Downtown District's Neumann says city purchase of Crowne Plaza can protect hotel's future

CEDAR RAPIDS -- Doug Neumann, president/CEO of the Cedar Rapids Downtown District, says an apparent city plan to try to buy the downtown Crowne Plaza Five Seasons Hotel has been an option on the table for months to guard against a nightmare scenario in which a new owner would extract profits and not make a much-needed reinvestment in the 275-room facility.

Neumann said the best option for the hotel and the downtown would have been to have a private hotel owner step up, buy the hotel and make the needed reinvestment in it. However, that hasn't happened.

He pointed out that construction on the $67-million Event Center project is about to begin, which will consist of a $15-million upgrade of the U.S. Cellular Center arena attached to the hotel and the construction of a new convention center on what is now Third Street NE right next door.

“A worst-case scenario, where you really needed the city purchase of the hotel being a backstop against this happening, the worst-case scenario was that somebody comes in, buys the hotel, sucks some profit off of it, but without making any of the needed reinvestments in the property,” he said. “That would have left us at the opening of a $67-million arena improvement and convention center expansion with a very substandard hotel.”

What is needed, Neumann said, is an option where the reinvestment in the hotel takes place. The city, he said, also will need to reinvest in the facility if it buys it.

However, Neumann pointed to the city of Coralville, which owns the Coralville Marriott and Conference Center, as an example of how public ownership and reinvestment in a hotel can work. The city, he suggested, would sell hotel bonds to pay for refurbishments and then pay the bonds off a piece of the hotel revenue. The reinvestment then will make the hotel marketable to a new owner, he said.

Neumann said a lack of a strong hotel in the downtown for some years has been “a significant impediment” to the revitalization of the downtown.

“There are many stories of people conducting downtown business who won't stay downtown,” he said. “And that's not a good situation.”

Having said that, he said the hotel can turn a profit.

“This hotel, given the proper reinvestments and good management, can make plenty of money,” Neumann said.

He pointed to a feasibility study conducted along with planning for the new Event Center that concluded that the downtown will need at least 400 hotel rooms after the center is finished in 30 months.

In fact, Neumann said “significant developer interest” exists to build a second downtown hotel in the vicinity of the Crowne Plaza Five Seasons Hotel.