Brian Eason

brian.eason@indystar.com

Visit Indy, the city's tourism arm, has commissioned a feasibility study on whether to expand the Indiana Convention Center for the second time since 2011, tourism officials confirmed this week.

It also will examine the need for additional Downtown hotel space after a nearly decadelong trend of rising occupancy, which has fueled the belief that there may be pent-up demand for hotel capacity in Indianapolis.

The last such study, completed in 2004, resulted in a $275 million expansion of the center, as well as the development of the 1,000-room JW Marriott hotel.

Convention center expansion launched tourism to new heights

In an interview with IndyStar, Leonard Hoops, the president and CEO of Visit Indy, said the study was commissioned in response to a series of stakeholder interviews during the tourism agency's annual master planning process.

Consistently, he said, two issues "clearly had the strongest interest from customers and stakeholders ... the potential hotel room growth, as well as the convention center expansion or modification."

Chris Gahl, the Visit Indy spokesman, said the nonprofit issued a request for proposals earlier this year and awarded a $75,000 contract to hotel consulting firm HVS to conduct the study. The New York-based group, which has offices in more than 35 cities and several countries, has been conducting interviews with area stakeholders over the past month.

The study comes at a potential watershed moment for Indianapolis tourism.

In 2015, the tourism industry posted a record-setting year, booking more future hotel nights than ever before and securing a projected economic impact of nearly $1 billion.

Visit Indy reports record year for Indianapolis tourism

Marion County hotel occupancy has climbed steadily since the expansion opened in 2011, hitting a peak of 69.1 percent through the first seven months of 2016. In 2011, hotels were 58.1 percent full.

The 85 percent occupancy the hotel industry posted in June was an all-time Indianapolis record, Gahl said.

And yet, as recently as January, tourism officials had been warning of leaner times ahead. At the time, Visit Indy said the furor surrounding last year's Religious Freedom Restoration Act might have cost the city of Indianapolis as many as 12 conventions and up to $60 million in economic impact. The law, known as RFRA, was met with fierce backlash from civil rights groups who said it could be used to deny services to lesbian, gay, bisexual and transgender people because of religious objections to same-sex marriage.

Official: RFRA cost Indy up to 12 conventions and $60M

This week, Gahl said he believes "we have bounced back from the RFRA crisis and have been able to answer any uncertainties about booking Indianapolis with our long-standing human rights ordinance."

If there are lingering concerns, they don't appear to be scaring off developers. Already, new hotels are planned Downtown. The HVS feasibility study will examine just how many rooms — if any — are warranted.

Hoops said it's a delicate balance between having too many rooms and too few. Too many would depress profits for hotel operators, while too few could result in existing conventions leaving for greener pastures. If major conventions leave, the city could struggle to fill the rooms it already has.

"In addition to fulfilling latent demand that we can't currently fill, there's also the question of how long can you keep what we have with the existing inventory?" Hoops said. "How long can you keep a GenCon without growing your hotel inventory?"

GenCon, the country's largest tabletop gaming convention with more than 61,000 attendees this year, was considering leaving Indy when its contract ran out in 2010 because of a lack of space. At this point, GenCon hasn't completely filled the available exhibit space at the convention center and Lucas Oil Stadium, but it has maxed out the hotel inventory.

Gen Con opens with expected record numbers

Gahl said the convention's 56 reserved hotel blocks sold out within 15 minutes for this year's conference. After that, attendees spilled into the suburbs.

"It was a virtual sell-out of not only Marion County hotel rooms, but the metropolitan statistical area as a whole," Gahl said.

Gahl said it was too early to say whether any proposals for a Downtown hotel would seek taxpayer assistance. It's also unclear how the Capital Improvement Board, which manages the city's tourism taxes and funds the convention center, would finance an expansion, if the study deems one is warranted.

"We'll look for the study to drive how soon any potential hotel and convention center expansion projects should come online," Gahl said. "Part of the timing will depend on what an inevitable public-private partnership would look like."

The study's results are expected before the end of this year.

Call IndyStar reporter Brian Eason at (317) 444-6129. Follow him on Twitter: @brianeason.