|photography by Adam Fish|
Sentiment in the city of Dallas seems to be building to attach a new hotel to the downtown convention center. City leaders are ponying up $500,000 to option the land, part of a $41.3 million total price tag for the acreage. They’re also considering spending ad valorem tax dollars to service the debt on developing a 1,000-room, city-run hospitality property.
The end game? Boosting business at the massively expanded convention center that sits empty and unused far more weeks than anticipated. Project proponents like Phillip Jones, president of the Dallas Convention and Visitors Bureau, contend a new hotel could help the city bring in 25 citywide meetings a year, up from the current 16.
While some objections to this nine-figure, govern¬ment-backed plan have been raised (see box below), inertia at this point seems to favor the project. The Dallas CVB is for it, as is Mayor Tom Leppert and most of the City Council.
If anyone wanted to stop this juggernaut, he would emerge like Horatius the One-Eyed-the ancient hero who stood alone on the bridge against impossible odds, defending Rome against the Etruscans. Who would dare do that? Enter Harlan Crow, the 58-year-old CEO and chairman of the board of Crow Holdings.
“We overbuilt the convention center and now we’re going to make a $500 million mistake to try to save it, Crow says.” Sometimes you just have to admit you made a mistake and stop drinking the Kool-Aid.
===The Takeaway: 1. Competition is good-as long as it’s fair. 2. Some battles are worth fighting, even if the odds are stacked against you. 3. Sometimes you just have to stop drinking the Kool-Aid.!==
“It is the city’s job to spur economic development-to the extent they create a TIF district or do what they did for the Mercantile, Crow adds.” It’s not like the city should do nothing; there are lots of good things to do. But they shouldn’t be in the hotel business. They shouldn’t go that far. They shouldn’t be in pharmacies, either.
Anne Raymond, Crow’s key assistant and managing director of Crow Holdings, says city money might be better spent elsewhere. “If they really have half a billion dollars to spend, they ought to build a riverwalk or they ought to build a French quarter or they ought to build a destination that people want to go to, she says. But a hotel?” It’s unrealistic and it’s reckless.
Quietly but efficiently, Crow and Raymond are working to build a coalition of business leaders to convince the City Council to re-evaluate the plans for a convention-center hotel. They want to slow the process enough for decision-makers to examine the plan more dispassionately, and with something more than “blue-sky data from the CVB. They admit it’s an uphill battle. This is Texas, the home of the Alamo, though-not Sun-Tzu’s China-and here men know that sometimes you have to fight a battle you know you’re going to lose.
This isn’t the first time Crow has taken on the Horatius role. But if you spent only a short time with him, you might never know of the hard resolve beneath his affable exterior.
TOUGH AND WARY
Harlan is the third son of developer Trammell Crow, who made his last name a household one in Dallas, and the younger Crow exudes a good measure of his father’s informality and openness around the office. (Harlan’s sister is developer Lucy Billingsley; his brothers Trammell S. and Stuart are also involved in Crow Holdings.)
If you saw Harlan on the street with his full mop of gray hair and his happy smirk, dressed in his usual office golf shirt and khakis, your first thought might be, “Isn’t that my son’s J.V. football coach?-not, “That guy lives in the third-most-expensive house in Dallas. (He does indeed, in a $24 million manse off Preston Road.) Crow leaves the office early sometimes to pick up his daughter from school because he says his wife, Kathy, will kill him if he’s late. He swipes water-bottle caps from visitors to add to his son’s collection for school.
These appearances can be deceiving. This is a man who faced down creditors after the 1980s real estate crash and almost single-handedly saved the Crow family from financial disaster. During that time he was Horatius-fighting against overwhelming odds-and he developed a reputation for being tough at the negotiating table. The scars he earned then still color his business practices: He’s as conservative in business as a Depression survivor, and he brings to the table the wariness of someone always on the lookout for threats.
He can also take things personally, even when it’s supposed to be “just business. For example, when he was forced to sell off many of the family’s commercial real estate assets, he steadfastly refused to give in and sell his father’s most prized property, the Dallas Market Center. When the din of battle died away and the marketplace righted itself, Harlan Crow was left with the makings of an even bigger empire than his father had built.
Crow’s conservative approach to business is matched by his conservative take on politics. It’s not just that he has friends in high places, including President George Bush, Vice President Dick Cheney, former New York Mayor Rudy Giuliani, and Supreme Court Justice Clarence Thomas. He’s a member of the founders committee of the Club for Growth, an influential conservative political group that espouses an anti-tax, anti-regulation, pro-free-trade message. He’s also served on the board of trustees of the American Enterprise Institute for Public Policy Research, a think tank that funds research promoting conservative politics and business interests.
Crow’s interest in politics also fuels one of his outside passions: his collection of statues of Vladimir Lenin, Joseph Stalin, Mao Zedong, Nicolae Ceausescu, Fidel Castro, and other Communist leaders-what he calls his “dead dictators. For Crow, the statues stand as mute testaments to the defeat of an ideology so different from the one he embraces. His collection is considered among the largest private statuaries in the world-stone scalps, you might say, of a battle won yesterday.
As for tomorrow’s battle, Crow won’t even begin an interview about the convention-center hotel without admitting he has a dog in the fight beyond free-market principle. A big dog, at that. “We own the [Hilton] Anatole hotel. It’s a big convention-center hotel, and it will be affected by this, he says. “So do I have a bias because of this? The answer is yes, I do. I don’t mind that there’s a convention-center hotel. I don’t mind one bit. As long as it’s financed by the marketplace and it competes with the other hotels on a level basis-you know, they pay taxes, we pay taxes-you know, it’s a level thing. I don’t mind competition at all.
He stops a second to gather his thoughts, then lays down his bottom line. “I could be wrong, but get your facts before you vote on this thing. Prove me wrong, he says. “If someone came and said we’re going to give the city of Dallas a 1,000-room hotel-hooray-we’d go back to work. I don’t think [the city knows] what they’re doing, except digging the hole deeper.
Six Hard Questions
These are the questions Harlan Crow and other opponents of the project have asked about a taxpayer-funded, convention-center hotel.
1. If a convention-center hotel is such a sure-fire profitable enterprise, why has a private developer not stepped forward to build one yet–even when the city offered generous financial incentives?
2. At 60 percent occupancy–and that’s projected to decline further–the Dallas hotel market is already one of the country’s weakest. How would building yet another hotel help that?
3. The most optimistic projections say a convention-center hotel would attract another nine citywide conventions a year, bringing the annual average to 25. The national average of guest-room nights for a citywide convention is 1.9 nights. Even rounding that up to three room nights, and assuming full occupancy during conventions, that accounts for just 75 nights out of the year. What about the other 290 nights?
4. It’s argued by Mayor Tom Leppert and others that the convention-center hotel will spur additional retail, entertainment, and restaurant development. Where? Developed by whom? Has anyone committed? And will all that “domino development really mean a positive ROI for the taxpayers’ investment of $500 million over 10 years?
5. The developer and management company the city hires will collect its fees with no downside if the hotel underperforms. If the hotel performs as poorly as the expanded convention center has–and as poorly as some other city-built convention hotels have–who will be on the hook to subsidize the losses?
6. Tradeshow Week notes that trade-show attendance peaked in the mid-1990s, and that the biggest 200 shows are using the same amount of space as they did in 1992. How can Dallas, which is not a destination city, succeed in a declining market that offers truly attractive alternatives like Las Vegas, Orlando, and San Diego?