When the Omni Hotel executive team began working on the project to construct Fort Worth’s newest and most elegant hotel, the company knew that the eventual success of their efforts would depend in large part on partnering successfully with city government.
The City of Fort Worth prides itself on its modern convention center, but the city never had a major convention center hotel. Many city leaders wanted a signature hotel to continue the revitalization of the city’s downtown and to solidify the convention center’s docket of bookings of national conferences and events. But there was also an undercurrent of opposition—a concern that any hotel project could be a boondoggle that would use taxpayer dollars to unjustly enrich the developer.
To assist with this large project, the Omni Hotel executive team hired Winstead's Real Estate Industry Group to serve as lead counsel. Winstead and Omni had the task of developing an effective partnership with city government to get the job of building the Omni Fort Worth Hotel completed in an economically viable manner.
Real Estate Industry Group Co-Chair, Andy Dow, recalls, “The biggest advantage that we had was that Omni was willing to be involved as an owner. The other possible developers had all wanted a combination of public and private ownership. So in this case, the city didn’t need to be directly in the hotel business itself. But we still needed the city’s assistance in the form of tax abatements and economic development incentives in order to make the numbers work.”
The Fort Worth project constituted one of the largest assignments that Winstead has undertaken for Omni, a privately owned company that operates 45 luxury hotels across North America. To complete the project, Winstead put together a team of real estate and public finance attorneys that helped Omni open the hotel on time. Many members of the same team had successfully helped with launching an earlier convention center hotel in Austin, Texas.
The Omni Fort Worth Hotel, which uses glass, Texas stone, and rich hardwoods in its design, now sits directly across the street from the convention center. It features 614 guest rooms, almost 68,000 square feet of meeting and event space, 89 luxury condominium units with views of the city’s skyline, a top-flight steak house, and a wine bar. It was the scene of a grand opening at which the mayor and dozens of business leaders were present.
“Our biggest challenge was that despite the obvious economic advantages of the hotel to the city, there was still a lot of public opposition,” Dow says. “Some people questioned whether the city should be so heavily involved with a private hotel.”
The Fort Worth City Council, however, approved a package of tax abatements and economic development incentives to make the numbers work and make the hotel economically viable. Then the unexpected occurred: The real estate development boom of 2005 and 2006 caused building costs to skyrocket, creating an immediate crisis for the construction of the hotel. The city council had to get involved again.
“The cost of steel and other building materials increased the budget from $60 million all the way to $100 million,” Dow says. “We simply had to get more from the city in abatements and incentives. This led to even more opposition on the grounds that it was too expensive for the city to afford.”
After a carefully organized informational campaign, the city council agreed to increase the incentives. Dow says the hotel project “would not have gone forward without that decision.”
With the city’s involvement came requirements that Omni bring in minority- and women-owned businesses to help build the hotel and commit to hiring minorities and residents of downtown Fort Worth to work as hotel employees. These obligations served as additional challenges to the team—challenges that they met successfully.
The Omni Hotel executive team also had the challenge of obtaining the needed approvals for the 89 residential condominiums that are an integral part of the hotel’s appeal and of completing all the other related real estate work needed for that key part of the project. For that, Omni turned to Winstead's Mixed-Use Development and Condominium Practice Group, which has extensive experience in high-rise and mixed-use projects.
“This was a very critical part of the project,” Dow says. “The residents of the condominiums will be able to avail themselves of the hotel amenities, thereby increasing the revenues of the hotel. The condominium project will also link the hotel with the residents and the downtown city life of Fort Worth.”
Just as the economic boom of 2005 and 2006 presented a problem with inflated costs, the real estate recession that began in 2008 caused the hotel’s builders and planners more than a bit of worry.
Dow recalls that there “was a lot of concern about the timing, but as it turns out, the hotel has been as successful as we thought it would be when we were planning it. There are a lot of advance convention bookings.”
During the grand opening of the hotel, Fort Worth Mayor Mike Concrief said, "The Omni Fort Worth Hotel has changed the downtown skyline forever. While there has been so much growth in Fort Worth, our capacity to support the demand for convention business has finally been fulfilled. Omni is an unbelievable partner that has built one of its greatest hotels right here in Fort Worth. We look forward to many successful years working with their team."