Government officials in Portland, Ore., have scrapped plans to build a publicly financed, 600-room Westin headquarters hotel adjacent to the Oregon Convention Center. The project, which was first proposed 20 years ago, is the victim of the recession.

“We have agreed that now is not the right time to move forward with predevelopment efforts to build a convention center headquarters hotel, due to the current economic climate,” declared Portland Mayor Sam Adams, Multnomah County Chairman Ted Wheeler, and Metro President David Bragdon in a joint written statement. The decision came Friday, September 18, following a meeting of the three officials, who represent the government bodies that oversee the project. “The current climate requires a focus on maintaining what we have, and we will work with partners and stakeholders to develop new strategies for making the most of our existing facilities.”

The decision not to move forward was based on projections of declining revenues from the Visitor Development Initiative, a fund created from lodging taxes that pays for hospitality-related projects and initiatives. With revenues from the VDI down approximately 11 percent in fiscal year 2008-2009 according to reports, the VDI monies are inadequate for the government to obtain a bond to fund construction, so additional sources of revenue would be needed. The other problem is the bond market, says Brian McCartin, executive vice president, convention and tourism sales, at Travel Portland. It’s not a good time to be selling the municipal bonds that would fund the $200 million project.

While the economy has taken its toll on the destination, the city is performing well compared to its peers, McCartin says. Through July of this year, Portland’s average daily hotel room rate was fourth-highest and occupancy rates were third-highest among the 16 cities in its competitive set. The number of rooms sold through July was down just 2.4 percent, he says. Plus, the city has added 600 hotel rooms in the past couple of years, increasing its supply.

“We’re in better shape than a lot of destinations,” he says.

While Portland was burying one headquarters hotel project, Dallas was breaking ground on another. Following a contentious debate, voters in May narrowly passed a referendum to fund the 1,000-room, $500 million Omni at the convention center. On September 16, the city broke ground on the hotel, which is scheduled to open in early 2012.