Compared to other “topping off” events, the one held for the Hilton San Diego Bayfront Hotel on Jan. 25 was no different than most.
Politicians, community leaders and corporate executives showed up to talk about how happy they were that the much-anticipated project was coming to fruition, and when it was done, construction workers were back on the job.
Typically, a topping off, which commemorates hoisting the topmost beam on a structure, along with ribbon cuttings and grand openings, doesn’t grab headlines or sound bites, since the real news happened earlier. For the sake of accuracy, that particular beam was put in place more than a month ago.
Construction is ahead of schedule, and the event focused on placing the hotel’s logo, albeit temporarily, atop the 30-story, 1,190-room property, which stands on 12.8 waterfront acres near Eighth Avenue and Harbor Drive. The site was previously home to Campbell Shipyard.
While the hotel is expected to open its doors in November, its official opening date is January 2009, said Hilton’s area vice president, Karima Zaki. Being ahead of schedule is no small task for a project that, to date, has involved 1.5 million man-hours of labor, 112,000 tons of rebar, 55,000 cubic yards of concrete and 4,000 tons of steel since it broke ground two years ago.
Part Of The News
But that’s just part of the news that led up to the recent fete. The San Diego Business Journal broke the story that financing for the $348 million development , long on the drawing boards , was nearly a done deal in October 2005. The package was completed three months later.
The new Hilton is one of the largest convention center hotels in the country to be built without municipal funding. However, San Diego Unified Port District (the new hotel sits on port property), which agreed to a rent reduction of $46.5 million to be applied during the first 11 years of operation, is investing a hefty sum. From then on, the agency expects to receive about $7.8 million in annual rent. The lease runs for 66 years.
San Diego National Bank provided a construction loan of $245 million. An additional $100 million in equity capital was provided by the hotel’s owners, Hilton Hotels Corp. of Beverly Hills and ING Clarion, which has its headquarters in New York. Portman Holdings of Atlanta and Phelps Program Management of Aurora, Colo., are the developers.
Projections are that three years after opening, the hotel will gross as much as $96.5 million annually, and as much as $165 million annually by the time it is in its 14th year, said Michael Bixler, chairman of the Port District’s board of commissioners.
Based on the $96.5 million figure, the city would receive about $10 million annually from a 10.5 percent hotel room tax, he added.
Zaki said that “January is going to be a gang-buster month for the hotel.”
“We have solid business on the books. We’re ahead of per forma with 450,000 room nights booked from 2009 and beyond, with some as far ahead as 2015.”
By room nights, she was referring to the total number of nights for which individual rooms have been booked.
Zaki declined to cite rack rates.
Steve Johnson, vice president of community affairs for the San Diego Convention Center Corp., which operates and sells space at the 2.6 million-square-foot facility near the Hilton, said that aside from adding the missing piece in the puzzle that makes it possible to hold large citywide conventions simultaneously, it also enhances the possibility of luring labor and trade union business. As a rule, the unions hold events in cities such as San Francisco where their members are able to stay in unionized hotels.
The Manchester Grand Hyatt Hotel with 1,625 rooms and the San Diego Marriott Hotel & Marina with 1,345 rooms are the two largest convention hotels downtown. According to Robert Speck, Hilton’s regional director for sales and marketing, most of the workers involved in building the Hilton Bayfront belong to unions, and the hotel signed a neutrality agreement, meaning that it will not interfere with the unions trying to gain members among its work force. The hotel is expected to provide 1,000 new jobs.
To date, it has booked rooms for members of the National Education Association who are coming to town for a convention in July 2009, followed by the International Association of Firefighters in August 2010 and the Laborers International Union, also in August 2010.
Of the three, the largest is the NEA, which will bring 7,000 members to town for four nights.
The Hilton Bayfront, designed by Atlanta-based John Portman & Associates, includes 165,000 square feet of meeting and event space, a 7,300-square-foot spa, 3,000 square feet of retail space, a business center, swimming pool, three restaurants and a 4.3-acre park capable of accommodating 15,000 people for outdoor meetings and events. An adjacent parking structure has space for 2,000 vehicles.
Meanwhile, the hotel’s original moniker, Hilton San Diego Convention Center Hotel, was changed “because we actually had a customer or two that wanted a hotel that was not in a convention center,” Speck said.
“We had to explain that it was not in the convention center, but just adjacent,” he added. “We know the groups are going to come, but the thought was to jazz up the name to attract leisure business. We didn’t think Hilton San Diego Convention Center Hotel would look real great on a wedding invitation.”