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Drury pulls conference center bid

Drury pulls conference center bid

June 4th, 2013 in News

Less than a week before the plans were to be unveiled, one hotelier withdrew its bid from a Jefferson City's conference center project.

Drury Hotels notified City Administrator Nathan Nickolaus of its decision to withdraw its bid Friday, and Nickolaus said they didn't give a specific reason as to why.

Three developers had submitted proposals for a conference center, which will be funded by a voter-approved lodging tax that is estimated to allow for a $9 million facility.

• Ehrhardt Hospitality Group, based in Hannibal, has proposed the facility at the West McCarty Street site;

• Drury Development Company, based in St. Louis, submitted a proposal for the West McCarty Street site, the old Missouri State Penitentiary site or any other site that meets city requirements;

• Farmer Holding Company, a local developer, has proposed the facility at the Capital Mall.

Though no specific reason was given as to why Drury withdrew, Nickolaus said the company had expressed concerns before the withdrawal.

"We had met with them, and they had shared some of those concerns," Nickolaus said.

On Thursday, Nickolaus told the News Tribune that all three developers were still in the running for the project and no one had withdrawn.

In a letter to Nickolaus dated Friday, Larry W. Hasselfeld, senior vice president and chief financial officer of Drury Development Corporation, listed three observations resulting from the company's review during the selection process.

One observation noted "the ongoing operating cost and future renovation cost of the center is likely to exceed operating revenues generated by the center. Public ownership or support may be necessary for an ongoing successful operation."

Nickolaus noted that particular observation when asked if there was any specific reason why the company said it was withdrawing its plan.

"You can kind of read between the lines a little bit and guess," Nickolaus said. "They don't think it'll generate enough revenue ... I really don't have anything to add to what they said."

Nickolaus said city staff had told the company that if they believed a subsidy would be necessary for the project, they could make that part of their presentation to the City Council on Thursday.

Another observation from Hasselfeld noted "the occupancy and average daily rate of the current hotel market is a concern for the quality new hotel development that should occur in Jefferson City."

Nickolaus said the other two developers, Ehrhardt Hospitality and Farmer Holding Company, have not expressed any similar concerns, and both have confirmed they will present their proposals at 5:30 p.m. Thursday at City Hall.

He said he did not believe Drury's withdrawal would have an impact on the city's timeline for the conference center selection. The City Council hopes to make a final decision by July 1.

In a reaction to Drury's decision, Mayor Eric Struemph said: "I look forward to the rest of the progress we've been making toward getting a conference center."

He also said he looks forward to seeing the presentations Thursday.