Archive for October 21, 2009

Public Private Partnership Makes W. TX Vision Reality

Overton Hotel and Conference Center

Overton Hotel and Conference Center, Lubbock, TX

As posted on HotelBusiness.com

LUBBOCK, TX—A decades-old vision to have an upscale, full-service hotel and conference center that would draw scores of guests and meetings attendees to this West Texas city and also support Texas Tech University in its own backyard has come to fruition here as a result of a public private partnership.

The Overton Hotel and Conference Center is the tangible yield of years of efforts by the partnership, which is composed of owner/operator 1859 Historic Hotels, Ltd., the City of Lubbock and developer Garfield Traub. “Lubbock is almost a text book case of how to bring private equity and conventional financing and tie it to public support in order to accomplish a very top priority for a community,” said Ray Garfield, principal of Garfield Traub Development, which led the project.

A great deal of the drive to get the project off the ground centered on the university and its desire to have a full-service hotel and conference center on or near its campus. “Around 1999 to 2000, we talked with [Texas Tech] and we talked with the city. The city itself, the entire community wanted a full-service, first-class hotel with ballroom and meeting space to support that entire region of Texas. When the efforts by Texas Tech fell short, the city took responsibility for it and we began our relationship with the city around 2003, 2004 and were formally selected to be the developer and led the effort to design and to build the facility,” Garfield said.

According to Steven Moffett, president of Garfield Traub’s hospitality division, the Overton deal is a $67-million project, of which $22.4 million was funded through the city and grants programs that Garfield Traub helped initiate with the city. The city issued bonds for $11.4 million. The balance—$44.6 million—was privately financed and includes a $35-million loan from Plains Capital Bank, Moffett said.

The City of Lubbock owns the conference center, the 11,250-square-foot ballroom, the kitchen and some back-of-house facilities, which it is leasing to 1859 Historic Hotels for the next 40 years with options beyond that. Garfield Traub and 1859 Historic Hotels owns the 15-story, 303-room hotel tower and the land underneath the hotel.

“It was a classic structure with great collaboration between the city and the private sector,” Moffett said.

The property is located within an urban renewal project known as the Overton Park District, which is considered the largest privately funded project of its kind based on acreage in the U.S. In creating this district, hundreds of properties in what was deemed a distressed neighborhood were acquired during the past decade by locally based McDougal Cos. “and essentially…eliminated one of the largest slum and crime areas in the city. [McDougal] has built, really, one of the truly great planned redevelopments in the country that any city has envisioned or tackled or accomplished,” Garfield said. The district encompasses student housing, retail, commercial, office, mid-rise and single-family residential space.

“The hotel and conference center that we developed with the city and the support of the university is sort of the crown jewel of this district,” Garfield added.

Garfield also noted that while the city could have issued tax increment financing (TIF) for the Overton project, the increase in assessed values of the redeveloped district “have been so tremendous over the past decade, and the tax revenues so greatly increased to the city, that the city issued its own debt at $11.4 million as its contribution.”

Hunter Carmichael, general manager of the Overton, agreed the community and university have been very supportive of the project. “Sometimes you get projects like this and everybody’s trying to find a way to hinder it. In this market it’s been the exact opposite of that,” Carmichael said.

The hotel overlooks Texas Tech and Jones AT&T Stadium, home to the university’s Red Raiders football team.

A key feature of the hotel is the second floor incorporation of a classroom for the school’s restaurant/hotel institutional management (RHIM) program, which helps students prepare for hospitality careers. “We are staffing our facility with many of the students going through the RHIM program,” Carmichael said, adding students outside the hospitality program also are on staff. “It’s been one of the advantages of being so close to the campus.”

The second floor also houses meeting rooms and executive boardrooms and the GM said his sales team will therefore be going after association and group business for the use of those facilities. “The state associations that rotate throughout all of Texas have really left the West Texas Panhandle off their radar due to having no facility that could accommodate them. So we’re going after all those groups that have been skipping the Panhandle and try to get them to come back out here. There hasn’t been a new full-service facility opened up here in over 20 years,” Carmichael said.

Carmichael added the initial feedback from some groups that have come to the hotel has been “overwhelmingly positive.”

The hotel and conference center, designed by architects DLR Group, includes a street-level restaurant, a business center, a fitness center and an outdoor pool. A bar and lounge area is situated between the conference center and the hotel lobby, which features 22-foot-high ceilings. Loewen Design Group did the interior design, incorporating West Texas themes.

The Overton is operated as an independent like many of the properties under Galveston, TX-based 1859 Historic Hotels’ umbrella, which includes a portfolio of some 2,500 guestrooms nationwide. Among its properties are the Brown Hotel in Louisville, KY; the Cliff House at Pikes Peak in Manitou Spring, CO; and the Menger Hotel proximate the Alamo in San Antonio.

Flagging the Overton with a major brand was considered, but according to Moffett, consulting firm PKF was brought in to help assess branding and it concluded the property would not get the additional rate and occupancy in the market that would be needed to justify a flag. However, Garfield suggested a community with the size and dynamic of Lubbock would, ultimately, attract the attention of flags such as Marriott, Hilton and Sheraton. “So we’ve designed the hotel, in every respect, to meet or exceed the requirements to accept a major flag. We’ll continue to keep our finger on the pulse of the marketplace there and when we believe it’s absolutely necessary to be branded then we’ll make that decision,” he said.

Currently, the hotel has a budgeted rate of $139 for this year. “And right now we’re exceeding that,” Carmichael said. “We’re in a market where, historically, average rate has run in the $70s.”

Carmichael noted that there are also two Holiday Inns, a Staybridge Suites, a Hawthorn Suites and an Embassy Suites in the market.

“Being a part of delivering a hotel of this quality to the City of Lubbock and to Texas Tech University has made this very special for us because Lubbock has needed this for a long time and they deserve a hotel like this,” Moffett said. “When you’re there in the lobby and people walk in you hear, ‘Wow. This hotel’s in Lubbock?’ It’s pretty amazing. It’s just a classic win/win situation for everyone.”

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