Anne Linehan, Kevin Whited and Cory Crow note this week’s “are you kidding me?” moment from City Hall — two Nancy Sarnoff/Chronicle articles reporting on the trial balloon that Mayor White floated about building a second large convention hotel in downtown Houston next to the George R. Brown Convention Center and the existing 1,200 room, city-owned Hilton Americas Hotel.
Another large downtown convention center hotel is surprising to anyone who has been following the Harris County government’s fits and starts in regard to the proposed Astrodome hotel redevelopment project. However, Mayor White recently engineered the hiring of a new leader (Greg Ortale) for the local convention bureau and it looks as if the prospect of elevating Houston to the small tier of U.S. cities with adequate facilities to handle the largest conventions was part of the pitch in that hire.
Does building another big downtown hotel make sense? In and of itself, the answer is clearly no. Private equity interests have no interest in risking their money on such a project, just as they have no interest in doing the same in regard to the Astrodome hotel redevelopment. Thus, the deal only begins to make sense because of the prospect of public financing, which is how the City financed the first downtown convention center hotel.
Despite the lack of any meaningful analysis in the Sarnoff/Chronicle articles, the first hotel has been anything but an unqualified success. The Mayor suggests that the City spent $300 million on it (that seems way low to me) and that its presently worth “at least $350 million” (yeah, but who’s buying?). There are a bunch of less risky investments that the City could have made with that $300 million that would have generated more than the speculative $50 million equity that Mayor White thinks the City has in the Hilton Americas.
But the larger question is whether the City ought to be in the business of building convention center hotels in the first place? As Cory points out, the rationale for the investment is that, with the larger number of convention center hotel rooms, Houston could compete with the small number of cities (Las Vegas, Orlando and San Antonio) for the really big conventions that need the concentrated mass of hotel rooms that only those cities offer. Although transit is an issue in getting from the downtown convention area to Houston’s cultural areas and attractions, I can see how Houston would be a viable alternative to those other cities. For example, Houston’s restaurants, theater district and museum district are better and more diverse than any of the other three alternatives. And Vegas is not every large convention’s cup of tea.
But given the alternatives, is another large investment in a second convention center hotel really a prudent allocation of the City of Houston’s financial resources? Here is where I have my doubts. As I’ve noted many times in regard to Houston’s light rail boondoggle, allocating $300-$500 million on another downtown convention center hotel has real consequences, such as leaving inadequate resources to make improvements to Houston’s infrastructure (flood control and fixing of traffic hotspots, to name just two) that would dramatically decrease the risk of death and property damage. Stated simply, does it make sense for the City to be investing that kind of money in a downtown convention hotel when convention attendees won’t be able to get to it from Hobby Airport? The main drag to the Gulf Freeway and downtown from Hobby Airport — Broadway Street — is already virtually impassable during even moderate rainstorms.
Maybe taking a flyer on a second downtown convention center hotel would make more sense but for the billions blown on the light rail system. But the size of that boondoggle leaves a very small margin for error in regard to allocation of the City’s remaining resources. At this point, a large investment in a second convention center hotel appears to fall well outside that small margin.
By the way, speaking of the Astrodome hotel project, it appears now that even Harris County officials believe that the deal is dead. However, the proposed alternative is to turn it into a horse barn?:

Meanwhile, there could be three or four groups prepared to present plans to transform the Dome.
The Houston Livestock Show and Rodeo may be one contender, said Leroy Shafer, the rodeo’s chief operating officer. The rodeo and partners are looking into whether the Dome could serve as a replacement facility for aging Reliant Arena.
Astroturf and tiered stadium seats would give way to more than 1,000 horse stalls and an arena with a capacity of at least 6,000. The vast open area where former Astros stars Jimmy Wynn and Jeff Bagwell hit towering drives would be turned into a three-story exhibition and stalling space, Shafer said.