Education

Cal Poly studies whether to build $155M hotel, conference center, arena

An entrance to Cal Poly in San Luis Obispo.
An entrance to Cal Poly in San Luis Obispo. jjohnston@thetribunenews.com

Cal Poly is weighing whether to move forward with planning a $155 million hotel, conference center and events center — all on campus — to bolster a proposal to expand the university’s hospitality degree program.

The university paid $130,000 to the consulting firm Brailsford & Dunlavey to analyze the marketability and potential for an events center arena and an integrated hotel, conference center and museum that might feature an alumni hall of fame. The 136-page feasibility study, which has been in the works since December, was released this week.

The study proposes an “upper-midscale” 143,000-square-foot hotel complex that includes a 120-room hotel, 12,000-square-foot ballroom and 22,000-square-foot conference center catering to university and business events.

The study also proposes a separate 166,000-square-foot events center for sporting events, including men’s and women’s basketball, rodeo activities and concerts.

The report estimated the total cost to build the facilities, with a hypothetical opening date of 2020, would be about $155 million: $107 million for the events center and $48 million for the hotel/conference center.

The study projects an estimated $2 million in profits from the hotel and conference center in its first year, but a loss of more than $100,000 each year for at least the first five years for the events center.

Cal Poly President Jeffrey Armstrong and Provost Kathleen Enz Finken emphasized in a letter to the campus community that the university is still in an exploratory phase to determine whether any or all of the components of the potential project make sense for Cal Poly.

“We want to reiterate no decisions have been made,” Armstrong and Enz Finken wrote. “There is much work ahead of us to thoroughly assess the idea, and it will require the input of many stakeholders.”

The new facilities would be tied to an expanded, upgraded interdisciplinary Cal Poly hospitality degree program coordinated through the College of Agriculture, Food and Environmental Sciences and the Orfalea College of Business.

The program is currently a recreation, parks and tourism administration major within Cal Poly’s College of Agriculture, Food and Environmental Sciences.

“We have heard hospitality leaders from throughout the county express their desire for the university to build upon its current hospitality curriculum,” Armstrong and Enz Finken wrote.

Pros and cons

The study based its findings on factors that included a market analysis of the local hotel industry and university sports arenas, area demographics, interviews with community leaders, and economic histories and projections.

Among the potential benefits, according to the study:

• An estimated $2 million profit for the hotel/conference center in its first year that would increase to $4.3 million by the third year of operation.



• Sufficient space for larger conferences and business events that don’t come to the area now.



• Higher attendance for sporting events, concerts, shows and rodeo events.



• An estimated 600 jobs created during the construction phase and 133 jobs related to the operations thereafter.



The consulting firm identified nine conference facilities in the San Luis Obispo market to assess the viability of a larger center.

“A common sentiment among those interviewed was that the market lacked a true conference center with modern amenities and aesthetics to serve not only the university but community groups,” the report states.

Among the potential downsides identified by the study:

• Competition with local hoteliers who could oppose the hotel/conference center project.



• Estimated financial losses of more than $100,000 annually in the first few years of the events center.



• Limited sponsorship and advertising revenues for the events center compared with peer event center projects around the nation.



The study proposes an upper-midscale hotel such as a Hilton Garden Inn, Courtyard by Marriott, or Hampton Inn & Suites because of limited choices locally for higher-end lodgings.

“According to interviewees, the hotel market in the city is very strong; development of a 120-room property wouldn’t ‘kill’ the off-campus market, though hoteliers would likely be significantly opposed to the idea,” the report says.

Local reactions

The study identifies larger hotel operations in the area — Embassy Suites and Madonna Inn — with space for conferences and expositions that might be most affected by a Cal Poly hotel/conference center.

Nipool Patel, owner of the 77-bed Comfort Inn & Suites, said he thinks Cal Poly’s concept could play a complementary role to the local hotel industry.

“Having a conference center and an events center nearby would help because I don’t think they could accommodate all the people that would stay in one hotel,” Patel said.

Developer Clint Pearce, the president of Madonna Enterprises who runs the real estate side of the business and helps with decision-making at the Madonna Inn, also said that — despite some lost business from conferences — the “net positive” would outweigh the competition.

“The conference center and events center will bring in a lot of people,” Pearce said. “People don’t tend to congregate under just one roof when you have a lot of people coming to town. I think it will be really good for the community.”

Noreen Martin, owner of Martin Resorts, had a more nuanced view, saying she’s committed to the benefits that Cal Poly would bring. But she also said that having a solid visitor local marketing plan is vital to the success of the San Luis Obispo-area tourism industry.

“We have fierce growth in business marketing from our friendly competitors that would like to acquire the San Luis Obispo visitor,” Martin said in an email. “In San Luis Obispo County we need a sustainable funding mode to maintain Visit SLO County (a tourism marketing campaign) so they can continue to compete. ... Napa, Sonoma, Monterey, and Santa Barbara all have sustainable, clear, business plans with objectives, goals, tactics, and reportable standards which measure effectiveness.”

Events center

The study looked at building a 5,500-seat arena to draw visitors by creating a new space for men’s and women’s basketball, rodeo activities and concerts.

Cal Poly’s Mott Gym, built in 1964 and upgraded in 2012, has the second-lowest capacity in the Big West Conference at 3,032. The average attendance for men’s basketball was 2,075, while the women’s team averaged 630 people per game. Attendance has held relatively stable over the past decade.

The study looked at other universities that built new arenas and the financial impacts of those facilities.

In an assessment of seven universities that built new arenas in recent years, including Troy University (Troy, Ala.), Bowling Green (Bowling Green, Ohio), Central Florida (Orlando, Fla.), and Arkansas at Little Rock, fan attendance rose 32 percent on average — although two, Troy and Arkansas, actually showed declines in attendance.

Funding also unclear

San Luis Obispo City Manager Katie Lichtig said this week that it was too early for the city to weigh in on the proposals. City officials have had discussions with Cal Poly about the potential for the projects.

“We expressed the types of issues that we’d want to have conversations about as the idea got solidified,” Lichtig said. “Those include bed taxes and traffic impacts.”

No mention in the report was made about potential impacts to services in the San Luis Obispo area, or any sharing of revenues.

No timeline on a decision to plan the projects has been set; discussions will take place through meetings with stakeholders in coming months to assess the issue, Cal Poly officials said. Funding options also still haven’t been determined.

“If the university decides to move forward with any of the project planning, it will only occur after robust meeting and conversations have taken place with our faculty, staff and students, as well as the City and County of San Luis Obispo and other groups and individuals,” Armstrong and Enz Finken wrote.

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