GRAND RAPIDS, MI - With 800 hotel rooms under construction in downtown Grand Rapids, does the public authority that owns and operates DeVos Place convention center need to get into the game?
That's the question the Kent County/Grand Rapids Convention/Arena Authority (CAA) hopes to answer with a $50,000 market study it authorized on Friday, March 2.
HVS, a Chicago hotel consultant, will determine if there's a need for a 400-plus room convention hotel at the DeVos Place Convention Center. The study also will look at the impact of building a separate hotel in a CAA-owned parking lot behind the Van Andel Arena.
The study comes as five hotel projects bringing 800 new rooms to the downtown area are being built or will break ground this spring.
"A rising tide will lift all boats," said Rick Winn, a CAA board member who was part of a CAA task force that urged the authority to consider building a 24-story hotel with more than 400 rooms in an under-utilized section the DeVos Place convention center.
Winn is president of the Amway Hotel Corp., which operates three hotels with more than 1,200 rooms and plans to manage another 300 rooms when a Hyatt Place Hotel and an AC by Marriott Hotel are completed next year.
While a new convention hotel may add competition from the public sector for his privately owned hotels, Winn says it's worth looking at if it will elevate Grand Rapids as a market for big conventions.
Developers who are building new hotels are not as open-minded.Five hotels are under construction in the downtown area surrounding the DeVos Place Convention Center.
John Wheeler, owner and developer of a 160-room Hyatt Place hotel at 150 Ottawa Avenue NW, says the CAA should not be competing with the private sector and build a hotel.
"I'm not even remotely close to supporting this," said Wheeler, whose Orion Construction Group is building the hotel and a 17-story office building next door that will serve as the headquarters for the law firm of Warner Norcross & Judd and Chemical Bank.
"My theory is that a public entity with public property should not have the ability to compete with private taxpayers' dollars," said Wheeler, whose hotel will be operated and managed by the Amway Hotel Corp.
"I'm not sure I'm comfortable with the public sector competing with the private sector," said Ed Finkestein, whose EdMark Development Corp. opened a Homewood Suites by Hilton about a block away from DeVos Place in 2016.
Although his 110-room hotel is operating at near-capacity and caters to a business traveler rather than convention guests, Finkelstein says he hopes the CAA will create public-private partnerships if they decide to build a hotel at the convention center.
"I'm going to withhold judgment," said Sam Cummings, managing partner of CWD Real Estate Investment, downtown's largest property owner and the owner of 250 Monroe, an office building located across the street from the proposed hotel and the Fifth Third Bank office complex.
For CWD Real Estate Investment, the question raises a number of conflicting issues. CWD is converting an old warehouse at 50 Monroe Avenue NW into a 130-room AC Hotels by Marriott that will open in 2019 and also be operated by the Amway Hotel Corp.
One of CWD's owners is Dan DeVos, a member of the DeVos family which co-owns Amway Hotel Corp. DeVos Place was named for his father, Amway Corp. co-founder Richard DeVos.
Several blocks north of the convention center, Suburban Inns is building a 246-room Embassy Suites by Hilton on Monroe Avenue NW.
"If the result has broad public benefit in terms of being a business driver for the convention center and area businesses, it would be fine," said Peter Beukema, chief operating officer for Suburban Inns.
"Such a hotel may also benefit other hotels because a convention center hotel should indeed help to draw conventions and related business to our market," Beukema said. "
"However, I would prefer that the project be a public-private partnership bringing in some of the local hoteliers like Suburban Inns since we are stakeholders in this community and have experience and a track record of being a community asset," Beukema said.
Suburban Inns relies mainly on business travelers to local companies, Beukema said. "These businesses have a nice demand for smaller events and meetings, and other business activity provide a large collective demand mid-week and all year round," he said in an email.
The push to explore a new convention hotel at DeVos Place was driven by a 2016 study that concluded the city needs another 400-plus room convention hotel if it wants to continue to grow as a destination for regional and national conventions.
With 8,300 rooms in Kent County, hotel operators are enjoying a boom in business travel, weekend visitors and the convention visitors, said Doug Small, president of Experience Grand Rapids, the county's convention and visitor's marketing agency.
Kent County's hotels took in almost $211 million in revenue last year, increasing their room occupancy from 66.6 percent in 2016 to 67.2 percent in 2017.
That's better than the national occupancy rate of 65.9 percent and statewide occupancy rate of 61.4 percent, said Small. Those favorable occupancy rates attract developers and investors, he said.
Most of the new hotels rooms built in recent years have relied on business travelers for their bread and butter, Small said. Weekend visitors who come for the arts and cultural attractions were up last year as well as sports events and tournaments.
Selling Grand Rapids to large conventions requires another approach, Small said. Convention planners want rooms within walking distance of the convention halls and meeting rooms that are close at hand.