Hotel Buy is Necessary, but Risky

Described at a news conference Monday as “tired,” lacking “luster” and “not very graceful,” the Crowne Plaza Five Seasons Hotel has been scheduled for its $22 million city-funded face-lift.

But can these civic surgeons keep taxpayers from developing frown-lines?

“At this time in the city's life, we're taking some risk to revitalize the community,” said Cedar Rapids City Manager Jeff Pomeranz, after he and other leaders announced a deal to buy the joint for $3.2 million. The city takes over in March, and the face-lifting begins in earnest, with a $20 million to $22 million price tag.

“What is the risk of doing nothing?” Pomerantz said.

The feds, state and city are already well down the road to committing $75 million to a new convention complex and upgraded U.S. Cellular Center, which is joined at the hip to the tired hotel. Clearly, it would be a mistake to pour tens of millions of dollars into a new complex without fixing up the hotel. And no private business, at this moment in economic history, is going to step in and do it.

So you buy it. But you also shoot straight with taxpayers. This is no slam dunk. It's a gamble.

Back in June, when the city announced plans to buy the plaza, Mayor Ron Corbett, etc., were swift to say they did not want the city to be in the hotel biz. They wanted to buy, remodel and sell quickly.

“We don't want to be in the hotel business forever,” Council member Monica Vernon said Monday.

But officials now concede a fast sale may not be possible or preferable. John Frew, the special consultant overseeing the project, said Monday that the city may decide, after pumping $25 million into the place, it wants to hold on to the hotel, with a professional management firm running it. The city could sell, for the right price, or remain a hotel owner for years to come, like Coralville or Omaha. That's a new wrinkle in the saga.

If the city owns it, the city would be stuck with any losses. But Frew doesn't think that will happen. “All of the ingredients for success are here,” he said. That's a bet, but not a certainty.

The good news is the hotel industry, which hit the rocks in 2008 and 2009, is slowly recovering. “This is excellent timing,” said Jan Freitag, a vice president at Smith Travel Research of Nashville, Tenn., which monitors the industry. “The industry is coming out of a very strong downturn. We're seeing a strong upturn.”

However, we don't know what the landscape will look like in the fall of 2012, when the Crowne Plaza's face has been lifted. We do know the hotel will likely have a new name. How about "The City's All Inn?"

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