GRAND RAPIDS — The Grand Rapids-Kent County Convention/Arena Authority is hitting pause on a task force that is considering the feasibility of building a new convention center hotel and adding a large-scale amphitheater in the city’s downtown.
Citing the effects of the COVID-19 pandemic on the hospitality industry and on local government budgets, Doug Small, president and CEO of Experience Grand Rapids, now expects discussions about a convention hotel will be on hold until 2021.
Small chairs the task force the CAA asked to study whether building a new hotel at the DeVos Place Convention Center would make financial sense. He said the task force was a month or two away from presenting its findings to the CAA board when the coronavirus began to spread throughout Michigan, causing the statewide shutdown in March.
Noting that the task force has not convened for several months now, Small thinks a convention hotel could still be built downtown, but just on a delayed schedule.
“The last part of our industry that will probably come back is the large venues,” Small told MiBiz. “What people will be most scared about is not going to be getting into a restaurant or bar, it’s going to be going to a concert or convention.”
The CAA, a public body that owns Van Andel Arena, DeVos Place Convention Center and DeVos Performance Hall, was initially expected to make a decision on the convention hotel project by the end of 2019. The task force had estimated the convention hotel would cost between $140 million and $180 million, with an annual economic contribution of $82.3 million, based on data from a 2018 study from Chicago-based HVS Convention, Sports & Entertainment Facilities Consulting.
The plan was for the 400- to 500-room convention hotel to be constructed on top of DeVos Place, with a restaurant, lounge, coffee shop, 40,000 square feet of meeting space and a 20,000-square-foot ballroom.
Chris Knape, founder of K Corner Consulting LLC, attributed the pause in part to the task force’s consideration of using the city or county bonding authority to help finance the project.
“Frankly, (COVID-19) has had a huge impact on local government, and with all the uncertainty with local funding on the city and county level, it made sense to see what the long-term effects of this might be,” Knape said.
Much of the data the group had almost finished compiling quickly changed as Michigan became one of the states with the highest number of coronavirus cases in the country, causing shutdowns of most businesses, Knape said.
“We can’t rely on that data in the same way we could in normal circumstances,” Knape said. “It made sense to take a pause and see what long-term impacts this might have.
“This is certainly not the CAA or task force saying that the projects are dead or that they’ll never happen, but the responsible thing is we’re taking care of the assets CAA has already invested in and evaluating what makes sense from a financial standpoint and economic stimulus standpoint.”
The coronavirus has negatively affected most industries, but particularly the tourism and hospitality industries have taken a blow as governors across the country limited travel to prevent the spread of the virus.
The majority of hotels in Kent County have remained open, Small said, but as many as 15 hotels had closed at one point this year because of COVID-19.
Hotel occupancy for April plummeted 85 percent year over year, from 56 percent last year to just 18 percent in 2020.
Similarly, venues of all sizes have been empty since the coronavirus took hold in Michigan, said Rich MacKeigan, regional general manager of DeVos Place and Van Andel Arena.
“We’ve been busy rebooking business, moving business around and dealing with different industry groups in terms of different plans for reopening,” MacKeigan said.
MacKeigan said it is too early to tell when a decision will be made about the convention hotel and amphitheater.
Neither the CAA nor the task force has set specific benchmarks on when to resume consideration for the project, Knape added. The governor’s stay-home order was in place from March 24-June 1.
“Until the country has fully opened up, I just can’t see anything happening until that happens,” said Small at Experience Grand Rapids. “Our priority is going to be on helping those hotels that have reopened to regain their footing.”
Once the task force reconvenes in the future, Small said it is more likely the amphitheater project has “more solid footing” to move forward before the hotel because its outdoor setting better allows for social distancing.
“It’s an outdoor setting, and you can space it out,” he said.
One decision the task force made about the amphitheater was that it should be located somewhere in downtown Grand Rapids, Small said. The group previously considered Millenium Park as a potential location for the large outdoor venue. The focus now is on an urban downtown setting, Small said, but the group has not landed on a specific site.
The CAA received $5 million from the state in 2018 for the estimated $40 million amphitheater project. It was estimated that the amphitheater would create $5.9 million in new spending annually, 410 full- and part-time jobs and $456,000 in new tax revenue.
EDITOR’S NOTE: This story has been updated to fix a typo in a quote from Chris Knape.
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