Yesterday, I had a follow-up phone conversation with Mike Garcia, CFO and senior vice president of acquisitions and development for Omni Hotels & Resorts, to discuss the Irving, Texas-based company’s big announcements on Tuesday. On that day, Omni made two major acquisition and development announcements. First, the company announced it was the successful bidder for the renowned Amelia Island Plantation at a bankruptcy auction in Florida. Later that day, the company one-upped itself with the announcement that it had reached a pre-development deal with The City of Nashville to build a new, 800-room hotel adjacent to the Music City Convention Center, which is expected to open in 2013. Omni expects the hotel to be completed the same year.
In Nashville, the new hotel will serve as the central hotel to the new convention center and Garcia said that with the convention center going up Nashville is sure to become a and even hotter commodity on the convention scene. “Nashville itself is a very strong market. Even today it runs in the high sixties on occupancy during a down cycle, and the rates have held up pretty well,” Garcia said. “We’re excited about coming to Nashville. It has its own identity and gives us an identity to bring into the hotel to create an authentic experience.
“One thing about the city is that it already has its identity with the leisure market,” he continued. “I think once groups explore that market and discover it, it’s going to huge.”
Huge is an apt word to describe the development itself. Already, the city is building the convention center. “It’s probably at least four-times the size of the current convention center. It’s over a million square feet,” Garcia said. “But, they really don’t have a hotel there to service that size of a convention center.”
While Garcia says Omni will take on the risk of construction costs, the development of the hotel—which is expected to include several restaurants, bars, retail space, and a Mokara spa—is being built as a public-private partnership. “In today’s environment, and especially when we started talking about this a year ago, it’s very difficult to get financing. In that market, with the convention center just coming up out of the ground, there’s a risk factor, and to not be able to have some of your returns covered doesn’t make a lot of sense in that market. So it was important from our perspective for the city to help from the incentive side. [The hotel] is something they need and I think it’s going to help that market as well as the other hotels in that market.”
Garcia also said that Omni is discussing plans with the Country Music Hall of Fame, which will also be beside the new hotel. “We’re working jointly with them to integrate the experience of the Hall of Fame into the hotel,” he said.
Garcia also discussed Omni’s acquisition of Amelia Island Plantation. He said the Omni has been working to extend its resort portfolio and Amelia Island was a good fit for those plans. “Amelia Island is a pretty authentic experience and we think it suits us well,” he said. “There are certainly some things from a capital point of view that we’re going to try to achieve quickly, and when I say quickly, I mean probably in the next 24 months.”
About those plans, Garcia said, “What we’ve talked about is expanding the inn, which is the hotel component of Amelia Island, to make it more of a group-focused hotel so we can accommodate larger groups. That’s probably the biggest piece of it. We’re also going to look at enhancing pool area.”
On a final note, Garcia said Omni has growth on its mind. “We have some other projects that we’re working on so this is not going to be it for us,” he said. “We have a couple of things that are pretty hot right now that hopefully we can get some movement on.”