IUP hotel project 'going well'
IUP administrators offered assurances to trustees on Thursday that the seemingly stalled hotel project is, in fact, moving ahead.
“Things are going well,” said Cornelius Wooten, vice president for administration and finance. “We continue to make progress.”
Progress, however, has been slow in coming — the hotel, as it’s currently envisioned, was to have opened this August. But as of the moment, it remains in the development stage, where it’s been for the last 16 months.
Throughout that time, administrators have repeatedly responded to questions about the project’s status by saying that it is progressing and that they remain confident it will come to fruition.
But they’ve said little else. And Thursday’s update wasn’t much different.
Trustee Gealy Wallwork even gave Wooten a friendly ribbing about the vagueness of his response, saying that if he ever would like tap-dancing lessons, he would come see Wooten.
Officials have said that having an upscale hotel — it’s supposed to be a Hilton Garden Inn — next door to the Kovalchick Convention and Athletic Complex is crucial to the building’s success. The argument goes that having an on-site hotel would make it a more attractive venue to organizations interested in booking events there.
But even without a hotel, the Kovalchick Complex seems to be so far holding its own, and Wooten on Thursday reported that second-quarter numbers for this fiscal year are in line with expectations.
For the six months ended Dec. 31, the complex had operating revenues of $1.08 million, about 70 percent of what it’s projected to earn this year. In that same time, operating expenses stood at $1.35 million, representing about 60 percent of this year’s budget.
In each of the past two years, the complex has turned a slight operating profit of a few thousand dollars, which far and away exceeded projections that it would lose around $1.8 million annually.
Adding to the favorable news was IUP’s November announcement that it had decided to pay off the construction debt. But officials said Thursday that move isn’t without its own costs.
IUP borrowed the money to build the complex through a blanket bond floated by the State System of Higher Education. So to pay it off, the university will have to disentangle its debt from the rest of the bond and then pay the costs of making good on the debt ahead of schedule.
Wooten said those costs could be between $1 million and $4 million on top of the principal, which is around $29 million.
Nevertheless, if the university did nothing, the interest expense accumulated over the life of the bond would outstrip the cost of paying off the debt early, according to President Michael Driscoll. Driscoll said the state system estimates that by paying off the bond now, there will be an $18.2 million savings in interest expense.