The long-vacant Hotel Arizona in downtown Tucson may reopen under a $20 million plan approved by the Rio Nuevo District board Tuesday.
After being shuttered since 2012, the hotel adjacent to the Tucson Convention Center would reopen under a Hilton brand by 2019 under a plan proposed by owner HSL Properties. HSL, led by Humberto S. Lopez, has owned the property since 1984.
The new hotel, along with others in the works, would allow downtown Tucson to compete for conventions that now pass on the area because of the lack of hotel rooms, supporters, including Visit Tucson, said.
HSL asked for no cash from Rio Nuevo for the project, but the company proposed a sale-leaseback with the district with abatement of the resulting taxes, as well as payment of all site-specific taxes from the property to HSL through 2025.
The board voted 4-0 to authorize the board’s executive officers to draw up agreements under the plan, with details like the duration of the proposed tax breaks still to be finalized.
“Congratulations, we’re in the hotel business again,” Rio Nuevo board secretary Mark Irvin said after the vote.
Irvin chaired the meeting after chairman Fletcher McCusker recused himself because of partnerships with HSL that could create a conflict of interest.
Board member Edmund Marquez called the vote “a defining moment” for Rio Nuevo after years of trying to reopen the convention center hotel.
“I think we are the largest city with a convention center and no hotel,” Marquez said. “This is a defining moment — this is a big deal.”
Jerry Fischer, chief financial officer of HSL, said plans are to renovate and reopen the hotel by January 2019, just in time for the Tucson Gem Mineral & Fossil Showcase.
“It’s critical to bring conventions back to Tucson,” Fischer said.
HSL’s plan calls for the 155,179-square-foot hotel to have 309 total guestrooms; a restaurant serving breakfast, lunch and dinner; a lobby bar and lounge; and 30,000 square feet of meeting space.
Though the building needs refurbishment inside and out, the hotel was “built like a bunker” so major structural work isn’t needed, Fischer said, adding that as part of a feasibility study, HSL and Hilton engineers inspected the site to estimate the project cost.
Fischer said Hilton has signed a letter of intent to operate the hotel as one of Hilton’s full-service brands, which include Hilton, Curio, Doubletree and Tapestry Collection hotels.
HSL has existing local relationships with Hilton, including at the HSL-owned Hilton El Conquistador Golf & Tennis Resort on Tucson’s northwest side. Overall, HSL has some 1,600 hotel rooms in addition to more than 10,000 apartments in the Tucson market.
“They’re as bullish as HSL is about bringing a convention hotel back to Tucson,” Fischer said of Hilton.
According to an economic impact study commissioned by HSL, the proposed hotel would have an annual direct impact of $7.1 million, with $2 million in indirect impacts like payments to suppliers and an additional $1.9 million in “induced” impacts from personal spending.
HSL and supporters said the reopening of the former Hotel Arizona, along with several other planned downtown hotels, will finally allow Tucson to compete with other cities for large conventions.
Elsewhere downtown, the 130-room Marriott AC Hotel is set to open soon, and the same developer has proposed a 100-room Marriott Moxy boutique hotel. Scottsdale-based Caliber Hospitality wants to build a hotel with a minimum of 120 rooms just south of the TCC.
TCC general manager Glenn Grabski said an onsite hotel is sorely needed.
“We are missing out on a lot of business,” he said, citing a study showing a convention center the size of the TCC needs a hotel with a minimum of 300 to 400 rooms.
Brent DeRaad, president and CEO of Visit Tucson, said reaching a supply of 1,000 rooms downtown will be critical in attracting convention business in the future.
“There’s really no ability for us to bring in groups of any size whatsoever,” DeRaad said.
Brian Corbell, who is renovating the 134-room Riverpark Inn Hotel on West Cushing Street downtown under a deal with the city, said he’d welcome the new HSL hotel as a “headquarters” hotel with on-site meeting space to attract conventions — even though it would be a competitor.
“I believe it’s essential if the convention center’s ever going to be successful, if it is to have conventions come back to downtown, that is impossible without the physical presence of a headquarters hotel,” he said.