Dave Nicklaus' article today in the Post covers questions surrounding the financial future of the Renaissance Grand Hotel downtown. Most of you know the on-going debt payment problems that have plagued the hotel since its opening.

Renaissance hotel troubles reflects woes facing local convention business

By David Nicklaus

ST. LOUIS POST-DISPATCH

12/19/2007



The Kleenex folks have dipped into their pockets one more time to cover an interest payment for downtown's Renaissance Grand & Suites Hotel. There's reason to believe, though, that they might hold on to their cash next time.



Meanwhile, a consultant's report says the 5-year-old hotel will continue to struggle financially for at least five more years.



All of this lends new urgency to efforts aimed at refinancing the hotel's debt. It also may lead to a new debate over the adequacy of St. Louis' convention facilities.



That's a subject most St. Louisans thought was closed when the Renaissance opened. Our main deficiency, we were told for years, was the lack of a big hotel next to our convention center. Now we have that hotel but, according to C.H. Johnson Consulting of Chicago, it's losing money because St. Louis doesn't have enough meeting space.



The hotel won't make enough money to cover its debt payments until 2012, according to C. H. Johnson's new report. It projects that the fiscal gap will total $1.7 million in the next four years.



Moreover, the Renaissance probably won't be able to cover that gap the way it has handled previous shortfalls. Up to now, it has relied on reserves and contributions from its owners. But the debt-service reserve is down to just $100, and the owners have less reason to keep pumping in cash.



The hotel made a $3.5 million interest payment last week, but it needed an $829,000 loan from its lead owner, Kleenex maker Kimberly-Clark Corp., to do so. The owners have lent the Renaissance more than $2 million in the last 18 months, partly to avoid jeopardizing federal historic tax credits that they got when the hotel was being developed. The last of those tax credits will expire early next year, according to a report by Moody's Investors Service.



After that, Kimberly-Clark has little to lose, aside from its stake in a money-losing hotel.

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If the above is accurate, some pretty big issues will confront the Renaissance in the next year or two. Nicklaus offers a few solutions possible solutions, including restructuring the bondholder debt for the hotel. Yet the fundamental question of St. Louis's competitiveness remains:

If making the next interest payment is the Renaissance's biggest short-term problem, its biggest long-term problem is a lack of convention business in St. Louis. C.H. Johnson's report isn't optimistic on that front. It says that the hotel has too little meeting and ballroom space while America's Center, directly across the street, is losing business to newer and bigger convention halls in other cities.

What can St. Louis do to address both the short-term and long-term questions surrounding the Renaissance and St. Louis' convention business.

^ I have wondered the same as well. At the very least two or three more floors with meeting space would help address the lack of meeting room space and bring the structure closer to the height of surrounding buildings.



I also wonder whether the option of condo-ing out the Renaissance Suites building is being considered again. I always liked the idea of converting that building to permanent residences.



Another option for adding meeting space: work with Pyramid on the Laurel and preserve the existing skybridge connection from convention center to the building and add some meeting spaces inside of the Laurel.



But even if you address the above there are other more fundamental issues that face St. Louis' quest to be a convention destination:



A.The style and design of the Convention Center is very basic and boring. It does not compare well to other major convention centers in terms of aesthetics.

B. Reduced number of annual conventions (i.e. more cities competing for a smaller pot).

C. Let's not forget the Union issues at the Convention Center

^ Lot's of good suggestions.



IF the city if going to be in the convention game, then there needs to be a plan for expansion. Why not expand on the Bottle District site? The site has awkward access anyway and never really fit as an entertainment district IMO. Then, when the dome is gone (maybe 10 years, maybe 30) that land can be used for futher expansion, or hotel space or whatever.



[edit]By the way - I just saw that Indy is building a 1,000 room, 34-story JW Marriott Hotel connecting to their expanded convention center . . . we're falling futher and further behind the curve.[/edit]

Need to get something done using talented people who don't date their St. Louis ancestors to the 19th Century, don't belong to Old Warson, Bellerive, SLCC or the Bogey Club and didn't go to an ABC high school? Yeah, good luck with that.

Mmmmm...tastes bitter.



The question no one (but me) is asking is this: What kind of conventions is St. Louis trying to get? What advantages do we have?



I look at it as such, and people will hate me for it BUT:



We've had very good success in catering for the religious conventions, and the "republican" right - NRA conventions (I can't think of any others off the top, but i'm sure there's some).



Are we targeting these groups? If not, why not? We should be. People may not agree with their stance on the issues, but their money is just as good as anyone elses. If we're targeting conventions we have little to no chance of getting, we're wasting our time, and putting off other groups that would be interested in using the facility.



St. Louis clearly has some competitve advantages over other cities (biomedical too), we should be exploiting these, not trying to chase after conventions that will obviously go to Vegas, Orlando, or Chicago

JMedwick wrote:But even if you address the above there are other more fundamental issues that face St. Louis' quest to be a convention destination:



A.The style and design of the Convention Center is very basic and boring. It does not compare well to other major convention centers in terms of aesthetics.

You are definitely entitled to your own opinion, but I disagree.



While Chicago, Denver, Philadelphia, Atlanta and Pittsburgh have some awesomely aesthetic convention centers - those convention centers were built, expanded or remodeled after America's Center - so quite naturally they are going to be more avant-garde exteriorally than America's Center. With the exception of Denver's new one, I have seen the others up close and in person.



While I am usually cajoling St. Louis for its safe and practical architectural designs, America's Center is not that bad especially when comparing it to other convention centers aesthetically, in my opinion. It is a facility with lots of exterior glass paired with a classic look and it is still modern and amenity rich inside.



My beef with America's Center is the cabby sidewalk, the dated marquee and there are no plans on the table for expansion.



urbanreviewstl.com has some great photos of America's Center.



From urbanreviewstl.com







































Source #1

Source #2

Arch,



I should have been more specific, though your photo selection illustrates my intended point nicely. The exterior of America's Center is great. The building looks terrific from Washington and is a nice blend of old and new. The interior of America's Center is bland and boring. It is the interior space where America's Center falls short of other big name convention centers.



The question of the hour though is whether limited expansion of America's Center to add ballroom and meeting space is feasible. Obviously, the whole place will need major upgrades eventually, but if the City/ region could find a way to get such a limited expansion completed now, that would be best. How to fund it? The idea of revisiting selling off the Renaissance Suites building should be considered again. I wonder how much selling that off and/or condo-ing it out would offer in terms of both available cash to make debt payments and to fund a limited expansion.





As for such a limited expansion, there are some options nearby:

1. If possible, adding additional floors to the current Renaissance ballroom building. This is probably the best option.

2. Construction of a single or two story facility on the parking lots at either Lucas and 9th or Lucas and 7th. Such a facility could even be part of constructing a parking garage on one of these lots.

On the design of the Convention Center: Outside, there is nothing wrong with the design. It actually looks much nicer than the convention center in Indy. It reflects the general designs across Saint Louis in many buildings and the new ballpark. So outside is fine (on the south side, everywhere else not so much). Inside, while I agree it is not outstanding, I am not sure many convention centers have striking designs inside. The Moscone Center in San Fran for instance may look a bit better than ours on the outside, but inside it is just a series of rooms, similar to our convention center. Sprucing up the inside would be helpful, but I don't think that is going to make a big change in the conventions we bring to town.



I don't know who is to blame for Saint Louis' reputation among convention crowds, but there is little doubt it has a bad reputation. I do 4-5 small to medium conventions a year around the U.S. and I frequently ask the planners if they would consider Saint Louis. Inevitability, I get a litany of reasons (not enough space, no shopping, little entertainment, etc...) which basically add up to me that Saint Louis just does not have a good reputation in conference circles (meanwhile, I have been the San Antonio 3-4 times just in the last 2 years). Anyway, that is just our reputation, at least in my experience.



So, the question is how to change that. Do you go for a slow and steady improvement, or do you try something big to change it all at once? While I think Grover's idea of expanding convention facilities into the BD is a good idea (we might as well use that space for something - if nothing else, an acceptable northern entrance to the convention center would perhaps help with development there) I do think we would be much better served if we had an entity that coordinated improvements and the marketing thereof. This is why we need a strong(er) CVC. The improvements are coming. Lumiere. MX. More folks downtown. BPV (eventually). We just have to be able to sell those improvements to the nation. And, I agree new blood is a good idea. People like to go to cities that are fresh and exciting, not historic and traditional (perhaps why we get Republican/religious conventions). The personnel we choose to lead these organizations are a reflection of the values we privileged in marketing ourselves.

I think perhaps we shouldn't have decided to compete in the convention business. Not every city can do everything. We should have done residential decades ago. Then Downtown would be more attractive for conventions as there would be more for people to do. After we actually had a vibrant Downtown then perhaps then do a convention center. The idea of a convention center is risky. It makes cities dependent on outsiders. We should have worked on creating a residential market first. Tourism can't make a city work by itself.



But what I am saying doesn't really matter. The idea of abandoning conventions would happen basically never.

It's too bad that St. Louis has not been able to win as many large conventions as other cities. I have friends that stay at this hotel, and they are always saying that large groups come through (particularly at the suites tower). Hopefully they will be able to restructure/cut costs and get into black sooner or later.

JMedwick wrote:Arch,



I should have been more specific, though your photo selection illustrates my intended point nicely. The exterior of America's Center is great. The building looks terrific from Washington and is a nice blend of old and new. The interior of America's Center is bland and boring. It is the interior space where America's Center falls short of other big name convention centers.

Thanks for specifying.



Although I think America's Center could be expanded and upgraded, I still think that America's Center is not that bad of a facility. But yeah, an upgrade of the interior wouldn't hurt. But didn't they just put down new carpeting and added fresh paint recently? While America's Center is certainly no McCormick Place, I've been in several CC's - large and small - and America's Center is very decent by comparison.

More news on this situation.

Hotel plan may be a month away

By David Nicklaus

01/24/2008 6:15 pm



A debt restructuring plan for St. Louis’ Renaissance Hotel may be 30 days away, Steven Stogel told bondholders in a conference call this week. (A summary of the call has been sent to bondholders and should be posted on the Web soon.)



Stogel, a local real estate developer, is acting as an unpaid go-between in debt negotiations. According to the transcript, he said that the hotel’s owners “spent extensive time in the months of November and December 2007 attempting to come up with a plan” and that “he hopes to deliver that plan within the next 30 days.”



Robert Bray, the hotel’s general manager, also spoke on the conference call. The summary doesn’t make his presentation seem particularly upbeat. Here’s an excerpt:



When question about when the hotels would break even, Mr. Bray responded that it was too soon to answer the question. Mr. Bray advised the group that the hotels will have a difficult first half of 2008 and that the full year cash flow for 2008 is projected to be $5.6 million.



That amount isn’t enough to cover the $7 million that the hotel owes in interest this year.

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Reading the end of the article is worth it. Those are some disturbing downward trends for convention booking in St. Louis.





The news on the economy can't be good for the hotel or the prospect of either gaining additional financing or selling and condo-ing out the Suites portion.



It will be interesting to see what becomes of all this.

And to think Dierdorf has been at the helm of the CVC!



If the rams left town, we'd have that extra large convention space people have been saying we need. Of course, we wouldn't have the rams. Some people think that's a good thing ::



No one has answered me what type of conventions the city is going after! If they're tageting big ones that have only a slight interest in the city - it's a freakin waste of time! It's like if a D-1AA school trying to recruit Shaq - he's not going there, don't waste your time! The city should go after smaller, but still substantial conventions, beg and plead with existing conventions to keep returning here, and make the rare push for a major convention once a year. Rome wasn't built in a day, but for some reason, the CVC thinks it was!