City, Kite agree to build only one hotel at a time at Pan Am Plaza

rop-panam-p1-2col.jpg

Ongoing disagreement between the city of Indianapolis and a group of downtown hotel owners has prompted city leaders to officially postpone construction of one of the two convention hotels planned for Pan Am Plaza.

Plans for the redevelopment project, led by Kite Realty Group Trust, call for a $120 million, publicly funded expansion of the Indiana Convention Center and two privately funded Hilton-brand hotels totaling more than 1,400 rooms.

IBJ previously reported that city leaders and Kite had been negotiating the development timeline and whether they should move forward with both hotels and the convention center expansion all at the same time as originally planned.

In a letter sent Friday to the group of prominent downtown hotel owners that have been opposed to the project, Mayor Joe Hogsett confirmed that the two hotels will not be built at the same time. Instead, Kite will build the 814-room, 38-story Hilton Signia first, along with an 80,000-square-foot addition to the convention center that would include a 50,000-square-foot ballroom.

Hogsett said construction of the additional 600-room hotel would be delayed to allow the city “to ensure that market demand exists.”

He also wrote that the current design for the Signia hotel would have more meeting space than the Signia in Atlanta, which is expected to have about 75,000 square feet of meeting space and connect to the Georgia World Congress Center—a major competitor to the Indiana Convention Center.

The hotel owners have raised concerns about how much meeting space would be included in the Hiltons, because they say the industry standard calls for 100 square feet of separate meeting for every room. The proposed meeting space for the hotels had previously not been disclosed.

Hogsett’s letter comes in response to a June 12 letter the hotel group, which includes well-known industry leaders White Lodging Services Corp. Chairman Bruce White and General Hotels Corp. CEO Jim Dora Jr., sent to him and the Indianapolis City-County Council last month.

In their letter, the hotel owners made several suggestions that would, in their opinion, improve the project.

They argued that the addition of that many rooms downtown would “destroy the delicate balance of supply/demand that is necessary to ensure employment stability in the downtown hospitality market.”

Their recommendations to ease their concerns included having the city acquire Pan Am Plaza, including the underground parking garage; withhold public dollars from the hotel project; create a committee made up of hotel owners, city and state officials, consultants, convention experts and urban planners to outline a 25-year sensible growth plan for the convention center and tourism industry; and re-issue the request for proposals for Pan Am Plaza after that 25-year plan is adopted.

The letter said White Lodging, which owns the JW Marriott, the Marriott Indianapolis Downtown and the Fairfield Inn & Suites Indianapolis Downtown, would not respond to the new RFP, if the city opted to do that.

“We hope you accept this proposal in the spirit in which it is offered,” the letter read. “That is, to sensibly grow the downtown hospitality and tourism industry, in a manner which obeys the fundamental laws of economics, and which complies with old adage ‘First, do no harm.’”

Hogsett’s response, which did not address the specific suggestions but outlined what he described as a “new framework” for the project, came almost a month after the June 24 date requested by the hotel group for a response.

“While we were aware that this group of hotel owners requested action by the city within a week or two of their most recent letter, our focus continues to be on a negotiation timeline that protects taxpayers and doesn’t rush such a potentially transformative project,” city spokeswoman Taylor Schaffer said in an email.

In addition to the city and Kite agreeing to delay construction on the second hotel, the new framework outlines that the Signia Hotel would have at least 75,000 square feet of meeting space, and Hogsett reiterating that public dollars will not be used to subsidize the hotels.

The city plans to use funds from its downtown tax increment finance district to cover the cost of the convention center expansion and related infrastructure, including a walkway above Capitol Avenue connecting it to the Indiana Convention Center.

“This new framework represents real change from the original proposal, without affecting the benefits of the overall project,” Hogsett wrote. “It also addresses your core concerns about the initial parameters, and we are thankful for the willingness of major stakeholders to come together to seek the kind of compromise and unity that has characterized fifty years of public-private partnership in Indianapolis.”

A spokesman for the hotel owners told IBJ that they have received the mayor’s letter and are reviewing it.

Please enable JavaScript to view this content.

Editor's note: IBJ is now using a new comment system. Your Disqus account will no longer work on the IBJ site. Instead, you can leave a comment on stories by signing in to your IBJ account. If you have not registered, please sign up for a free account now. Past comments are not currently showing up on stories, but they will be added in the coming weeks. Please note our updated comment policy that will govern how comments are moderated.

9 thoughts on “City, Kite agree to build only one hotel at a time at Pan Am Plaza

  1. As somebody who is in the Gencon scene I know that Gencon attendees from out of state want to see Gencon moved just because we do not have enough downtown hotels. All of the downtown hotels sell out in about an hour after they are made available for that week. The ability of downtown hosting a 60,000 person event where 90% are from out of town is a struggle and it seems like we need more hotel space to be able to host other major events such at this (NFL Draft, Superbowl, other large conventions). At the same time, we are not really a tourist destination so I can’t imagine we are filling hotel space when we do not have major events going on…

    1. I seriously doubt GenCon attendees want to move the event out of Indianapolis because of an alleged shortage of downtown hotel rooms. Consider that San Diego’s Comic-Con attracts three times as many attendees with some 55,000 rooms in the greater San Diego region (not downtown, mind you, but in the “region” however that is defined). Marion County, certainly smaller than the Indianapolis “region,” has some 22,000 hotel rooms in its inventory, with even more beyond the city-county limits. That is not even counting numerous Airbnb options that can accommodate anywhere from 1 to 12 guests. Besides, where would GenCon go and get room rates that are competitive with those in Indianapolis?

    2. You are in the ‘gencon scene’ so, you attend. Well, I also attend and I’m from out of state and I have absolutely no desire for it to move from Indy. For starters, I love the layout of the city. Central to the country, easy access in and out and great people in the city. Staying outside of town (even 12-15 miles) has never been a problem if I don’t get a downtown hotel. Not all of the hotels sell out, just the ones that are available for less in the Gencon availability block. Granted, they are at a significant price, but do you think other large city hotels will be as generous with hotel pricing? People that want downtown hotels within 5 minutes from the convention are in for a rude awakening if they want this to move to a bigger city as there are a ton of factors beyond how far one needs to walk. Secondly, Indy has hosted large events such as the Super Bowl, Final Four, Big Ten Football Championship and the draft combine is there every year so, not sure where you are getting the ‘need more hotel space to host other major events’.

    1. Why is it that so many Indy boosters are so obsessed with building more things? It’s because of Chicago, right? Chicago’s bigger and that bugs you. It isn’t the size of the buildings that make a city special. If so, New Orleans and San Antonio would be nothing, and yet both cities have far more heart and soul than Induhnapples ever will.

    2. Anna, I think you are a bit confused. The Chicago Tribune is at http://www.chicagotribune.com. This website is the Indianapolis Business Journal. No one mentioned Chicago, nor does this website contain any Chicago-related news. If you live in Chicago, and you are reading the Indianapolis Business Journal, then you have some serious issues that you need to resolve.

  2. Hey….we try to do the best with the raw material we have to work with. The two cities mentioned by Anna are truly unique, one of a kind. Actually that’s why we have to work harder in other ways.

  3. Anna I. im not sure how you magically dragged Chicago into this post but it seems your’re actually the one more obsessed with what Indy is doing for Indy than Chicago is. I seriously doubt Indy wants to be like Chicago. high crime and cost of living. terrible school system and one of the most corrupt police department as well as politicians. indy is doing exactly what it needs to do to stay relevant and to compete with its peers. maybe its Chicago feeling the pressure of indy making its move with the economic job growth here. Chicago constantly is losing residents as Indy is at a steady pace of gaining population.Indy banks on major conventions to come here,its a city pride thing and you need the amenities to accommodate these large events. have you paid attention whats all coming within the next five years? big ten college football championship,NBA ALL star game,mens NCAA final four and the FFA,GENCON and the firefighters convention. theses are major conventions that even Chicago would love to steal from Indy but it cost too much to host these events in Chicago.so I think Indy has truly gotten the attention of the rest of the country and all eyes are always on Indy and plenty of mid size cities are trying to imitate what Indy is doing.

    1. Kevin,
      I think you hit the nail on the head. Everyone rails against Indianapolis as trying to be the next Chicago in the midwest. However, that hardly seems like the vision of our politicians and community leaders in the city or across the state. If anything we want to avoid every mistake Chicago has made because look at the disaster they are in. Really to me Indianapolis isn’t remotely comparable to cities like Chicago or San Francisco. Indianapolis is way more competitive and WAY cheaper to hold events in for the attendees and the people putting on the event itself.
      Really I think it’s funny because people from cities like Chicago I think are realizing that cities like Indianapolis are better for business without being so large and it pisses them off and shits on their ego that more people are paying more and more attention to Indy than their own home towns! XD