Horses and good bourbon may be the first things that come to mind when thinking of Louisville, Ky. But the hotel industry has taken a shine to the Derby City of late, and it's now set to develop one of the more ambitious projects in the U.S.
According to multiple outlets, Omni Hotels & Resorts plans to build a 600-room convention hotel that will anchor a $261-million development at Third and Liberty streets in downtown Louisville.
The project is a joint deal between Omni, the Cordish Cos., Louisville Metro government and the state of Kentucky, and is said to be among the largest investments the city has seen in a decade.
The deal is so big that it was announced in conjunction with Kentucky Gov. Steve Beshear and Louisville Mayor Greg Fischer, who said at a press conference that the project is the largest investment downtown since the construction of the KFC Yum! Center, and comes amid a slew of other developments from new hotels to a proposed expansion of the Kentucky International Convention Center.
“This project is a major infusion in our downtown and to the city’s entire economy,” Fischer said. “It will create jobs, both temporary construction positions and permanent jobs, and it will boost our convention and tourism industry as Omni provides a new level of luxury hotel.”
In addition to the hotel portion, the project includes an unnamed grocery, retail shops and 200 apartments constructed by Cordish.
Construction is slated to begin in 2015 and the project will be completed in 2017.
HOW IT WILL BE FUNDED
Omni will reportedly invest $105 million in the project, with $30 million coming from Cordish. Kentucky will contribute $90.5 million through tax rebates, with Louisville adding $35.5 million. Of the city’s share, about $17 million is the value of the land, which the city bought two years ago, and about $17 million will go to construct a parking garage. The city’s share also includes a $1.5 million contingency fund.
Kentucky Gov. Beshear called the project bold, one that will “continue the strong momentum of downtown Louisville’s revitalization.”
According to Louisville Business First. Mike Garcia, CFO for Omni, said the company’s success does not depend on an expanded convention center. “We did all of our current analysis not having that on the drawing board, so this is not contingent upon this happening,” he said of the proposed convention center expansion. “It helps going forward (but) we didn’t even factor it into our analysis.”
Garcia added that the design process will begin in two weeks and take six to nine months to complete. The hotel will also reflect the heritage of Louisville.
A number of hotel projects have been announced recently for Lousiville. Last year, work started on the $80-million conversion of the former Hilliard Lyons Center at Fourth Street and Muhammad Ali Boulevard into a mixed-use development anchored by a 300-room Embassy Suites Hotel.
Work is also under way on a Hilton Garden Inn on South Fourth Street, while the Seelbach Hilton Hotel is in the throes of a $10-million renovation project. A new Aloft hotel is also expected to open in 2015.
Late last year, the average occupancy rate for downtown hotels was at 70 percent, up from 2012’s full-year average of 66 percent.