by Joe Sullivan
There's a nice view from the dining room of the Holiday Inn Select that overlooks the World's Fair Park. But the laminated plastic menu is quite limited, and diners are instructed to pay, Shoney's style, at a cashier's station. The Formica-topped tables at an adjoining bar are a little wobbly. And while the hotel's 293 guest rooms are well appointed, it's a hassle getting through the cumbersome double doors that separate them from the elevator bank.
As the only hotel immediately adjacent to the city's incipient new convention center, the Holiday Inn Select needs to become a more inviting domicile for the gatherings that the city must attract in order to make its $160 million convention center bet pay off. According to the hotel's sales director, Tracy Hicks, enhancements are in the works that will make it into a convention drawing card. But the hotel's wheeler-dealer owner, Chattanoogan Franklin Haney, has led the city down a primrose path before. And suspicions begin to arise when Hicks couples her assurances with intimations that the extent of the enhancements could depend upon concessions by the city.
To be sure, the city isn't totally dependent on Haney to keep hotels from becoming a weak link in its convention center chain. The 317-room Hilton is just a block away, and the Hyatt Regency and the Radisson add another 544 rooms to downtown's stock—each of them with more amenities than the Holiday Inn Select has presently. But are 1,195 total down hotel rooms sufficient to the needs of a convention center that's being built to accommodate assemblages of 2,000 or more delegates? And is any one of the downtown hostelries big enough to satisfy the preferences of many meeting planners for a single headquarters hotel that will serve as a focal point for convention-goers?
The president of the Knoxville Convention and Visitors Bureau, Mike Carrier, insists that "room count wise we're in pretty good shape." And he points out that beyond the confines of downtown there are 7,500 rooms in Knox County to handle any overflow. Carrier goes on to acknowledge, though, that "Obviously, a new hotel with 500 rooms under one roof would be an asset," adding that, "Once the shovel goes in the ground, I fully expect we'll see more interest in new hotel development."
However, the prospect of more hotel rooms coming on the downtown market anytime soon is anathema to existing hotel operators. They point out that Knoxville's hotel occupancy rate of 55 percent in 1998 was far below the national average of 64 percent, according to Smith Travel Research's authoritative count. Moreover, the average Knoxville room rate of $55.50 compared to $75.47 nationally—another sign of market weakness.
"Anybody who produces a feasibility study saying we need more hotel rooms is on drugs," asserts the Hilton's general manager, Jim Lattin. Building for a convention peak is "like building a church for Easter Sunday," Lattin quips. "Three of the four downtown hotels we've got were built for an Easter Sunday back in 1982 [i.e. the World's Fair], and we've been suffering from overcapacity ever since."
Last year's study by the Urban Land Institute that has shaped convention center planning in many ways supports the Lattin text. The ULI panel concluded that, "The city will not be able to support new hotel space solely based on the convention center traffic. A city's economy drives the need for new hotel spaces; thus, until the business climate can support such space, the panel recommends that existing hotels be renovated and expanded before new ones are built." One of the members of that panel specializes in hotel feasibility analysis for the consulting arm of Pricewaterhouse Coopers.
Fortuitously or not, the downtown hotel that's in the best position to expand is the Holiday Inn Select. Haney is known to have his eyes cast on the state office building next door to the hotel as space that could be converted into an additional 140 rooms. Obtaining it would mean putting up a new office building for the state, and who better to do that than Haney. His notoriety for the $1 million consulting fees he paid to former Sen. James Sasser and Al Gore's crony Peter Knight for help with a federal office building deal in Washington didn't stand in the way of getting that deal done. Now that he's been acquitted of the 42 counts of federal campaign contribution law violations on which he stood trial last month, Haney would seemingly have more time for doing new deals in Knoxville.
However, his previous Holiday Inn dealings here still leave a sour taste in the mouths of many. After building the Holiday Inn and its garage, Haney went from 1985 to 1989 without paying property taxes on them and also defaulted on bonds issued to finance the projects. AMBAC Indemnity Corp, which had insured the bonds, foreclosed on the properties and paid $1.5 million in back taxes to forestall their being auctioned for tax delinquency. Haney subsequently re-acquired the hotel from AMBAC, and it has kept current on its tax payments since.
Neither Haney nor the Holiday Inn Select's general manager, Mike Gibson, returned telephone calls seeking comment on these matters and other acquisition designs. According to Hicks, the hotel wants to latch onto 28,000 square feet of the city's existing convention/exhibition center for its own ballroom, meeting rooms, and exhibit space cheek-to-jowl with the city's new convention center. But much of this space has been earmarked by the city, per ongoing discussions with the Home & Garden Television Network, for an HGTV center that could be a major attraction for conventions in its own right.
The city should be prepared to offer some inducements to get a hospitable headquarters hotel located near the convention center, but an alternative to Haney is needed.
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