Identifying the Financial Risks of the Convention Center Hotel Deal

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As I mentioned the other day, the Budget, Finance and Governance Committee, at its meeting on Monday, April 20th, will do what is necessary to push along the convention center hotel deal for approval at Wednesday’s city council meeting.

Ever since there was agreement by the powers that be, that Cincinnati needed a “headquarters hotel” for conventions and an upgraded convention center, the momentum to make a deal built up and the deal gets to the finish line on Wednesday.  Once it started, it wasn’t going to stop. Whether it is a good deal or not.

So, this is not to criticize the deal. It is to help go into the deal with our eyes wide open.

The financing of the project is complicated. There are at least 9-layers of various sources of financing both public and private. The current estimated cost of the hotel is $564 million, and it is essentially 50/50 public and private. The convention center is all public funding.

Here are my observations about the convention center hotel project:

  1. In a June 18, 2025, article, the Cincinnati Business Courier reported that, “The city may need to put in $2 million to $3 million per year in additional resources, but those are preliminary numbers.” In other words, until the convention center and hotel start generating the projected increased tax revenues, the city will have to pay its obligations out of existing resources. It is anybody’s guess how many years that will be. We all know about projects that were supposed to pay for themselves that we will be subsidizing until the city shuts it down.

 

  1. As I mentioned the other day and as reflected in the first observation, the financial success of the project relies entirely on generating increased tourism and the various multiplier effects that result in higher tax revenues. So, the city is putting supply ahead of demand. The city will have to generate the demand.

 

  1. The financing plan, especially for the hotel, has 9 layers, and they all have to generate their projected funding. The Business Courier’s article provides a list, posted with this blog. There is one item not included on the Business Courier’s list. The city will agree to make a 30-year $50 million loan to the project. Any outstanding payoff after 30 years can be forgiven.

 

  1. The city’s financial commitment to the hotel is open ended. The project will be crowding out other uses for those tax revenues until the project starts “paying its way.” I have not seen any discussion of that.

To sum up, soon after the city council’s  approval of the “convention headquarters hotel,” on Wednesday, the city will begin subsidizing the project. An extensive financing stack kicks in and the city must begin paying its obligations related to the project. Since there are no increased tax revenues yet, the city must pay obligations out of existing funds.

As I mentioned the other night, if the murders, shootings, other violent crimes and teen mobs in Cincinnati are not abated to the point where the city’s safety image improves the project may have a problem succeeding. The city and county will have an updated convention center and a new hotel or two, but they may be underused and require continued subsidies to meet financial obligations.

The city council should already know what the bookings look like for the new convention center and hotel. The type of conventions that the city is trying to attract are planned years in advance. It would be good to know that baseline before ctiy council votes.