A $276 million expansion that will double the capacity of the Savannah Convention Center is set to open in early January 2024, but no progress has been made on plans for a 400-room hotel to support the expanded convention center. In June 2023, Brookfield Properties backed out of an agreement to build the convention center hotel, citing financing issues.
As a result of Brookfield’s decision, the Savannah-Georgia Convention Center Authority, or SGCCA, announced on Nov. 2 that it would issue bonds to finance construction of the hotel. The authority is working with Hilton, and a date for groundbreaking and a construction timeline are still to be determined.
Hotel construction has been slowing since early 2020, first due to the onset of the pandemic and related supply chain issues, and more recently due high interest rates and tighter lending standards. In response to the challenges in debt markets, Savannah and other cities have taken it upon themselves to finance hotel projects.
The SGCCA referenced the 1,000-room Signia by Hilton Atlanta, the new headquarter hotel for the Georgia World Congress Center as a model for their plans. Scheduled to open in January 2024, the Signia is a partnership between the Georgia World Congress Center Authority, or the GWCCA, and Hilton. Financing for the hotel includes $450 million in revenue bonds, a $55 million investment by the GWCCA and $25 million from Hilton as part of the hotelier’s management agreement.
A similar scenario played out recently in Indianapolis. In June, the Indianapolis City-County Council approved the issuance of $625 million in bonds to build the 800-room Signia by Hilton Indianapolis Pan Am Plaza. The hotel broke ground in August and is expected to open in the fall of 2025. The city stepped in after a local developer and private bankers failed to reach a financing plan due to high inflation, rising interest rates and some uncertainty about the convention industry’s post-pandemic recovery. The building will be owned by the city and operated by Hilton.
The Signia is part of an expansion of the Indiana Convention Center, which is adding 143,500 square feet of flexible space, including a 50,000-square-foot ballroom. A skywalk over Capitol Avenue will connect the expansion to the existing convention center.
Another example of a convention center hotel financed with public money is under construction in Fort Lauderdale. The 800-room Omni Fort Lauderdale, which will be owned by Broward County, broke ground in June 2022 and is scheduled to open in January 2026. The Omni is part of a project to expand and enhance the Broward County Convention Center, and the county has issued bonds worth nearly $500 million.
Public financing of hotels frequently encounters criticism, but supporters contend the hotels are necessary to maximize the economic benefits of the local convention center, including the taxes generated by guest spending. More projects like these are possible as long as conditions in debt markets make private financing difficult to secure.