Deal could free city of San Antonio from making debt payments on struggling downtown Hyatt

Hyatt Corp. will sell downtown’s Grand Hyatt in a deal designed to take the city of San Antonio off the hook for debt payments it’s been making on the struggling, publicly financed hotel, the Express-News reports.

Under that proposed transaction, an affiliate of Arizona-based Community Finance Corp. would buy and hold the 1,003-room property in a trust, transferring ownership to the city after 40 years, according to the daily.

The Grand Hyatt has struggled during the pandemic, even closing down for a five-month stretch. Since the middle of last year, local taxpayers have footed the bill for $10.4 million to cover bond payments used to finance its contraction.

The deal now on the table would issue $450 million in new bonds to pay off the hotel’s current outstanding bonds and other debt, according to the Express-News.

Hyatt would keep running the hotel under a 30-year agreement with Community Finance, which would lease the hotel’s land from the city, the daily reports. The city would only take ownership of the tower once the new bonds are paid off, decades down the line.

City council will need to vote on some aspects of the deal and likely will discuss the transaction next week, according to the Express-News.

In 2005, San Antonio issued more than $200 million in public bonds to finance the Grand Hyatt. At the time, local officials justified the expenditure by saying the development would boost convention attendance.

However, the hotel underperformed even before the COVID crisis. Occupancy failed to meet the original forecasts, and the property’s opening drove down occupancy and average room rates at other center-city hotels, according to industry experts.

Stay tuned. More details to come. 

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This article appears in Feb 23 – Mar 8, 2022.