Though some San Diego officials are fretting about a proposal to bring a massive hotel and convention center complex to the South Bay waterfront, local hotelier Doug Manchester has no qualms regarding potential competition for his Downtown San Diego properties.
“This is a free enterprise country, and free enterprise is built on competition,” Manchester said.
Manchester, who owns the 1,362-room Marriott Hotel & Marina and the 1,625-room Manchester Grand Hyatt San Diego Hotel, which are within walking distance of the Downtown San Diego Convention Center, is the San Diego Unified Port District’s biggest hotel tenant.
But he may be joining the San Diego camp with concerns if Nashville, Tenn.-based Gaylord Entertainment seeks subsidies to build a biosphere-type complex containing a hotel with up to 2,000 rooms, a 400,000-square-foot convention center, restaurants and shops, which it has proposed for Chula Vista’s bay front.
“I built my hotels without any subsidies, so why can’t they?” Manchester said.
Bennett Westbrook, Gaylord’s senior vice president of development, declined to comment on whether the company would seek a subsidy or concession to build a property in Chula Vista.
“I’d prefer not to get into that at this stage,” he said. “The discussion has not occurred yet.”
Aside from owning the Opryland USA complex at its Nashville headquarters and the Gaylord Texan, which opened in April 2004, the firm also operates the Gaylord Palms Resort & Convention Center near Orlando, Fla., and is building the Gaylord National Resort & Convention Center near Washington, D.C.
The Gaylord Texan and the Gaylord National reportedly received tens of millions of dollars worth of subsidies.
Yet at least one Chula Vista official believes floating bonds would not only entice the mega-firm, but would speed a long-overdue redevelopment of the city’s dilapidated waterfront.
“Chula Vista has a bay front, but most people don’t know it, because it’s blocked by old industrial buildings,” said Laurie Madigan, the city’s community development director. “We have a dream of re-creating our bay front from something that’s old and worn out into a vibrant, exciting public place.
“Now Gaylord comes in and gives us the opportunity to actually make that happen.”
In her opinion, Gaylord Entertainment is more than capable of repaying any bonded indebtedness Chula Vista might incur by bringing an increase in sales and hotel room tax revenue to the city.
At a rate of 10 percent, the city’s hotel room tax , just a half-cent below San Diego’s , generated only about $300,000 during fiscal 2005, she said.
However, she anticipates that a Gaylord hotel would add substantially to the city’s inventory of hotel rooms and would increase the revenue stream.
“Yet, the important thing is that if we bond to help build the project, we will not bond against the city’s general fund, only against new revenues created by this project,” Madigan said, adding that the city would also gain from the new jobs it could bring.
Westbrook said he couldn’t project what the payroll would be for a hotel and convention center in Chula Vista, but he expects it would create from 1,800 to 2,000 new jobs, adding that the company offers its employees a benefit plan.
He also emphasized that a Gaylord complex would not compete with the Convention Center.
“The type of customer we look at does not stay in large municipal convention centers,” Westbrook said. “But while there might be some crossover between us and the Convention Center, the positive impacts by us bringing in new groups to San Diego and the spinoff of economic impact that results would far outweigh the loss of business the Convention Center might or might not experience.”
Madigan said she couldn’t give a revenue projection for the proposed Chula Vista project, but that the city’s planners would soon be putting their heads together with Gaylord’s developers to arrive at an estimate.
George Kakos, assistant executive director for the Grapevine Convention & Visitors Bureau, said the Gaylord Texan was on track to see at least 500,000 visitors by the end of this year.
“That’s a very conservative estimate,” Kakos said. “I wouldn’t be surprised if it’s pushing a million.”
A Fan Of Gaylord
Teri Jarvie, director of meeting services for the Westbury, Ill.-based Health Care Financial Management Association, said she has booked conventions in Gaylord facilities.
“I’ve worked for several associations and Gaylord’s appeal is to the niche market associations that aren’t big enough for large convention centers but are too big to hold their meetings in hotels,” she said.
According to Greg Rossiter, Gaylord’s vice president of communications, the firm is seeking a West Coast location in response to client demand. Last year, it booked 1.47 million hotel room nights for future engagements, and clients have said they’d give the company more of their business if it had another property in the West.
Aside from Chula Vista, Port District Chairman William Hall said he was aware that Gaylord’s location scouts had looked at some other Western sites, but he declined to name them. He said, however, that he thought the company had put them on the back burner for now.
Gaylord’s executives also declined to comment on that matter.
Meanwhile, Hall said he met recently with Carol Wallace, the San Diego Convention Center Corp.’s president, and its chairwoman, April Boling, and he agrees with them that a study should be done to assess the effect a proposed Gaylord facility would have on the local convention market.
Boling and Fred Sainz, the vice president of public affairs for the Convention Center, recently expressed fears that the proposed Gaylord facility would draw from the same “finite” pool of meeting business as the 2.6 million-square-foot Convention Center, rather than generate new visitors.
Boling, who runs her own independent accounting firm, said a study could determine the need to make up for any potential business loss.
“We’re concerned that some of our current clients would choose to take their conventions to the Gaylord,” Boling said. “But we don’t know. We want a study that would show the composition of the market and whether or not there’s enough business to support having an additional (convention) facility in the San Diego region.”
Boling stressed that the Convention Center doesn’t oppose a Gaylord property coming to Chula Vista. She just wants to make sure that the Convention Center Corp. is prepared.
“It’s not our goal to have anybody back down,” she said. “Our interest is making sure that the Convention Center is fully occupied.
“If it goes unoccupied, the money loss is to the city of San Diego and the hotels in the vicinity of the center.
“So there would need to be a discussion on how to fix the problem, and you would fix it by getting business that fills in behind the lost conventions. Something leaves, and you put something in its place. The strategy for backfill needs to involve the city of San Diego and also the port.”
According to Sainz, the facility’s $3.3 million marketing subsidy , supplied by San Diego City Hall , for the current fiscal year is the lowest of any in the center’s “competitive set.”
That includes convention centers in Orlando, Las Vegas, Phoenix and San Francisco. Marketing subsidies, as Sainz pointed out, go toward “buy downs” to lure large meetings that more than offset the discounts with revenues from hotel room taxes and sales taxes.
Boling said she hopes “the greater discussion” to develop from a marketing study would point to the need to augment the Convention Center’s marketing budget.
“And in the end, it may turn out that the Gaylord was the catalyst to have the greater conversation,” she said. But she stopped short of saying where the money might come from. Cash-strapped San Diego City Hall, however, has been in the mode of cutting budgets for city agencies, not increasing them.
One For All And All For One
Hall said he’s “just one vote” among the port’s seven-member board of commissioners. But he said he’d like to see a “joint” study that answers questions from the Convention Center, the Port District and the cities of San Diego and Chula Vista on how to bring an increase in convention business for the benefit of all. If the results are that additional marketing funds are needed then, the plan should benefit all, he added.
“I’d want to see a productive marketing effort that would enhance the overall level of attrition (in convention business) to the San Diego area,” Hall said.
Port Commissioner Steve Cushman also arranged a meeting for Convention Center Corp. officials, including its president, Wallace, and Sainz, at the Gaylord Texan in Grapevine, Texas, in mid-August. The purpose, Cushman said, was to get Wallace’s impression of how the venue is operated and the team that’s in charge.
This month, Sainz had complained that the Convention Center Corp. wasn’t consulted or notified when the Port District, the Convention Center’s landlord, started to entertain Gaylord’s proposal. But after the meeting at the Gaylord Texan, en route to a convention of meeting planners at Opryland during the week of Aug. 15, Sainz had some positive things to say.
“We’re very appreciative of Mr. Cushman’s efforts in facilitating the meeting,” Sainz said. “Because it was short, nothing conclusive came of the meeting. But it did give us an understanding of their (Gaylord’s) product.
“First of all, one positive is that they pay a prevailing wage for their construction. We also found out that they don’t intend to keep their clients within their biosphere (proposed for Chula Vista) during their stays.
“They actually intend to promote the Gaslamp Quarter by using their shuttles to take guests into Downtown and elsewhere to show them what the city is about. We also began a discussion on joint marketing, and what it could mean to either or both of us.”
In early August, after considering sole sourcing the proposed Chula Vista project to Gaylord, the Port District reneged on the idea and made a request for qualifications from prospective developers. The commissioners also pre-qualified Gaylord and set the bar for proposals at its high-water mark. The submission deadline is the first week in October. No other firms have shown interest in such a project.