Deal struck to build hotel to bolster expanded Convention Centre

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This article was published 16/01/2015 (3950 days ago), so information in it may no longer be current.

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Stuart Olson Dominion Construction, RBC Convention Centre and the City of Winnipeg have struck a tentative deal to build a hotel that was supposed to be completed along with the convention centre’s expansion.

The $180-million expansion conducted is on budget and is expected to be completed, on time, in early 2016. But the construction of a new, privately run hotel adjacent the convention centre has not started due to Stuart Olson Dominion Construction’s inability to build a first-class hotel capable of meeting convention needs. The original hotel-building partner, Matthews Southwest, departed the project in 2012 and was not replaced.

Also in 2012, downtown development agency CentreVenture bought the former Carlton Inn north of the convention centre for $6.6 million, with the help of a city line of credit. CentreVenture, an arms-length agency of the City of Winnipeg, tried to bring a hotel developer to the site, but could not find a way to recoup the cash it spent on the Carlton Inn land and business.

No developer was willing to pay $6.6 million — and the hotel was supposed to be built at no additional cost to the taxpayer.

According to the terms of its construction contract, Stuart Olson Dominion would be required to pay a penalty of $16 million if it does not build a hotel. RBC Convention Centre board president Bob Silver said the firm could in theory still build a hotel, but it would not be of sufficient quality to attract a hotel brand that could offer points to conventioneers.

The deal to end the impasse, which will come before city council’s executive policy committee on Wednesday, would involve Stuart Olson Dominion reducing its penalty to $3.75 million. The convention centre would then give that cash to the city to reduce CentreVenture line of credit obligation to the city.

CentreVenture would then go out and find a private developer for the Carlton land, or somewhere nearby. It must be connected to the convention centre via a weather-protected walkway, Silver said.

The expanded convention centre’s business plan relies upon the construction of a new, nearby hotel to ensure there are enough rooms in the South Portage area to handle delegates at larger conventions. Silver said the convention centre will not be able to bid for the largest conventions until more hotel capacity is created.

Regardless of how successful CentreVenture is at finding a hotel builder, the new hotel will not be open in time for the expanded convention centre’s reopening, he added. Construction of the hotel would take two and a half years, he said.

Silver said the convention centre expansion is otherwise proceeding well. He praised Stuart Olson Dominion and convention centre president and CEO Klaus Lahr for holding the line on construction costs, as promised.

Multiple sources claim True North Sports & Entertainment, which owns the Winnipeg Jets, is interested in developing the Carlton Inn site. True North spokesman Scott Brown declined to confirm or deny that interest.

“We’re a strong supporter of our downtown and any initiatives that would further enhance our downtown community, and we’d always look for chances to participate in development opportunities,” Brown said in a statement.