PORTLAND, Ore. — The Hyatt Regency Portland at the Oregon Convention Center plans to re-open on May 24 after shutting down operations for more than a year.
The sleek 600-room hotel, which took years of planning and millions in public funding, opened in December 2019 only to suspend operations four months later due to the COVID-19 pandemic.
Metro, which runs the Oregon Convention Center, hoped the $240 million project would attract new conferences and draw thousands of big-spending business travelers to Portland.
Proponents promised the convention hotel would generate enough revenue from guest taxes to pay off $60 million in bonds used to fund the project.
Instead, Metro has been forced to tap into reserves to make bond payments while hotel rooms sat empty.
Metro expected taxes on hotel guests at the Hyatt would generate $2.9 million last year. Instead, Metro collected only about $150,000 in tourism taxes at the property.
To cover debt payments until the hotel re-opens, Metro relied on reserves from the Visitor Facilities Trust Account (VFTA), funds generated from lodging and car rental taxes in Multnomah County.
In March, Metro, along with the city of Portland, Multnomah County and Travel Portland made cuts to VFTA spending to ensure there was enough money left in reserves to make debt payments.
“Metro could well find itself forced to dig pretty deep given these circumstances,” said Heywood Sanders, a professor of public administration at the University of Texas at San Antonio.
Sanders warned a prolonged shortfall in tourism tax revenue could force Metro to deplete resources needed elsewhere.
“Is that hotel going to produce the kind of economic boom that had been promised? At this moment that looks enormously questionable,” warned Sanders, a longtime skeptic of the project.
The Hyatt Regency Portland, which sits across the street from the Oregon Convention Center, relies on convention guests and business travelers.
The convention industry has been among the hardest hit by the pandemic, which shut down mass gatherings and caused corporate travel to grind to a halt.
“This is an industry nationally that has been really struggling and doesn’t look like it is going to come back any time soon, if at all,” explained economist Joe Cortright of Portland.
Cortright believes some businesses may reconsider the need for workers to travel to conferences.
“The advent of Zoom meetings and other sorts of distance learning and work arrangements are likely to put a permanent dent in the market,” said Cortright.
Additionally, Cortright explained Portland will be vying against other cities hungry to attract large conferences and often willing to provide incentives to convention planners.
“It’s a very, very tough market to compete in,” explained Cortright.
Metro’s chief financial officer Brian Kennedy believes financial conditions will improve within the next five years.
“There’s still strong interest in groups coming to Portland and the convention center hotel is an important part of that,” said Kennedy.
Kennedy believes Metro has enough money available in reserves from tourism taxes over the past decade to withstand a downturn in convention bookings for several years.
The VFTA, a fund jointly managed by Metro, the city of Portland and Multnomah County is forecasted to have $16 million in reserves, down from $22 million last year according to Metro spokesperson Nick Christensen.
“With pent-up demand for travel and increased distribution of vaccines, we expect leisure travel to lead our recovery, followed by increased demand from group business and business travelers as we move through 2021 and into 2022,” said Shane Nicolopoulos, general manager of the Hyatt Regency Portland at the Oregon Convention Center.
The uncertainty surrounding the pandemic has made it difficult to secure future events, explained James Jessie, chief sales officer at Travel Portland.
“COVID restrictions and limitations have resulted in us being one of the last states to open for large group gatherings and uncertainty around when our regulations will be fully lifted have impacted our ability to hold on to and book groups for 2021,” said Jessie.
Travel Portland explained bookings remain strong for 2023 and beyond- including two deals inked just last week for meetings in 2024 and 2026.
Unlike other luxury hotels in Portland, the Hyatt Regency at the Oregon Convention Center is separated from downtown by the Willamette River.
The Hyatt needs a steady influx of convention crowds and business travelers to survive, said industry experts.
“The hotel’s performance is much more highly tied to the convention center’s appeal and the convention business than it would be if it was next to a major employer or in the heart of downtown Portland,” explained Sanders, the professor of public administration. “I suspect it is going to underperform for a while.”