Hijacked Hyatt

The fiercest opponent of a Convention Center hotel now wants to take control of it.

SONDLAND GRAB: Hotelier Gordon Sondland (inset) wants to buy the convention center headquarters hotel instead of Hyatt. "It would be owned and operated by a well-respected, locally owned hotelier," Sondland's attorney wrote April 20, "as opposed to a multinational corporation."
By AARON MESH

Hotel financier Gordon Sondland has been fighting for a decade to stop construction of a headquarters hotel at the Oregon Convention Center that will compete with his business.

As CEO of Provenance Hotels, Sondland has been waging three lawsuits against a deal led by regional government Metro to build a $213 million Hyatt hotel, saying the publicly subsidized project should be taken to voters.

Now Sondland is trying to take the new hotel for himself.

According to documents obtained by WW, Sondland told Metro on April 20 his company would drop its lawsuits and invest $10 million more in the project than Hyatt. In exchange, Sondland wants to kick Hyatt out so his company can own and run the hotel.

Metro—which has spent more than $350,000 fighting Sondland's lawsuits—turned the offer down.

"We're glad that after years of paying PR firms to attack the idea of a convention hotel, and paying lawyers to file unsuccessful legal challenges, Mr. Sondland seems to have realized that the convention hotel project makes good business sense," Metro Council President Tom Hughes told WW in a statement. "The proposal that Mr. Sondland offered is not only unrealistic, it is three years too late."

Sondland's attorney, Jim McDermott, says the offer is sincere.

"If the government is going to engage in a public subsidy, it should be with a hometown company," McDermott says.

Sondland, 58, declined to comment for this story. He owns stakes in four downtown Portland hotels: the Lucia, deLuxe, Sentinel and Westin. For more than a decade, Sondland has paid representatives and lawyers to attack a convention center hotel as a threat to all downtown hotels and a risky investment for local governments.

In March 2104, a hotel coalition backed by Sondland sued to block construction of a Hyatt hotel financed with $78 million from Metro, the city of Portland and Multnomah County. Most of the public subsidy will come from bonds paid off by lodging taxes. The project's designer and builder, Mortenson Development, has agreed to spend $135 million. Hyatt will buy the hotel from Mortenson for a price that hasn't yet been set. 

McDermott says Sondland's $10 million investment would cut the public subsidy. "We're offering to take less of a reward than the out-of-town companies are offering to take," he says.

Documents released to WW under the state's public records law show Sondland's lawyers sought to settle the lawsuits starting in February.

Two weeks ago, Sondland's company, in a letter sent by McDermott, proposed that Metro let it take over the planned hotel. Four days later, on April 24, Metro attorney Alison Kean rejected the offer, saying it would break the agreement with Hyatt, increase construction costs and derail the project.

Besides that, Kean told Sondland, Metro wouldn't go into business with him. 

"Your client has adamantly and consistently opposed the project, perhaps most notably by questioning the viability of the convention industry in general," Kean wrote. "This long-stated position is diametrically opposed to the project mission."

McDermott acknowledges Sondland has painted the convention center hotel project as a loser. He says Sondland's offer to take control of the hotel would save taxpayers money. 

“You might call it brazen,” McDermott says of Sondland’s proposal. “I would call it bridge-building.” 

WWeek 2015

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