Group business going away? Don't tell convention hotel developers!

The industry heard a lot of buzz in 2013 about the changing face of group business for hotels. Advance bookings were down, rates were down and the days of huge corporate events seemed like they might be gone. Going hand-in-hand with that trend was the fact that the development pipeline for traditional big-box convention hotels was way down. In October we reported that STR’s hotel development pipeline data show that new-build hotels with more than 50,000 square feet of meeting space were petering out. 

However, recent development activity in second-tier convention markets may be signaling that group business, though different, may be on the way back. Emerging convention markets now are focused less on traditional large-scale corporate group business and instead are attracting sports business and other regionally focused groups. 

Here's a roundup of some projects in the works:

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New York Daily News reports Fleet Financial Group paid $17 million for a car dealership site in Corona, Queens, to build a $200-million convention center, hotel and retail area. The site is across the Grand Central Parkway from Citi Field and the Willets Point mixed-use development is in the works. "For the longest time, Queens has wanted to have some sort of facility like a Javits Center," Fleet president Richard Xia told the NY Daily News. The plan calls for 292 five-star hotel rooms above the convention center. 

• According to the Des Moines Register, plans are moving ahead for a proposed 450-room convention hotel near the Iowa Events Center. The project is led by the Des Moines Redevelopment Co., a coalition of local business leaders, and last week they chose Minneapolis-based Mortenson Development to lead construction. The redevelopment group's goal is to attract more business related to Wells Fargo Arena. The article cites local interest in next year's bidding on the 2017-2019 NCAA men's basketball regionals as a driver behind the project. 

• While the hotel part of this project is still undecided, plans are moving ahead for a new $400-million convention center in Oklahoma City, according to The city's chamber of commerce commissioned a study to examine costs associated with replacing the city's 38-year-old Cox Convention Center. Right now John Q Hammons Hotels operates the current center's convention space, ballrooms and attached Renaissance Hotel. The study's preliminary findings report that "the lack of a headquarters convention hotel and lack of market exposure to meeting planners is hampering the city's ability to draw bigger events." 

• In Oregon, plans for a publicly subsidized hotel at the Oregon Convention Center still face opposition from local hoteliers objecting to the $80-million subsidy attached to the deal, reports Willamette Week. A convention hotel has long been a topic of contention. According to The Oregonian, the most current plans call for a 600-room Grand Hyatt hotel developed in parnership with Mortenson Development. 

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The company's revenues declined from $560 million in the third quarter of 2019 to $337 million in the third quarter of 2020.

The top five markets account for 15 percent of the rooms in the total U.S. pipeline.

The total U.S. hotel construction pipeline at the end of Q3 2020 was down 7 percent by projects and 6 percent by rooms year over year.