VIRGINIA BEACH — The company in talks with the city to build a hotel on property near Tidewater Community College has terminated negotiations with the city, according to an Aug. 16 inter-office memorandum between city officials.
The memo, sent from Director of Economic Development Warren Harris to City Manager Dave Hansen on Thursday, states that negotiations over the proposed hotel were terminated by the president of Harmony Hospitality Inc.
But that’s simply not true, says Brooks Johnson, director of development for Harmony.
Johnson said the city abruptly walked away from negotiations after Harmony proposed a hotel that did not quite meet the city’s expectations.
“We did not terminate negotiations with the city,” Johnson said. “The city declined to move forward and just refused to meet with us” after a disagreement on the proposed hotel’s room-count.
Johnson said it was “startling” and “surprising” to see the city publicly blaming his company in writing.
The city was not immediately available for comment on Harmony’s claims.
A RevPAR Management Company feasibility test in 2015 indicated the market in the Princess Anne Commons area could support a 120-room, moderately upscale and limited service hotel, according to a presentation Harris gave to City Council in April 2017.
However, during negotiations with the city, Harmony discussed that 120-room number with Hilton Hotels, the brand Harmony intended to use for the project.
“Hilton believed that the Princess Anne Commons area could only sustain a hotel with 80-85 rooms,” Johnson said. So Harmony proposed to meet both numbers in the middle.
“We came back to the city with a proposed Hampton Inn and Suites hotel that had 101 rooms” with four stories, Johnson said.
However, the city refused to budge on the 120-room number and declined to move forward with Harmony, Johnson said.
“After we came back to the city with the Hampton Inn and Suites, they wouldn’t even meet with us to discuss it any further,” Johnson said.
Johnson acknowledged there were further discussions with the city through the company’s attorneys, but no restart of negotiations.
The city never fully explained to Harmony why they walked away, Johnson said.
“All we got was an email from Warren Harris on July 26 that said ‘Sorry we were unable to agree on term sheet.‘ That’s it,” he said.
According the memo Thursday, Harris is searching for a new developer to build a hotel near TCC, and anticipates bringing forth a new recommendation to City Council toward the end of the year.