Published: Jan 09, 2011 02:00 AM
Modified: Jan 09, 2011 12:19 AM
My company has managed the Durham Convention Center successfully since we bought the old Omni Hotel in 1996 and spent $17 million upgrading it to a far better Marriott. At the time, downtown Durham was struggling. Since then, our hotel improvements and our management of the Convention Center have contributed to downtown's renaissance.
The Convention Center's problem the past two years has not been mismanagement; it has been the severe national economic downturn amid The Great Recession - pain that has hit our hotel hard, as well. Much of the recent unbudgeted losses are simply the result of sharply lower demand for group and convention business as America's economy tanked.
Unlike us, the other bidder under consideration, Global Spectrum, has not offered to cap the subsidy the city and county would pay toward the Center's operation going forward. Instead, Global Spectrum has merely floated a rosy estimate of operating costs, with no guarantee whatsoever.
We, by contrast, proposed a maximum annual subsidy cap of $1 million - which would drop as the national economy recovers and Convention Center revenue increases. City and county leaders, as well as the local press, should carefully scrutinize both proposals.Our new offer
The city and county staffs involved have never asked us to negotiate our proposed subsidy cap or other elements of the deal to achieve terms they would find more acceptable.
But we get the message. At a meeting Tuesday with elected leaders of the city and county, I'll present a fixed-price contract proposal to manage the Durham Convention Center for the city and county at what we believe they will find a very attractive price. We support the city and county's efforts to be as efficient as possible on behalf of Durham's taxpayers.
Since the financial bottom line has emerged as paramount, Durham's elected officials should instruct their staffs to negotiate with us or rebid the management contract, requiring all bidders to commit to guaranteed, enforceable, annual subsidy caps, as we alone have done.Practical realities
When the Convention Center was built in the 1980s, the hotel was built on top of it. They are essentially one building. The Convention Center and the hotel were intended, designed, and built to operate as one unified facility. Splitting the management of the Convention Center and the hotel is impractical and would result in inferior customer service.
Durham taxpayers benefit from the joint management because Marriott's brand strength helps bring valuable business to the Convention Center. Dividing the management would sacrifice those critical bookings, roughly one-third of the Convention Center's business.
What's more, splitting the management could cost downtown Durham its Marriott. Here's why: We lease from the city and county the space above the Convention Center for the hotel. Under the lease, we are required to maintain our Marriott franchise. And that franchise calls for us to manage the Convention Center.
Losing the Marriott hotel brand as a result of dividing the management would ill-serve the city and the county - while benefiting Durham's competitors throughout the Triangle.Don't go backward
Splitting the management of the Convention Center from the hotel would create an unduly complicated, inefficient, and inferior management structure. It would imperil a vital, unified economic catalyst that has contributed to the rebirth of downtown.
Such a move could not possibly serve well the long-term interests of Durham, its economy, its downtown revitalization, or its taxpayers.
Lance T. Shaner is the chairman and CEO of the Shaner Hotel Group.