The Jekyll Island Authority (JIA) will subsidize a Westin convention hotel for the Jekyll town center village as means of jump starting the high-end project which has been stalled for nearly two years due to lack of bank financing, according to a November 16th Brunswick News article. A multi-million dollar, ten-year kick back of a portion of the 5% bed tax collected by the JIA; a reduction in the percentage of annual room revenues to be paid to the JIA by the Westin; and a reduction of the percentage of room revenues to be paid to the JIA by the Jekyll Hampton Inn & Suites—which is owned and operated by the same company that will build the Westin—will all be part of the deal, according to the Brunswick News.
In return, the Westin must agree to promote tourism and convention business through its marketing activities.
A scaled-down version of the Westin deal will be offered to the Hyatt Place hotel as well, which, like the Westin project, has been unable to secure financing on the terms it desires, the Brunswick News further reports.
Full text of the article appears below.
Jekyll has plan to jump-start hotels for convention center
The Brunswick News
November 16, 2012
By NIKKI WILEY
Jekyll Island plans to aid the financing of two delayed hotels with money from a development fund supported by its accommodations tax.
The hotels are vital to the island's revitalization plan and essential to bringing in business for a newly opened, $50 million convention center. The planned 200-room Westin hotel and a 120-room Hyatt Place hotel were originally expected to be under construction earlier this year, but neither has broken ground.
Drafted lease agreements between the Jekyll Island Authority, the body that operates the state park, and hotel developers show that the authority plans to help finance the hotels with its newly approved Jekyll Island Tourism Development Fund that is funded in part by a 5 percent bed tax collected on the island.
In another apparent cost-saving move for the developers, the Hampton Inn and Suites, built in early 2010 and developed by the same firm as the planned Westin, will now pay 2 percent less of its rental revenue to the authority. The Westin will also pay the authority less, dropping from 6 percent of its revenue to 3 percent for two years and 4 percent thereafter, if the agreements are approved.
Both the Hyatt Place and Westin will receive reimbursement for marketing expenses from the development fund if the drafted documents are approved by the Jekyll Island Authority board.
The Westin would receive funding equal to 6.7 percent of its gross room revenues during its first three years in operation and 5 percent after for 10 years. The Hyatt will receive 5 percent of its gross room revenues for its first four years in business.
Jekyll Island officials declined to comment Thursday on the status of the Westin and Hyatt Place hotels. The Jekyll Island Authority board will meet at 9:30 a.m. Monday at the Jekyll Island Convention Center and will discuss the lease agreements.
The Westin project stalled in September when Jekyll Island Authority Executive Director Jones Hooks said the state would not be implementing immediately the Georgia Tourism Development Act, which was expected to provide a tax credit the Westin's developer needed to obtain bank financing.
Gov. Nathan Deal's office has since said that the project would not have qualified for the tax credit because of a provision that prohibits a recipient from directly competing with other Georgia businesses and that Jekyll should not have expected that funding.
The lease documents that say the hotels can receive Jekyll Island development fund money require that the hotels apply for a tax credit through the Georgia Tourism Development Act if the state does carry out the program or if another program is created.
The lack of hotel rooms on Jekyll Island has been a continuous problem.
Without substantial lodging on the island, the convention center is unable to market itself to organizations that host large-scale conventions, like the Association County Commissioners of Georgia that was one of seven conventions that canceled plans to meet on the island in 2014 because of a shortage of accommodations.
The cancellations cost the authority $3.8 million.