Bentonville seeks investors for downtown convention center
For several years, Bentonville has eyed the prospect of building a large-scale meeting center and hotel downtown, but the project cannot move forward without investment — and it’s not going to come cheap, a city official said.
Brian Bahr, economic development manager for the city, said he believes a convention center would be a boon for the town and the Northwest Arkansas region as a whole, but the project is still in its earliest stages of conception. Bahr’s team, along with Bentonville’s tourism bureau, is researching tax incentive options while “actively looking for investors, which can be hard to find for a project of that scope,” he said.
It has been two years since Kalene Griffith, president and CEO of Visit Bentonville, commissioned a feasibility study that recommended the convention center project. At the time, she cited missed opportunities to host large meetings tied to business with Wal-Mart Stores and its suppliers.
The study was conducted by Chicago-based consultant Hunden Strategic Partners, and it showed a convention center and hotel would generate hundreds of new jobs, tens of millions in new tax revenue and spark a micro-economy in goods and services. Early estimates showed it would cost about $150 million. Griffith said the proposed center has since gained traction with potential investment partners, including those with similar facilities in other markets.
“There’s interest. Our biggest challenge is our need for more incentives for convention center development,” she said.
At the state level, investors can receive a 15% sales tax credit if they invest $1 million or more in a facility with at least 75,000 square feet of convention center space. An adjoining hotel cannot be counted toward the total square footage of the tax credit requirement, said Arkansas Economic Development Commission spokesman Scott Hardin.
There aren’t any tax breaks or investment assurances in place with the city of Bentonville for such a project, and Bahr said any discussion with the city about potential incentives should wait until a serious investor is on board to help take on the expensive project. A hotel-convention center will require a significant amount of space, and Bahr thinks the development should be built downtown, where commercial square footage is at a premium right now.
Downtown is where the action is. It’s inviting, and it’s a good place for visitors to the city to be, he said. “Look at all the activity and energy that is taking place in downtown Bentonville right now, between the arts district, the market district, the square.”
In addition to convention center space, the project would include a hotel and likely a parking deck, Bahr said. Compact layouts downtown mean the parking needs to be vertical, and that’s about 10 times more expensive, escalating from $1,500 per space for a basic, flat parking lot, up to $15,000 per space for a multi-story parking garage. All in all, it takes work and time to prove the return on investment to potential financiers, Bahr said.
Though not downtown, an available site for a large-scale development is along Walton Boulevard just south of the Wal-Mart Home Office. An Oklahoma-based investor, Square Deal Capital Inc. of Oklahoma City, paid $56.8 million last fall to acquire the nine-story Bentonville Plaza office building and 16 additional acres. Included in the deal is 8.68 acres south of Bentonville Plaza. The property once was home to the George Nunnally Chevrolet auto dealership, but is now largely a crumbling parking lot. It has been vacant for nearly six years since Nunnally moved to a new Bentonville location on Moberly Lane in July 2011.
To date, Square Deal representatives have not commented on the land purchase, nor have they filed a site plan with the city.
There are two existing convention centers along the Interstate 49 corridor in Northwest Arkansas — the sprawling, 23-acre John Q. Hammons Convention Center in Rogers, connected to the Embassy Suites hotel, and the 13.4-acre Northwest Arkansas Holiday Inn & Convention Center in Springdale.
In Bentonville, there are two hotels between 11,000 square feet and 12,000 square feet of meeting space: the 21c Museum Hotel downtown and Four Points by Sheraton on Walton Boulevard.
Bahr said the city is unable to host mid-sized conventions, and the proposed facility, in terms of size, would fall between the city’s current offerings and the John Q. Hammons Center, which boasts 125,000 square feet of meeting and convention space.
Northwest Arkansas is not the only region looking to tap into the big meetings business.
In Jonesboro, two proposed convention centers are being planned. A 78,000-square-foot, $50 million convention center and 165-room Hyatt Place Hotel near Interstate 555 last year received the blessing of the city’s Advertising & Promotion Commission, which approved a $300,000 investment given in $75,000 installments.
However, recent investor issues caused delays in the project, prompting the A&P to take back $71,000 from the first payment until the development is back on track. Chris Keller, CEO of the entity that’s planning the project, is confident a new investor will carry it forward, according to recent reporting from Talk Business & Politics journalist George Jared.
A $35 million project is proposed to be built on the Arkansas State University campus. The plans include a 202-bed Embassy Suites hotel, a 40,000-square-foot Red Wolf Convention Center, and a Houlihan’s restaurant. The company behind the project is O’Reilly Hospitality Management of Springfield, Mo., according to recent reports. Both convention centers have targeted 2018 for opening.
CONFERENCE ATTENDANCE HIGH
Meeting centers in other parts of the state are showing increases or holding steady in revenue and attendance. The Fort Smith Convention and Visitors’ Bureau reported record revenue for the Fort Smith Convention Center in 2016, at $777,519.
Looking at the center’s 17 highest producing events, $15 million in spending on meetings at the Fort Smith center generated an estimated $293,715 in sales taxes for the city, according to the visitors’ bureau.
In Little Rock, the publicly funded Statehouse Convention Center booked 140,589 convention room nights for 183 events in 2016. Events were down from the previous year at 218, according to the Little Rock Convention & Visitors Bureau’s annual report.
CEO Gretchen Hall said the entity so far in 2017 has held onto increased meetings volume caused by a large spike tied to the temporary closing of the Robinson Center venue between 2014 and 2016. The Statehouse Convention Center was built in 1982 and expanded in 1999, the same year the city built the Verizon Arena. Both projects were made possible by a one-cent county-wide sales tax.
As far as gauging the need for and feasibility of a large-scale convention center, Hall said, “Every destination’s a little different.” She said Little Rock’s Statehouse Convention Center “has been very well utilized,” and the bureau is now aiming for funding of a large-scale, indoor sports facility recommended in a 2015 study.
On a national level, meeting attendance and conference budgets were both up last year, and more than one-quarter of industry professionals expect an increase in meetings bookings for 2017, according to an annual meetings market survey published in March by Convene, the Professional Convention Management Association’s magazine.
The key metrics of budget, attendance and exhibitions space are all increasing but at a slower rate than in 2015, according to the report. Of the 200 respondents from throughout North America, 91% expected their budgets to either increase or stay the same during 2017. One-quarter reported earnings of $1 million or more from events and exhibitions.