New conference center planned for Cape Girardeau

Citing boosts to tourism and an opportunity to bring more money to the local economy, the city of Cape Girardeau has announced a partnership with several hotel owners to support a new Drury Southwest Inc. conference center and hotel, pending approval of an agreement by the city council.

The two buildings will be built at the location of the current Drury Lodge, 104 S. Vantage Drive, which will be demolished early next year.

Built as a Ramada Inn in 1969, it became the Drury Lodge in 1985, according to Southeast Missourian archives. The two-story lodge has 140 guest rooms.

Submitted photo An artist's rendering shows the view from Interstate 55 of the proposed Drury conference center and hotel.

Herb Wedemeier, who serves as senior vice president, secretary and general counsel for Drury Southwest, said the company knew it was time to start thinking soon about the facility's next chapter.

"We knew we had to or should do something there, and then we started looking at options," he said. "(Hospitality research firm) HVS did a very good, in-depth study on the need for a conference center here in Cape."

Before recommending an indoor sports complex, the City of Cape Girardeau/Midamerica Hotels Corp. Feasibility Study joint committee last year considered a conference center with a hotel component as the next possible project to be funded by the city's 1 percent restaurant tax.

HVS conducted a study and found a conference center would meet an "unaccommodated demand" in Cape Girardeau for large gatherings. They estimated 27,000 room nights were turned away each year because of seasonal demands.

Numbers provided by HVS showed hotels in the area experience occupancy rates of nearly 80 percent in the spring and summer months but can dip below 40 percent from November to April.

The HVS report also indicated the project would not be profitable for a private developer or public entity alone. Property tax abatement, land donation and tax rebates were among the suggestions offered by the consultants to make the project more economically feasible.

"We've been looking to do a conference center for some time, but the financials of a conference center -- that takes a while, up to four to five years to function properly financially," said Mayor Harry Rediger.

As the HVS report explained, it would likely take a few years for the hotel and conference center to reach its full potential, because groups usually book rooms years in advance. Because of that, the plan "fell off the table," Rediger said, but was revived again after the opportunity arose to partner with Drury Southwest.

The council will vote Monday on two agreements to help fund the conference center, using mostly private money. The conference center is valued at more than $11 million and will be funded by three sources, the city said.

Participating hotel owners in the William Street and Interstate 55 area have volunteered to pay 1 percent of their hotel revenue for up to 20 years, or until their combined contribution with the city meets $6.25 million -- whichever comes first. The city estimates the hotel owners' contribution at $3.8 million.

Contribution from the city of Cape Girardeau is estimated at $2.45 million. Per the agreement, the city will pay an amount equal to 1.5 percent of the revenue from the conference center for up to 20 years, or when their combined contribution with the hotel owners meets $6.25 million -- whichever comes first. The contribution is equal to the 1 percent general sales tax and 0.5 percent capital improvements sales taxes, which the city said still will be paid by the new development. Payments will be made quarterly, as outlined in the agreement.

Finally, Drury Southwest will contribute a private investment of at least $4.75 million.

"This is an exciting public-private partnership," said city manager Scott Meyer. "Additional tourists support our restaurants, retail and other businesses. The additional revenue to the city will help sustain our infrastructure and support public safety, and we won't have to assume the costs of operation."

The owners, hotels and city all stand to benefit from the project, he said. Those involved in the agreement expect the hotel and conference center to boost business year-round, especially during the winter months.

Activities such as Southeast Missouri State University events and sports tournaments fill hotel rooms and restaurant tables, but those events are seasonal, Wedemeier said, and do not drive the economy year-round. A conference center could change that by drawing new crowds during the off-season.

"This is the type of activity we're talking about, that it's not a zero-sum game; this is all new users to the area," he said. "This is something that's going to float all the boats, whether it be restaurants, or other hotels or shops here in town."

The idea of attracting new groups is a key part of the plan. As Cape Girardeau Area Chamber of Commerce president and CEO John Mehner said, the city already has conference centers that frequently host large events.

"What we did not have in Cape, and still don't at this particular point, is a conference center that's attached to a hotel," he said. "That's an additional draw and puts us into additional markets to be able to host additional events."

The hope is the city becomes a stop in the circuit for statewide or regional organizations that host large conferences regularly, whether they are quarterly or every few years.

As a regional hub, Cape Girardeau is "well positioned" to host statewide or regional organizations, Mehner said. Another major draw that attracts such groups -- and one Cape Girardeau has -- is a sufficient variety of things to do, he said.

He also pointed out the types of statewide and regional conventions the city is looking to host would bring in more visitors than one hotel could hold, meaning the conference center provides benefits to many, not just a few.

While the city will not assume operation costs or liabilities, the agreement requires it to provide some assistance to the project outside of the financial contribution. This includes marketing the conference center through the Convention and Visitors Bureau, buying and installing signs at intersections near the new conference center to inform the public of its location, and working with the Planning and Zoning Commission to approve a zoning variance for the height of the hotel.

Another requirement for assistance stipulates the city work with Drury Southwest to transfer a portion of Vantage Drive from the Missouri Department of Transportation to the company to accommodate additional parking space needed for the project. Concept property plans included in Monday's council packet show the section of Vantage Drive near Percy Avenue would be acquired.

This agreement marks the third time in recent years the city has formed a public-private partnership to make a major project possible. It teamed with Republic Services late last year on a new transfer station and is working with Midamerica Hotels on the new indoor sports complex.

"More and more we're finding we can get so much more accomplished with public-private partnerships that benefit both parties," Rediger said.

Once complete, the eight-story hotel will include 168 rooms and an adjoining restaurant, and the conference center will cover more than 20,000 square feet. Each component was a requirement outlined by the city.

If approved, the agreement will remain in effect for 20 years or until the $6.25 million combined contribution is reached. The agreement states during its lifetime, a donation of the rental cost for a single day's use of the entire conference center will be made to the city. The annual donation, which includes only the rental cost, will be offered on a day requested by the city, depending on the conference center's availability.

Drury Lodge will close in January after all events at the location have wrapped up, and demolition will begin immediately after, Wedemeier said. Ideally, the new hotel and conference center would be open in the late spring or early summer 2017.

"It's going to be our finest Drury product that we have available," he said. "It will be completely upscale and will be the type of project that will draw new users."

srinehart@semissourian.com

(573) 388-3641

Pertinent address:

104 S. Vantage Drive, Cape Girardeau, Mo.

401 Independence St., Cape Girardeau, Mo.