University of Arkansas Seeking $30 Million On-Campus Hotel Project

by Chris Bahn  on Monday, May. 27, 2013 12:00 am  

“I think they could be complementary,” Davies said. “… PKF was asked to take Carnall Hall and the university interest there into account. We believe that is reflected in the size they’ve recommended for the project.”

Ted Belden, one of the hotel operators at Carnall Hall, is watching with interest as the UA evaluates the possibility of a conference center and hotel. Belden has been in conversations with university administrators, and he believes they’ll keep their financial commitment to Carnall Hall in mind.

Currently the UA has a 40-year lease with the property, which has 50 rooms and can accommodate 120 people for meetings.

“As an existing partner with the university I’m confident that the university will evaluate this opportunity for them and take my facility into consideration as they weigh the options available to them,” Belden said. “They’ll treat me fairly. I do have some concerns over what they are considering.”

While the conference center is central to the UA’s mission, it’s the sleeping rooms that hold the most value for a potential investor. Davies said it would be difficult to make money solely from a conference center.

The UA is hoping that potential investors will see the location and the potential demand from large groups attracted by the school and determine that an investment would be worthwhile. Whether anyone is willing to do that is yet to be seen. If the school is asked to subsidize the project beyond providing the land and maybe showing some flexibility with the lease, the whole idea may crumble.

“There are not a lot of conference centers being built just for profit,” Davies said. “This place, this project, if it makes sense financially, it make sense because of the demand the university brings to it.

“I don’t know whether these people that respond are going to say this is a great project, but [what] the university needs to do is put in ‘X’ million dollars. That’s the point of what we’re doing. We’re trying to find out if it’s possible.”

Projected Use and Revenue

YearRateRoom PercentOccupancy Revenue
2015 $147.50 45 $3.0 million
2016 $152 52 $3.6 million
2017 $156.50   55 $3.9 million
2018 $161.25 55 $4.0 million
2019 $166 55 $4.1 million

Source: PKF Consulting study commissioned by the University of Arkansas

 

 

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