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BOOKED UP

Convention Center expansion could further Columbia hotel growth — but it’s not a done deal

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Columbia Metropolitan Convention Center sits in the Vista.

When you live in a town, you’re not the most likely to frequent its hotels. So Columbia residents might not realize that our downtown is enjoying a boom in new hotels. 

The city now has more than 1,800 hotel rooms in the city center, up from 1,100 five years ago, as newcomers such as Aloft (which opened in 2017) and Hyatt Place (which opened in 2015) have brought more higher-end options to the region than ever before. 

And even with this influx of new rooms, Columbia continues to post impressive occupancy rates, with an average of about 73 percent, which is high by industry standards. 

“That speaks very loudly about the demand,” says Bill Ellen, CEO of Experience Columbia SC, the organization that operates the Columbia Metropolitan Convention Center and promotes travel to the region.

That growth of high-end hotel rooms is set to continue, with at least three more either proposed or currently under construction. 

And two more could soon be added to that — if the local governments agree to expand the publicly owned convention center. Developer Ben Arnold has proposed adding two more high-end hotels to his 12-acre Vista site to serve a greatly expanded convention center.

The question facing Midlands leaders is whether to invest millions in the expansion, even as hotel growth remains strong. To get Arnold’s two added hotels requires a further public investment, and while development downtown is thriving, the project’s approval is no sure thing. 

The proposal also challenges the community to double down on betting on itself as a destination, one that can draw people from around the Southeast to visit its attractions — and book more hotel rooms.

Arnold’s Ambition

Talking about his latest Columbia hotel project, Arnold is exuberant about the possibilities, but becomes more wary and more careful as he discusses the politics of his native city.

Arnold, a real estate developer who now makes his home in California, believes that his plan for three hotels on 12 acres of land that borders Gervais Street behind the Columbia Metropolitan Convention Center, where the Vista continues to slope toward the Congaree River, can push Columbia to substantial economic and tourism growth. 

Arnold already has announced plans to put Columbia’s first four-star hotel on his site adjacent to the Adluh Flour mill. Now he hopes that the community will agree to expand the Columbia Metropolitan Convention Center using public funds, which he would match by building a huge parking garage with public spaces and two more hotels, including a Hyatt Regency, to accommodate an expected influx of visitors.

“The project is a total winner,” Arnold proclaims. “It’s really laid out there for Columbia.”

Arnold was born into business. His grandfather founded a successful liquor distributorship, Ben Arnold Beverage, which was later taken over by his father. Arnold took on real estate instead of liquor. His list of Columbia projects includes the Vista Lofts apartments and the Palms on Main Street, which has an expansion under construction on the former Moe Levy’s site at the corner of Assembly and Lady.

Arnold says that it was his family’s work in the distribution business, rather than development, that resulted in him owning the former railroad along Gervais Street that is the foundation of this new project. For years, the space was home to the Jillian’s arcade bar and restaurant. It currently includes Junction 800, a 16,000-foot event space that opened in November.

Now Arnold believes that the Vista acreage belonging to his real estate company is perfectly situated to bring something special to Columbia.

This summer, Arnold’s company announced plans for one new hotel that is already on its way to the site to be called Anthem. The four-star hotel will be part of Hilton’s Tapestry brand of high-end hotels. 

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Rendering of the proposed Hotel Anthem

The 11-story hotel will cost about $40 million and feature a full-service restaurant and two bars, including one on a rooftop and another modeled after a speakeasy. Construction on the project would begin in July. At the time of that announcement, Arnold’s company released a site plan showing several buildings across the site, including at least one more hotel, apartments and a parking deck, plus green space areas. The idea behind the plan was that an expanded convention center would need more space for both parking and hotels to serve the bigger crowds coming to larger events.

If the convention center goes forward, Arnold has plans for two additional hotels on his site. The first would be a 15-story, 384-room hotel in the Hyatt Regency chain. On the scale of hotel quality, it would be rated at 4½ stars, Arnold says.

“It would be the nicest hotel in Columbia by far,” the developer offers. 

The Hyatt Regency would be a full-service hotel dedicated in large part to meeting the convention center’s needs. A convention center needs a nearby hotel that can set aside blocks of rooms long into the future so events can plan on having enough space for their attendees.

The third hotel on the site if the center expands would be a 130-room hotel in the Hilton family of brands, Arnold reports. The hotels would be within 1,500 feet of the convention center, since event planners want their attendees to have an easy walk to the event. In the case of this proposed project, the hotels also would be within an easy walk of another major attraction, the University of South Carolina’s Colonial Life Arena, which hosts men’s and women’s basketball games in addition to big-time concerts and other events.

“Even if the numbers are half what we think they could be, it’s still a good idea,” Arnold said at the time of the Anthem announcement.

A Bigger Building

For Ellen, the Experience Columbia CEO, it’s past time to make the convention center bigger, so it can accommodate many gatherings for which it currently can’t even put in bid.

He keeps a binder on his desk of proposals for conventions and other events that the organization has to pass on because their size requirements make the Columbia center unsuitable. The binder is thick enough to require two hands to pick it up.

The convention center’s current exhibition hall downstairs is almost 25,000 square feet, but that is far smaller than the big rooms in many other convention centers and the smallest such exhibition center in the Southeast, Ellen says.

Facilities in comparable cities such as Greenville, Knoxville, Raleigh and Greensboro offer about 100,000 square feet of space.

Ellen believes that Columbia has the downtown amenities right near the convention center that event planners want, and that they are looking for new destinations to book their events, instead of using the same places over and over. But their need for facilities with big rooms and enough space for breakout programming separate from the main event take the Columbia off the table.

“Outside of the four walls of the meeting space that everyone has, what they’re looking for is what is there to do and how easily accessible it is, and what is the experience going to be like outside of the meeting,” Ellen says. “We just don’t have enough space to accommodate many of those groups.”

Ellen recalls a national organization of Corvette owners that considered Columbia as a place to hold their annual gatherings, but they wanted to put 90 sports cars in one area, which the convention center here could not accommodate. The Experience Columbia team suggested instead that the event and its Corvettes could be put in several rooms on the two levels of the convention center, but the event’s organizers chose to go up the road to Greenville.

John Folsom, CEO of commercial real estate firm Colliers International South Carolina, sees the project as adding to the desirability of the downtown district and keeping Columbia on a level with competing cities. Hearing that Columbia is losing events to cities such as Florence because of convention center space is a sign that it’s time to upgrade, he reasons. 

“In my mind, that’s a wake-up call,” Folsom says. 

Government Concerns

Columbia Mayor Steve Benjamin also believes the time has come for convention center expansion to help push downtown economic growth forward. 

“It’s crucial that we expand the convention center,” Benjamin says.

Local officials will have to be careful about the funding plan to pay for the project, and those discussions already are underway, Benjamin says.

While Arnold will be in line for tax credits for the public infrastructure that he builds as part of his project, the private investment in the hotels and other facilities will far outweigh what the public spends, the mayor contends. 

“That is just the way it should be,” Benjamin says.

Indeed, the convention center may well have already been too small when it opened in 2004. An invisible design feature, one that was added with future possibilities in mind, certainly speaks to the notion that expansion was intended from the beginning.

The south wall of the convention center, which faces Colonial Life Arena and is the current edge of the main exhibition space, was designed to not have to carry the weight of the structure. Because it is not load-bearing, that makes it far easier now to expand the building into the current lower parking lot.

Of course, any such expansion would still have to be paid for. The original convention center construction was a joint project of the city and Richland and Lexington counties. It was financed with a 3 percent special fee added to hotel bills in those areas, called a tourism development fee.

The bonds to build the structure will be paid off in the year 2022, meaning that the fees collected could be used to pay, at least in part, for the expansion. The fees currently bring in between $6 million to $7 million annually. This hotel tax and the event fees that it collects have covered the construction bonds of the convention center since it opened, Ellen says.

“Unless you’re a resident and you happen to stay in a Columbia-region hotel, you haven’t paid a dime,” he offers.

Ellen explains that a larger convention center could attract more events with attendees from around the Southeast, which would improve its economic impact. If people travel from out of state, they are more likely to book more hotel room nights rather than commuting home at the end of the day.

The likely cost for construction of an expansion that would take the main exhibition hall to 100,000 square feet is roughly $60 million, the CEO says. Paying for that, however, is a question for local governments to settle.

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Columbia Metropolitan Convention Center

Columbia City Councilman Daniel Rickenmann says that the local governments have plenty of work to do before any plan to pay for the expansion can be agreed upon. 

“There are a lot of unanswered questions,” he notes, highlighting a few:

How would the expansion be financed? What would the city’s legal exposure be? What is a reasonable expectation of the return on investing in a bigger center?

One question already has been answered, according to Rickenmann and others: Lexington County is out this time.

It was a major accomplishment of cross-river cooperation when the two counties joined with Columbia to build the facility in the Vista. It has been made clear by Lexington County leadership that they have other priorities now, including improvement of their own crowded roads, Rickenmann and others confirm.

Rickenmann often has been a skeptic of government-led spending projects, challenging the need and price tag of such efforts as the required city-provided parking garages that are yet to be built at the BullStreet District.

Does the councilman think the expansion is, in general, a good opportunity for Columbia?

“I would say, ‘Yes,’ but we have to be smart and calculating,” he says.

Rickenmann cites other city projects such as long-debated improvements at Finlay Park, the ShotSpotter system for combating gun violence, and city vehicle replacement needs as competing for the attention and dollars of the city. He also points to the city Department of Public Works and other agencies that have been working with strict budgets for years. 

“How many times can we ask them to tighten their belts?” he asks.

The downtown area is getting at least three new hotels with no convention center expansion to drive them, so that shows that growth is coming without taking action on the convention center project as an economic incentive, Rickenmann says.

Full Hotels

The growth of hotel demand shows that more people are seeing Columbia as a place to stay rather than always making sure to spend their night on a business trip in other cities such as Charlotte or Charleston, according to Experience Columbia’s Ellen.

The rates both for occupancy and average daily room rate both show how popular Columbia’s downtown hotels are, he contends. The average daily room rate is above $150, Ellen reports, noting that in years past you would have to hunt for a hotel room charging more than $100 per night.

That growth reflects how many people today want to be in a walkable downtown area rather than out by the interstate, says Rich Harrill, a University of South Carolina professor and director of the school’s International Tourism Research Institute.

He explains that downtown growth in Columbia has established momentum. One important factor he cites: affordable and available land for new development close to the city center. That is much shorter supply elsewhere than it is in Columbia.

“There is no other city in the United States of its size where the real estate prices are in such a sweet spot,” Harrill posits.

Other cities in the region that have established national reputations as desirable destinations have become much more expensive for investment, Harrill says, listing Asheville as one example.

Already, those investors have brought more national brands to Columbia’s downtown hotel market. A Holiday Inn is open and another Holiday Inn Express is coming, both within blocks of Main Street. Another investor group wants to bring a Cambria hotel to Park Street, while an AC Hotel from Marriott is slated to be part of the project being launched on the former Kline Iron and Steel site at the corner of Huger and Gervais.

Even with all of the national brands and high-rise hotels that have been added or are planned, there still is room for a locally run boutique hotel to do well downtown, according to Rita Patel, who co-owns Hotel Trundle, now the area’s only such business, with her husband, Marcus Munse. The 41-room hotel opened almost two years ago just off Main Street on Taylor. 

After its two-year ramp-up period, the hotel is hitting its expected targets for both occupancy rate and revenue, Patel says.

The hotel has used community engagement, such as a partnership with the Columbia Museum of Art, to help it connect with potential customers, she says. Recent big events, such as the museum’s Van Gogh exhibit and a long run of the Broadway show Wicked at the Koger Center in January and February, have helped keep the hotel well-occupied during their runs.

The audience for Hotel Trundle comes mostly from the Southeast, she says, and they are looking for a unique and fun experience, something different than they can get at a chain hotel.

“Our guests are not looking for loyalty programs,” Patel quips.

Time to Decide

Arnold believes that 2020 is the time to make a decision on the expansion of the convention center. The bonds that built the original building are being paid off in 2022, clearing new capital to invest. He has acquired, and is now paying taxes on, the additional land to connect his Gervais Street section to the convention center, making such an ambitious project possible.

USC is also supportive of the plan, Arnold says. One of the hotels could be a venue for students from the university’s College of Hospitality, Retail and Sport Management. University leaders have expressed interest in the possibility of having students get on-the-job learning exposure, learning management techniques and helping it to function.

The added hotel space also would be a boost for nearby Colonial Life Arena, which got to host NCAA March Madness men’s basketball games in 2019 despite a shortage of full-service hotels in the city. Columbia received a waiver from the NCAA over hotel rooms to host the first- and second-round games.

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Columbia Metropolitan Convention Center

If the community leaders decide not to pursue an expansion of the convention center now, Arnold will have to change his plans for the area he owns, likely creating more apartment spaces and less public parking, taking two hotels and about 675 hotel rooms out of his plan.

The developer says he would much rather be part of the convention center’s expansion and the continued growth of his hometown. 

“I feel like everyone wants this to happen,” he says. “It’s really laid out there for Columbia.”

Ellen believes that Columbia’s downtown will continue to be a favored destination for hotel investment as higher-end hotels attract visitors who previously would have headed down the interstate for accomodations.

“Today’s travelers are very well-educated in what’s out there in the various markets,” the Experience Columbia CEO says. “They know what they want, what their expectations are, and that is what they expect.”

Could Columbia, in collecting several new hotels, including the three on Arnold’s site, add so many rooms that the market becomes overcrowded? Ellen says that he does not see that as likely because the city is starting way behind.

“There’s always a risk that you can become oversaturated, and I think there are markets that have experienced that,” he offers. “However, I think we’ve been so underserved in the past that we are catching up to where we should have been.”

He admits that the impending threat of the coronavirus and possible disruptions to business travel and area events — officials in Austin, Texas, forced the hugely popular arts festival and conference South By Southwest to cancel last week — could hurt the market momentarily. But digital communications, including online conferencing, have made no dent in the demand for meetings and business trips overall.

“The Skype revolution and the technology never replaced business travel. That just never happened,” Harrill says. 

Those who are building hotels are keeping an eye on travel and demand, Ellen says. He doesn’t see them slowing down any time soon.

“I think these investors, they’re studying the numbers,” the CEO reasons. “I don’t think they’d be investing the millions of dollars they are if the numbers weren’t still strong.”

 

Follow him on Twitter at twitter.com/mikefittsat140

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