Second convention center in Jonesboro approved, economics of competing convention centers still uncertain

by George Jared ([email protected]) 340 views 

A convention center on the Arkansas State University Jonesboro campus is about to become a reality.

Hilton Worldwide approved plans Tuesday (July 19) to build a 202-bed Embassy Suites Hotel, a Houlihan’s Restaurant, and a 40,000-square-foot Red Wolf Convention Center on the Arkansas State University campus. Jonesboro Hotel Partners LLC and its management company, O’Reilly Hospitality Management LLC, of Springfield Mo., is the proprietor of the $50 million hotel and convention center.

Hilton Worldwide had to approve the plans before the project could move forward.

“We are very excited to immediately move forward with this incredible project in partnership with the key driver of visitors and conference attendees to the region, Arkansas State University,” O’Reilly Hospitality CEO Tim O’Reilly said.

Construction could begin as early as late August, according to information released by the company. It could take up to 18 months to complete, ASU Delta Center for Economic Development Executive Director Shawnie Carrier told Talk Business and Politics. ASU has already entered into a 50-year lease agreement with Jonesboro Hotel Partners for an 11-acre swath between Centennial Bank Stadium and Tomlinson Stadium on Red Wolf Boulevard.

It’s a joint investment between O’Reilly and Springfield businessman Robert Low. The project is fully financed and ready to begin, O’Reilly told Talk and Business and Politics.

University officials have lauded the site as one of the heaviest traveled locations in the city. The lease agreement calls for Jonesboro Hotel Partners to pay $250,000 per year starting in the fourth year after the convention center is built, and the amount can increase after the 10th year based on the positive difference in the Consumer Price Index.

Jonesboro Hotel Partners also has the option of renewing the lease for another 40-year term once the original agreement expires, according to information provided. ASU will receive 250 room nights per year at no cost to divvy up among its employees. The school may also receive up to $50,000 per year for conferences or meetings arranged by the university or agents that work for the institution.

What remains unanswered is if Northeast Arkansas’ hub city can support two convention centers. The Keller Family Hyatt group has announced it will build a 165-room Hyatt Place Hotel and a 37,000-square-foot convention center on a track of land in the city’s hotel district off Caraway Road and near Interstate 555.

Jonesboro Mayor Harold Perrin – who has supported the Keller project – told Talk Business and Politics he’s wanted a convention center in the city for at least 10 years, and he does not oppose either of the proposed convention center projects. But, he thinks there is a finite number of conferences and events that the city can attract, and there won’t be enough revenue generated for two convention centers.

A feasibility study for one hotel/convention center on the ASU campus has been done, and it could generate as much as $50 million in economic activity a year, according to information released. Carrier said the study didn’t take into account a second hotel/convention center, however.

O’Reilly isn’t concerned. He thinks his company’s brand and track record will lead them to success in this potentially congested market.

“Our project is a different size, and it has a different scope,” he said.

In February, the city’s A&P Commission voted 3-2 to give the Keller Family Hyatt project group $300,000 in advertising revenue to support their hotel and convention center project. The decision was contentious as both groups made pitches, and several ASU administrators attended the meeting. Jonesboro has a 3-cent hotel tax that funds A&P. The tax has generated $199,847 in the first four months of 2016, up 9.18% compared to the same period in 2015.

The commission also rejected a request by O’Reilly’s group for $600,000 in advertising funds, along with a $3.6 million hotel tax abatement that would have been spread over 18 years. That part of the request would have been divided into three-year renewal requests, but both parties agreed that once the first three year installment was approved, it was likely the commission would have given the project the entire 18 years.

Keller has also received a hotel tax forgiveness of up to $200,000 per year for the first three years after it begins operation. It’s slated to open in late 2017 or early 2018. A ground breaking ceremony for the Keller project could be held as early as July 28, and Gov. Asa Hutchinson could be in attendance, Perrin said.

How the Jonesboro Hotel Partners project will affect the Keller group project is hard to predict, the mayor added.

The A&P has tabled any further discussions about funding for Jonesboro Hotel Partners for the next 18 months. It shouldn’t affect the project, and the group hopes to negotiate an agreement with A&P once the building phase is complete, Carrier said.

O’Reilly said he will seek a partnership with the A&P once the moratorium ends. If his company will seek the same compensation package or another amount hasn’t been determined, he said. He was disappointed with the commission’s decision to not support their project, but he hopes they can move beyond that.

ASU is slated to begin a hospitality program this fall. The curriculum for the program has already been established, and staff is being hired, Carrier said. The hotel/convention center will play a key role in the new program, she added.

The convention center will help grow the campus, and it is a sign that ASU is moving in the right direction, ASU Chancellor Tim Hudson said.

“We are grateful to Tim O’Reilly and Hilton Worldwide for their commitment to this exciting development on campus,” Hudson said. “The benefits for our students, their parents, alumni, and visitors to Jonesboro will be tremendous.”