Gaylord Palms Resort & Convention Center has reached a deal with Osceola County that clears the way for the county's largest hotel to add another 300 rooms and 90,000 square feet of new meetings and event space.
Plans also call for two new parking garages and a $10 million water park expansion with a lazy river. Total project cost is estimated at $150 million, of which $85 million is earmarked for the hotel improvements.
Construction would start in January and be completed by Dec. 31, 2021, per the agreement.
"I think the project is fantastic," County Manager Don Fisher told GrowthSpotter. "It affirms that the W192 corridor is thriving and keeps getting better. And it aligns with property with other hotels in the Gaylord line, which all have between 1,800 and 2,000 rooms."
The resort's existing convention center is 400,000 square feet. The $65 million expansion would consist of a net increase of 60,000 square feet of meeting space and 30,000 square feet of pre-function space.
"This is really going to help them get more groups, conferences and conventions," W192 Development Authority Executive Director David Buchheit said. "It's an amazing project, and it really showcases the transformation happening right now in Osceola County and on W192."
The Gaylord Palms, operated by Marriott, is currently the only 4-star/diamond property in the W192 CRA district. It has 1,416 guest rooms, which were last renovated in 2015. The hotel spent $4.2 million in 2016 on a water park expansion to add waterslides and a surf simulator.
Osceola Commissioners are scheduled to vote Monday on an amended joint marketing agreement with Ryman Hospitality Properties, the hotel's parent company, clearing the way for expansion.
The agreement allows the hotel to keep 85 percent of revenue generated by the first four pennies on the hotel's tourist development tax. The county's TDT tax rate is 6 percent; revenues from the fifth and sixth penny go to the county for other tourism-related expenses.
Fisher said the amended agreement guarantees a return of $49.6 million through the TDT reiumbursement, and it expires once the hotel collects that amount.
"We're projecting that they'll reach that amount in 2032," Fisher said.
The county is not making a cash contribution, but the revised marketing agreement has the potential to increase the total payout by about $4 million over the life of the contract, Fisher explained.
The second provision of the agreement establishes a 30-year special assessment equal to 1 percent of the room rates generated by the hotel. It essentially adds a seventh penny to the room tax, but the Gaylord will be able keep all of the revenue.
"It's a voluntary assessment," Fisher said. "ChampionsGate does the same thing."
Finally, the county agrees to cap all permitting and related building fees at $400,000.
Ryman executives did not respond to requests for comment. A formal announcement is expected sometime after Monday's vote.
The project closely mirrors the Nashville-based REIT Ryman's recent investment in its Dallas hotel, which comprised a 300-room addition and 86,000-square-foot meeting space expansion, which opened in April.
The Kissimmee Gaylord project also follows on the heels of multiple conference center hotel expansions in Orlando's tourism corridor over the last two years, most recently RIDA's filing earlier this month to add 111,000 gross square feet of meeting and event space to the Hilton Orlando.
In February, the owner of the neighboring Waldorf Astoria Orlando and Hilton Orlando Bonnet Creek filed plans to expand their joint event space.
In May 2017, owners of the Renaissance Orlando at SeaWorld filed plans to expand that hotel's ballroom-area meeting space by nearly 40 percent.
Omni Orlando Resort at ChampionsGate concluded more than $40 million in investments last year made over 17 months, which included a 100,000-square-foot expansion at the adjacent Osceola County Conference Center.