Home » NEWS » Economic Development » Just what is the market for a Jackson convention center hotel?

Just what is the market for a Jackson convention center hotel?

The Jackson Redevelopment Authority is moving ahead with selecting a developer for a convention center hotel, though at this point it can only guess at the soundness of the investment.

The latest invitation for developers to propose how they would build a hotel adjacent to the Jackson Convention Complex – the third in the past five years – shares with two earlier requests for proposals the absence of an in-depth analysis of how the hotel would do in the Central Business District market.

In the newest requests for proposals which carried a response deadline of June 30, the Redevelopment Authority assured potential developers it “understands the economics of the city’s hotel market.”

For data on the market, the Authority’s RFP directs the reader to Appendix VIII, where hotel occupancies, daily average rates and revenue-per-room, or RevPar, figures for the Central Business District compiled by STR, formerly Smith Travel Research, are included.

The figures stop at 2010, however.

More recent data on the downtown hotel market is available from STR. The international travel research company’s data from January 2009 through May of this year show a Central Business District with hugely fluctuating occupancy hotel numbers and revenue-per-room collections. RevPar is calculated by dividing the average daily rate into a hotel’s total number of rentable rooms.

Daily-average room rates through the 5 ½- years ranged from the mid-$60s to as high as $76.59 in June 2014.

By contrast, occupancy ranged from as low as 36.4 percent in December 2009 to 67.2 percent in April 2013. Yearly occupancies for the CBD came in at 51.8 percent in 2009; 47.4 percent in 2010; 49.8 percent in 2011; 54.2 percent in 2012; 58.8 percent in 2013; and 58 percent in 2014. From January through May, the CBD had an occupancy rate of 59.8 percent, according to STR.

On the RevPar side, the totals have been as low as $23.36 in December 2009 and $24.46 the following December to as high as $47.56 in October 2014 and $47.43 in February of this year. Yearly totals for RevPar have been $35.56 for 2009; $31.54 for 2010; $34.25 for 2011; $37.30 for 2012; $41.82 for 2013; and $42.50 for 2014. Through May this year, RevPar for the business district was $44.26, STR figures show.

Assessing the 2009-2010 lodging data, STR analyst Jan Freitag said he sees demand for hotel rooms within the Central Business District growing “at a healthy pace.”

Totals for 2014 appear at odds with that assessment, but Freitag said he sees last year as an outlier. He cited the early years and the first five months of this year for support.

Occupancies ended lower in 2014 compared with the same month the previous year in all but January, February and October.

April occupancy dropped by an eye-catching 14.6 percent. “I don’t know what happened in April 2014,” Freitag said, speculating that a convention or other large booking that typically occurred each April didn’t book in 2014.

Monthly average rates in 2014 ranged from $68.37 to $76.59 and RevPar from $31.65 to $49.89, according to STR.

So far this year, demand is up 3.5 percent, a percentage jump higher than the first five months of any year back to 2009, according to Freitag. “Occupancy is what normally drives pricing,” he said.

But flat room pricing prevailed in the first five months of last year and did the same through May  this year, Freitag noted.

Jackson has 70 hotels in the CBD this year after starting 2010 with 68 properties. Rooms are fewer, however, going from 5,478 in 2010 to 5,475 by the end of May.

The year-to-date occupancy numbers show good news after sliding into the negative column each month of the first quarter compared to the same period in 2014. “April and May saw positive numbers,” he said, referring to occupancy increases of 4.3 percent in April and 0.5 percent in May compared with the same months of the year before.


Freitag said he is not surprised the Jackson Redevelopment Authority’s RFP drew responses from four development companies. “A full- service hotel like what you are proposing, there are not a lot of them happening,” he said.

Developers are eager to jump in, especially when the JRA is promising to help close “any funding gaps” in getting a convention center hotel built, he added.

The RFP drew responses from Red Leaf Development of Herndon, Va., Hertz Investment Group, which owns many of downtown Jackson’s office buildings; EDT Development Co.; Mississippi Developers LLC; and Mississippi Block Development.

The Mississippi Business Journal is awaiting action from JRA on an open records request to review the RFP responses.

Meanwhile, metro Jackson hotel executive and Jackson Convention & Visitors Bureau board member Gaines Sturdivant is less apprehensive about a Jackson convention center hotel than he was five years ago.

In late 2010, Mayor Harvey Johnson and the JRA were pushing a deal with Dallas, Texas, hotel developer Transcontinental Investors that would be based on a daily average room rate of $150, more than double the top rate of CBD hotels at the time.
Sturdivant, CEO of Flowood-based MMI Hotel Group, worried back then that a failure by the convention center hotel to hit its vastly optimistic daily-average-rate target could force rates down across the Central Business District.

He still thinks a 300-room convention center hotel is too large for the submarket.

The hotel will also see competition from the opening of a nearby 200-room Westin hotel. Sturdivant, whose company owns and manage hotels throughout the Southeast, said he thinks the Westin “can work” in the downtown market.

On the other hand, a convention center hotel is going to need public backing, he said. “I understand the convention center needs a large room count for its marketing purposes, but I question the economic viability” of the 300 rooms the JRA wants.

“Only through public assistance can this likely be overcome,” Sturdivant said, “and then, yes, the balance of demand inventory gets out of sync.”

Downtown lawyer Sam Begley, who also is on the boards of the Jackson Chamber of Commerce and Downtown Jackson Partners, said he thinks the alternative to betting on a convention center hotel is to watch a steady decline of the city’s 5-year-old Convention Center Complex.

Call the public support “a tourism incentive measure,” Begley said.

Without it, “I don’t believe the it can sustain itself,” he said.


… we’d like to ask for your support. More people are reading the Mississippi Business Journal than ever before, but advertising revenues for all conventional media are falling fast. Unlike many, we do not use a pay wall, because we want to continue providing Mississippi’s most comprehensive business news each and every day. But that takes time, money and hard work. We do it because it is important to us … and equally important to you, if you value the flow of trustworthy news and information which have always kept America strong and free for more than 200 years.

If those who read our content will help fund it, we can continue to bring you the very best in news and information. Please consider joining us as a valued member, or if you prefer, make a one-time contribution.

Click for more info

About Ted Carter

Leave a Reply