San Antonio City Council stamped its approval Thursday on a deal in which Hyatt Hotels Corp. would sell its struggling downtown Grand Hyatt hotel to an Arizona-based private entity, but three council members abstained over transparency concerns.
The city bankrolled the hotel’s construction in a 2005 deal and has since poured millions of dollars into it in the form of debt bailouts and uncollected rent for the city-owned land on which the hotel sits. City officials supported the hotel’s construction — and put the city on the hook financially for the hotel’s performance by guaranteeing the bond debt — because its physical connection to the Henry B. González Convention Center was believed to be a benefit for the convention center’s business.
Last year the city spent more than $10 million helping the hotel meet bond payments it couldn’t make, after the pandemic cratered the hotel industry for a period.
Under the deal approved by City Council, the hotel would be bought by an Arizona-based nonprofit, Community Finance Corporation, and backed by bonds of up to $450 million issued by a Wisconsin government entity, Public Finance Authority. The deal will not be finalized until late April.
The new deal was described as an across-the-board windfall for the city, as staffers say it would pay back the money the city has poured into it, eliminate further debt payments, allow the city to keep the land underneath, make the city’s land rent a higher priority in the hotel’s list of expenses, and — after an estimated 40 years — hand ownership of the hotel itself over to the city.
“What we brought today can’t be described as anything other than a win-win,” Mayor Ron Nirenberg said. He echoed the city’s chief financial officer, Ben Gorzell, who said the deal presented an “excellent opportunity for both sides.”
Councilman Jalen McKee-Rodriguez (D2) said he was conflicted on the deal over one fact alone. “I have a concern the public hasn’t had an opportunity to gather detailed information on the financial package we’re discussing today,” he said. But McKee-Rodriguez said he did not believe the process was necessarily “non-transparent” and said it was probably the best deal available.
McKee-Rodriguez abstained from the 7-0 vote, along with City Councilwomen Ana Sandoval (D7) and Teri Castillo (D5), who said she was concerned because she had not seen the detailed breakdown of the bond’s dollars until the meeting. She said she wished city staff’s presentation of the deal had been given earlier during an information session for the council, before they were expected to vote on it.
Details of the deal were first outlined publicly last week when the city convened a late-day briefing with local media on short notice.
Under the deal’s terms, Hyatt is set to continue operating the hotel for the next 30 years, and will collect some $140 million as a purchase price. Hyatt representatives spoke briefly at the meeting to recommend the deal, which they said fit with Hyatt’s recent strategy to offload some assets and to focus more on fee-based revenue.
The changing ownership of the hotel will not immediately impact the hotel’s roughly 600 unionized workers, whose contracts hold that any new employer must still recognize and bargain with them. McKee-Rodriguez said his office met with officials from the union, who he said felt confident their employee protections would be upheld.
Phil Stamm, general manager for the Grand Hyatt and Hyatt Regency San Antonio, said there is another six years in that contract. He said roughly 30% of the hotel’s workers are not covered by the union. That includes front desk workers, maintenance staff, security, accounting and managers.