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With airport hotel stalled, Hendricks County makes its move

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Hendricks County’s moves to entice a developer to build a conference hotel in Plainfield could further crimp plans for a hotel attached to the new Indianapolis International Airport terminal.

The Hendricks County Convention and Visitors Bureau is offering up to 18 acres in Plainfield and a potentially lucrative government incentive package for the development of a 200-room hotel with meeting space at the intersection of Interstate 70 and Highway 267.

The group, which is funded with a county hotel tax, already owns a 10-acre site at the intersection and said it may buy another eight acres.

If a deal materializes, it probably would slow plans for a high-end airport hotel—but the Hendricks County property also could be vulnerable once an airport hotel is built, said Mark Eble, a hotel consultant and regional vice president in the local office of PKF Consulting.

The market for hotels is miserable—particularly for those near airports. Hotels near O’Hare in Chicago have seen revenues plummet by 20 to 30 percent this year, Eble said. But governments have a way of making things happen since developers are always willing to build with someone else’s money.

“It’s just a tough time to get anything done in the hotel world,” Eble said. “The things that are getting done are getting done with attractive incentives. It all depends on what the county offers.”

The Hendricks County group points to a study it commissioned from Wayzata, Minn.-based Conventions, Sports & Leisure International in 2008 that predicted the county could see an economic boost of $20.5 million in direct and indirect spending from a conference center and hotel.
But Eble said the study relies on numbers from 2007, “the best year for the hotel business in a generation.” So far 2009 has been the worst, he added.

The proposed hotel in Plainfield would be about the same size as one that was supposed to open at the airport this year, a $50-million, 250-room Westin attached to the terminal.

The airport authority in 2007 approved spending $8.8 million to help fund construction of the hotel, which would feature about 15,000 square feet of meeting space. The board had chosen locally based Mansur Real Estate Services from among three potential developers.

But the proposal derailed after Mayor Greg Ballard unseated Bart Peterson and installed a new regime to oversee the Indianapolis Airport Authority. While the new administration tried to put together its own deal, hotel occupancies fell and financing dried up for new projects.

“The biggest problem for the airport is traffic—it’s a beautiful facility and not enough airplanes are coming in,” Eble said.

The airport hotel would take at least 18 months to build, so it couldn’t open until 2011 at the earliest. Meanwhile, several new hotels already are opening near the Indianapolis airport, including a Hampton Inn & Suites and Hilton Garden Inn at the Interstate 70 airport exit. Another 300-room hotel is in the works as part of the Purdue Accelerator Park at Ameriplex Indianapolis, south of I-70 directly across from the terminal.

Susan Sullivan, a spokesman for the Indianapolis Airport Authority, said the airport is soliciting proposals to develop a land-use strategy but has no immediate plans for a hotel.

"We're going to be very deliberate and strategic about developing airport land," she said. "We're not in a rush."

Proposals for the potential Hendricks County hotel are due Dec. 10.

Officials with the HCCVB, including Executive Director Emory Lencke, did not return repeated phone messages or e-mails.

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