Jekyll Island to return bed taxes to two hotel builders
Westin and Hyatt will get breaks intended to solidify financing, Jekyll Island Authority says
Georgia Times Union
November 20, 2012
By Terry Dickson

JEKYLL ISLAND — The Jekyll Island Authority will return bed taxes to two planned hotels, including a beach-front facility considered essential to the island’s redevelopment plans.

The authority’s board voted Monday to tap its new Jekyll Island Tourism Development Fund to give Westin Jekyll Island 6.5 percent of its gross room revenue and Hyatt Place 5 percent.

The deal for Jekyll Ocean Front Hotel LLC, developer of the Westin, will last 10 years but will drop to 5 percent after three years. That is anticipated to raise $6.1 million for the hotel.

SEES Jekyll Island Hotel LLC, the group that is building the Hyatt, will get 5 percent for five years.

The board approved the incentives after hearing that Westin would be required to apply for Georgia tourism tax credits and, that if it receives any, the payout from the development found would be reduced dollar for dollar.

Jones Hooks, the authority’s executive director, said the development incentive was needed to jump-start financing for the Westin project.

Hooks said the hotels are needed to draw business for the new $39 million, 128,000-square-foot convention center that opened in May. The two hotels would be next door to the convention center.

Westin had counted on tax credits from the Georgia Tourism Development Act to secure a $25 million loan, but the law is so complex the regulations haven’t even been written. Construction was to have started two months ago.

With some groups backing out of convention dates because of the lack of hotels, the authority estimates it has lost $3.8 million in business.

Asked why Jekyll Island needed such an upscale hotel, authority spokesman Eric Garvey said Westin gives it a far better chance to draw conventions.

“There are some medical groups out there that won’t meet in anything less than a Westin or a Hyatt,’’ Garvey said.

But Jekyll Island is not trying to cater to millionaires as some have asserted.

“A key thing for us was having a variety, having something for everyone,’’ he said.

The authority also imposed a number of deadlines. The Westin must be under construction by April 21 and open by Aug. 31, 2014.

The Hyatt’s developers are looking to move more quickly and expect to be open by the end of 2013 or early 2014 at the latest, Hooks said.

Westin’s plans for 200 rooms and Hyatt Place’s 135 rooms will not get the island back to where it once was.

The island formerly had 10 hotels and a total of 1,500 rooms but now has about 900, he said.

Hooks stressed for the board that neither hotel will get any funds the first year of operation because they’ll have to pay in before they get anything back.

The authority also amended some of its other rules, which will also give some hotels a break by giving them access to more of their own revenue.

The authority compels hotels doing business on the island to set aside 6 percent of their gross income in reserves. The authority voted to reduce the requirement to 4 percent for flagged hotels such as the Hampton, Westin and others.

“What they’re there for is to ensure the property remains in good order’’ and is well maintained, Hooks said of the reserves.

Should hotels lose their franchises, the requirement would revert to 6 percent, he said.

Hotels always have to set aside funds that could be drawn upon for upkeep as a condition of financing, he said.

The lower requirement also corresponds with what the chains require, Hooks said., (912) 264-0405