SM convention every year at the convention center.

    That convention does very well in that location. Yes, frankly the main problem with it is lack of hotel space. There is the Red Lion across the street and usually it is booked up within 48 hours of convention rates going into effect. If they doubled the size of that hotel, it would likely still book all available rooms for that convention.

    That does not mean Portland’s hotel idea is a good one however. What it means is that convention is successful, nothing more. It is successful for two reasons – a large group of people in Oregon wishing to have such a convention who are also willing to do the work to attract national and international visitors to attend. In other words, that convention is located there because of a large Portland base, and a lot of networking to attract others to attend. The point here is you can’t just throw up a hotel and think that’s going to suddenly attract conventions that will generate revenue. That’s not how it works.

    Conventions go to a location for a myriad of reasons, and can switch locations any time they want to. The ideal convention center is one where the convention space and the hotel are the same thing. Did Portland think to do that? No. Plenty of hotels are built on this premise, Hyatt and Double Tree seem to do this very successfully.

    The bottom line here is if you look at the convention center site the problems are immediately obvious. The convention center was built across the street from a clearly under capacity hotel. The convention center site was more than ample to house a hotel and convention center combination and maybe that would have worked. However that wasn’t done. Now, after missing the obvious people are supposed to think this time Portland will get it right? I sure don’t think so.

    Let me give you a future preview of what this hotel will be like should Portland build it.

    It will be located not across the street, but a few blocks away. The hotel will have no parking,but plenty of bike racks. Transportation from the airport to the hotel will be by mass transit or bike rental. Running a jitney service to the airport will not occur to Portland until several years in. There will be one restaurant in the hotel, likely a relative of a city planner will get the only concession. It will likely sell county fair type food, last seating will be at 7.45PM. The cocktail lounge, “Scamps!” will be just off the restaurant. It will close at 9PM, have a small dance floor, music will be mostly Bob Segar.

    The Grand Ronde had the right idea. I am no fan of casinos, but if they had built that, the convention center would be fully booked. I’m pretty sure the Grand Ronde knows how to run a hotel. I know Portland doesn’t. If you think you are going to build a hotel and that’s going to fix the problem, then you have to believe the convention center is otherwise perfect. It isn’t.

    • guest

      The Grand Ronde could transform the Memorial Coliseum into mixed use site including a casino and construct a hotel across the street on the PPS Blanchard prop that could well serve both the Rose Quarter and the Convention Center sites. Cost to taxpayers? Nil compared what city planners and their attache-tenets are huckstering for.

      • .

        Too, don’t forget Wood Village Park not popular with ‘controlling’ interests attending Stump Town.

  • IhateLiberals

    The dumb SCHMUCKS at Metro and at City Hall have obviously never been to a convention in Las Vegas or Orlando. If they had, they would already know that no organization – other than ones that didn’t book early – will never knowingly book a convention in Portland unless they are:
    A) Cheap and have no money
    or
    B) Have no clue about Portland’s weather.

  • guest

    Send the ill begotten project PACing up some other’s behind.

    Metro taxpayers have had enough of the bovine scatology and are ready willing and able to send the tax and spend tyrants packing back into the rectal pouch of their headquarters congregated in DNC (Dubious Nocturnal Commissions) to die dee die die in thumb sucking tranquility.

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