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Posted: December 20, 2013

State of the state: Hospitality

Hotel dispute threatens Colorado’s collaborative reputation, official say

The planned Gaylord Rockies Hotel and Conference Center in Aurora has the potential to create thousands of jobs and deliver an economic impact of more than $8.2 billion over the next 30 years.

But the legal wrangling over the project is tarnishing the region’s reputation as a place where deals get done and communities collaborate to benefit everyone, says Tom Clark, CEO of the Metro Denver Economic Development Corp. He says the technical difficulties could hamper efforts to draw new businesses to Colorado.

“We have a global reputation of being a region that behaves differently than any other region in the country,” Clark said. “To see this controversy have an impact on our brand, it makes us look like we’ve lost our way in regional thinking that has been the driving force in putting us in a leadership role in terms of strong economies.”

In September, a group of 11 hotels – five controlled by Sage Hospitality – sued the city of Aurora, the state’s economic development office and the Colorado Economic Development Commission, asking for reconsideration of the $81.4 million worth of incentives the project was awarded last year under the Regional Tourism Act.

Ken Lund, executive director of the Office of Economic Development and International Trade, says the project met the criteria for incentives.

“We felt that it met both the spirit and the intent of the statute,” Lund said. “We believed the project was unique and extraordinary and would draw new visitors to the state.”

In October, Aurora fired back against the hotels. Using Sage’s Denver Union Station redevelopment as a backdrop, Aurora Mayor Steve Hogan announced that the city, its urban renewal authority and economic development council have filed a countersuit against the hotels seeking unspecified damages for financial costs and delays.

“All other efforts to get the hotel owners to back off or back down failed,” Hogan said.

Sage Hospitality President and CEO Walter Isenberg declined to comment.  Spokeswoman for the 11 hotels, Lynea Hansen of Strategies 360, said that since the commission approved the incentives, there have been significant changes to the project – namely new developer Rida Development Corp.

“The financing documents from Rida show they don’t need a subsidy to complete the project,” Hansen said.

The Gaylord will include 1,500 hotel rooms and more than 406,000 square feet of conference and meeting space on an 85-acre site near Denver International Airport. Aurora officials estimate the project will produce an economic benefit of $273.3 million annually in-state. The hotel’s construction phase is expected to create 10,100 jobs and add 2,546 permanent jobs to a city that has a 6.8 percent unemployment rate. Groundbreaking is scheduled for late next year or early 2015, with a target opening in the second half of 2017.

About 80 percent of Gaylord’s $1 billion in annual revenue comes from group meetings ranging from 600 to 2,000 people who eat, drink, shop and sleep without leaving the complex. The groups rotate their annual meetings through Gaylord’s four existing properties in Nashville, Tenn.; Grapevine, Texas; Kissimmee, Fla.; and Washington, D.C. The remainder of the company’s business comes from leisure travelers.

“The importance of this project to the region is a new venue with an established set of customers that have never come to Colorado before,” Hogan said. “They will be bringing dollars and those dollars will be new to the region and benefit the state.”

— Margaret Jackson

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