Monday, March 12, 2012

John Sharp, JS Reporter, Writes About the Planned New Marriott in Peoria

For nearly 40 months, Peorians have been hearing the name "Marriott" paired with "Downtown."
The only problem, there is no Marriott Hotel Downtown connected to the Peoria Civic Center.
That could all change this month, once the final details involving a lease agreement between the developer, EM Properties, and the Catholic Diocese of Peoria are settled.
After that happens, and a closing goes as scheduled, the city could showcase its new 284-room refurbished Hotel Pere Marquette with the Marriott name attached during the 2013 Illinois High School Association March Madness tournaments.
"It will be nice for our four-star Marriott Pere to open and re-establish the bar for superior quality in service in Downtown Peoria," Mayor Jim Ardis said. "Having our hotel attached to our Civic Center was critical and having the top name in the business on the hotel was even more important."
The taxpayers' commitment on the Downtown project includes a $32.5 million bond and a $7 million loan to the developer.
For that investment, Peoria gets a full-service, luxury Marriott hotel backed by a lot of faith from city taxpayers that the Maryland-based corporation can provide a return suitable to satisfying bond repayments for the next 23 years.
"I think having a Marriott flag with a four-star hotel attached to it is going to be a huge drawing card," 3rd District City Councilman Timothy Riggenbach said. "I think there are a lot of different benefits it will bring that you can't really put down on paper."
Corporate profile
Marriott International Inc. is a Bethesda, Md., Fortune 500 company that employs 129,000 people - slightly more, corporate-wide, than the 115,000 population of the city of Peoria - generating $12.3 billion worldwide in 2011, with a net income of $435 million.
Its stock sells at about $35 a share, or lower than competitor Starwood Hotels & Resorts (which includes Sheraton and its Four Points hotels), which sells at $54 a share, though Starwood's annual revenue is considerably less. Hyatt Hotels, which sell at about $40 a share, generated about $990 million in revenue.
Marriott's corporate ownership has been steady, with J.W. Marriott Jr. serving as CEO since 1972 (his father first began the business, as a root beer stand, in 1927).
"I think they are a top tier brand," said Thomas Maier, assistant professor of leadership and revenue analytics at DePaul University's School of Hospitality Leadership. "I think there is a synergy between the brand loyalty and recognition and . . . it will be a combination of reasons people will want to go to Peoria for a meeting."
The corporation operates about 3,500 hotels and 600,000 rooms, or about 9 percent of all hotel rooms in the U.S. It ranks third or fourth in online listings of the largest hotel chains, operating fewer properties than Wyndham Worldwide, but more than Starwood and Hyatt. The Chicago-based equity analyst company Morningstar places Marriott International at No. 2 in the U.S.
"Marriott, of course, is a well-recognized brand in terms of the number of rooms they have and their rankings," said Kara Wolfe, associate professor and director of the hospitality leadership program at Bradley University.
While the area already has Marriott properties in Peoria and East Peoria, it doesn't have any hotel property like what is anticipated to be connected to the Civic Center. The $92.8 million complex will have 401 rooms, making it the largest hotel property in the area.
The new Marriott complex includes a $23.5 million renovation of the Hotel Pere Marquette and the construction of a 117-room, $14.2 million Marriott Courtyard where Big Al's strip bar and its adjoined taverns are located.
Once closing takes place, renovation work is expected to commence immediately inside the Pere Marquette so it can open by March 1, 2013. If not, the city could get $41,000 a month from EM Properties.
Construction also is expected to begin shortly on the new Big Al's on Jefferson Avenue across from the Peoria Civic Center. It will replace the current venue on Main Street, which will be demolished for the new Marriott Courtyard.
The overall project has arguably been the most talked about and scrutinized development in Downtown Peoria, aside from the museum project, since the Peoria Civic Center's development in the late 1970s.
There have been multiple blown deadlines and three redevelopment agreements have evolved since the first Marriott Hotel design was introduced in 2008. It was redesigned into the present look - two hotel towers along Main Street connected via a $6.3 million skywalk and parking garage - in 2010.
Once at $102 million, the project's costs have been lowered to $92.8 million largely because a $9 million developer's fee was cut.
Financing had been difficult during the recent economic recession when EM Properties' Gary Matthews was trying to finalize the deal.
The Marriott name isn't immune to economic recessions, either.
According to a Feb. 15 Morningstar analysis, the company's North America hotels generated more than 80 percent of hotel revenue in 2010, "exposing the company to an economic downturn in North America to a greater extent than competitors." Morningstar is predicting revenues per available room - which had grown industry-wide from 2010 to 2011 - to contract in 2013 or 2014.
"In the event that nonfarm payrolls in the U.S. start to decline and the economy contracts, Marriott stands to experience a deterioration in financial results," according to the analysis, written by stock analyst Chad Mollman.
Mollman, though, recognized something that Peoria city officials and Matthews have been touting since the Marriott name was first attached to the property - the company's loyalty program called "Marriott Rewards," which offers travel and leisure discounts.
"People, when they are talking about loyalty programs, are looking at the value perception," Maier said. "With Marriott, with their different product experiences that you can have with resorts and vacation ownership, they have opportunities and partnerships with many vendors and product lines that provide a good value."
A corporate spokesperson did not return a call for comment from the Journal Star, but Ardis said the company has been "wowed" by the Civic Center and its convention and theater components. He said Marriott representatives have visited Peoria "many times" since the project was first introduced.
Boosting Downtown
Peorians who are skeptical the Marriott's brand can't sell should look to Normal, where a much smaller Marriott property has served as an anchor to a downtown-related redevelopment project.
That project, much like the Peoria hotel, is partially financed by the municipal government.
It is somewhat similar in its deal as East Peoria's agreement with hotelier John Q. Hammons for the Embassy Suites and Conference Center, which opened in early 2008. The more than $60 million project was constructed with taxpayers' assistance; $25 million in land, infrastructure and conference center construction paid back through taxes generated by the hotel and center.
The Normal project, also a John Q. Hammons development, required taxpayers in Normal to contribute $21.6 million toward a $60 million complex. One of the main public benefits, officials said, is that a conference center attached to the hotel is utilized by local and public organizations.
"Whenever we are talking about the Marriott, it's generally nothing but positive things," said Joe Tulley, marketing manager with the Uptown renewal project with the town of Normal. "It hasn't been a super long time since it's been (built), but you'd almost have to be blind not to see the impact."
Normal officials approved spending $3 million in acquiring property, $12.5 million to build the conference center, and $6.1 million on a parking deck and hotel. It opened in 2009.
The Uptown area has experienced a renewal of sorts, with the addition of the Children's Discovery Museum and the opening of boutique shops and restaurants near the town's Amtrak station.
The Marriott property, according to Normal officials, serves as an anchor to that development.
"The city fathers got together and decided this area was a downtrodden campus town with commercial buildings in disrepair," Tulley said. "They put together this vision, and the Marriott is part of it."
While the Marriott project in Peoria isn't necessarily an anchor because of its distance from the Warehouse District, the city wants to redevelop that area in a similar fashion as the Uptown project with shops, bars and restaurants. The Warehouse District will be anchored by the Peoria Riverfront Museum and Caterpillar Experience Visitors Center.
"Peorians and all central Illinoisans will be proud of the new Marriott complex when it is finished," Ardis said. "I'm thankful for those who have supported it through very difficult times."

John Sharp can be reached at 686-3282 or Follow him on Twitter @JohnSharp99.

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