Will downtown Modesto get a new high-end hotel downtown?
The city could be taking a hard look at a proposal for a high-end, 200-room hotel next to Modesto Centre Plaza, which supporters believe will be a key driver to an improved downtown and in drawing more conventions and visitors here.
The city has a consultant’s study that states the project is feasible, provided other steps take place, including upgrading and renovating the aging Centre Plaza, which has served as the city’s convention-community center for three decades. But one local hotelier is skeptical.
The proposed hotel is part of a larger effort by the city to energize downtown and promote Modesto. For instance, the city plans to hire another consultant to create a downtown master plan and is working on shifting the Convention & Visitors Bureau from a city operation to a standalone agency with a more robust funding source.
Mayor Ted Brandvold said he is cautiously optimistic, adding the City Council will have many issues to consider in deciding whether to move forward with the hotel proposal.
“If everything plays out,” he said, “I see it as an economic stimulus for our downtown. Our downtown is doing very well. We’ve got theaters, art galleries, restaurants. People are down here doing things. Businesses are doing well. And we are picking up more businesses. It would be nice to build on that.”
Modesto hired Chicago-based HVS Convention, Sports & Entertainment Facilities Consulting to conduct the study at a cost of $49,300.
The proposal calls for the hotel to be built in Modesto Centre Plaza’s parking lot, which is bounded by 11th, K and L streets.
While high-end and affiliated with a major brand like Marriott or Hilton, the hotel would complement and not compete with the 258-room DoubleTree by Hilton Hotel, which is connected to Centre Plaza.
Besides the renovation and upgrade of Centre Plaza, the consultant’s study says the proposal is dependent on the creation of more parking to meet the demand and replace what is lost to the project and that “(t)hrough common ownership or cooperative marketing and sales, the DoubleTree, (Modesto Centre Plaza), and the Proposed Hotel would attract new group room demand to Modesto ... .”
The study claims the hotel would create 106 jobs, have an annual economic impact of $8.6 million as well as triple the number of conferences and conventions at Centre Plaza from six to 18 and significantly increase the number of people attending business meetings.
The study says the annual number of room nights would rise from 8,000 at the DoubleTree to 21,680 for the DoubleTree and new hotel.
There are lots of details that need to be worked out if the City Council decides to proceed. That includes the city conducting more due diligence and developing a competitive process to find and select a developer. Modesto also will need to determine the extent of its involvement.
Brandvold said he cannot see Modesto as the developer or taking on debt for the project. But the city could develop a parking garage and contribute in other ways. The project could break ground in two or three years if the City Council decides to move forward and all the details can be worked out.
The council’s Economic Development Committee is expected to hear this proposal Friday, April 12, and then forward it to the full council for consideration. The EDC meeting is 10 a.m. in room 2005 at Tenth Street Place.
Councilman Mani Grewal — who owns three hotels, including the recently opened 95-room Marriott Residence Inn by the Kaiser Modesto Medical Center — said he could not comment at length because he does not know the details.
“Any kind of development for downtown is positive, and I’m glad we are looking into it,” he said, “but it’s ultimately going to be a decision by the (hotel) franchise and operator whether downtown can support a 200-room project.”
DoubleTree General Manager Pervez Khan is skeptical.
He said he does not believe Modesto can absorb an additional 200 high-end hotel rooms and doubts Modesto can draw enough conventions and conferences to justify another hotel even with an upgraded and renovated Centre Plaza.
He said Modesto is classified as a tertiary market for these events and cannot compete with primary markets like San Francisco and secondary markets like Sacramento. He said most of the large events Modesto Centre Plaza now draws are from church and religious groups that have been priced out of the Bay Area and Sacramento.
“We are a smaller market,” he said. “I’m not sure it’s going to be effective. This is an expensive undertaking. Who will invest that much money in a market where the potential is limited?”
The consultant’s study says the hotel could cost $37 million to $43 million. That does not include the cost to fix Centre Plaza or build additional parking.
Khan said Modesto has not had enough economic and business growth to support additional business travelers. He said while Modesto is a good market for those who travel for leisure or for sporting events, such as weekend youth soccer tournaments, there is not enough of those travelers to warrant this project.
Khan said the numbers in the consultant’s study appear to be too optimistic. He added that developers are on the lookout for opportunities and they would be here if they saw the demand. “In the last 11 years I’ve been here,” he said, “only one hotel has opened here (in Modesto).”
Brandvold said he appreciates Khan’s concerns.
“We need to pay attention to that and consider that,” the mayor said. “But we did hire a professional firm to provide a study on this, too. But the people in the trenches here often have a good read.”
City officials said while Modesto cannot compete with San Francisco, it still can develop its full potential. That includes building on the number of religious and church groups that hold conventions and conferences here as well as attracting more government events that may not be able to afford the Bay Area.
City officials in recent years have talked about the need to renovate and upgrade a dated Centre Plaza and make it financially self-sufficient. There also has been debate over whether it is a convention center that draws out-of-towners or a community center. The hotel proposal tips that debate toward convention center.
Councilman Tony Madrigal said the hotel proposal is part of a larger effort to make Modesto a regional draw. And he said the city can market itself as a competitively priced alternative to higher priced communities.
Modesto has had a plan for a hotel at the Centre Plaza parking lot for more than a decade. But Madrigal met a developer about three years ago at a League of California Cities event and invited him here. The developer came and then came back nearly two years ago to meet with Madrigal, Brandvold and city officials.
Brandvold said that was the genesis behind asking a consultant to conduct a study. City officials declined to name the developer, but said if the city proceeds with the proposal, a developer would be chosen through a competitive process.
The proposal drew support from downtown interests. Josh Bridegroom, CEO of the nonprofit Downtown Modesto Partnership, which works to improve and attract more visitors to the area, said a second hotel and upgraded Centre Plaza could energize downtown.
He cautioned that they are not magic bullets, just components in a mix of additions that might make Modesto more of a destination. For instance, by the time the hotel is finished, the proposed extension of ACE commuter train service to downtown could be a reality as well.
“It’s kind of like a chicken and egg thing,” Bridegroom said. “The answer to that riddle (of attracting more visitors) is incrementalism. You add a little here, you add a little there. You put these things into place and they go together. If the hotel is built at the right time, maybe completed in three to four years, and in the meantime there’s a good concerted effort to add new amenities and new value downtown then it could (help Modesto become a destination).”
Gallo Center for the Arts CEO Lynn Dickerson said in an email that a high-end hotel would be good for downtown and help the performing arts venue draw more top-tier artists, who can be demanding about where they stay.
“I didn’t know about that hotel idea,” she said, “but I actually think it’s a good one. My impression is that we are ‘under hoteled’ in downtown Modesto and in terms of nicer properties.”