Memphis City Council Approves Plan to Buy Downtown Sheraton: What You Need to Know

The city of Memphis is now in the hotel business.

On Tuesday, Memphis City Council members voted 9-0 in favor of a proposal to purchase the Sheraton Memphis Downtown hotel for $22 million.

“I’m excited that we’re moving forward,” said Memphis Mayor Paul Young. Young added that having a renovated hotel next to the Renasant Convention Center is a positive sign for the future of downtown Memphis.

On September 24, Young first proposed the concept of the city purchasing the 600-room hotel for $22 million. Under the proposal, the city would own the property for two years, and a local development group led by Chance Carlisle, Carolyn Hardy and Tyrone Burroughs would manage the property.

After this two-year period, the city will sell the hotel to the nonprofit organization. Young said the nonprofit will have a board of directors and an advisory committee, whose members will be selected by the City Council. The non-profit organization will partner with a local development group (led by the trio) as the new owners of the hotel. The hotel will be rebranded once the renovation is complete.

Young confirmed that the city is in talks with Louisiana-based Provident Resources Group as a nonprofit, but no agreement has been reached with the organization at this time. Provident Resources Group has overseen several economic development projects similar to the Sheraton situation, including the Polaris Hotel in Colorado Springs, Colorado.

The city will buy Sheraton for 501(c) bonds. These bonds will be administered through the Center City Revenue Finance Corp., an affiliate board of the Downtown Memphis Commission (DMC). Center City Development Corp., a DMC-affiliated board, will act as the real estate brokerage given that it is a nonprofit entity and Center City Revenue Finance Corp. NO.

HOTELS IN DOWNTOWN MEMPHIS: Why 600 hotel rooms could be the key to unlocking the potential of Downtown Memphis

On Tuesday, Young said the hotel financing has no impact on the general fund. He added that the bonds will be financed up to USD 30 million, and the purchase of the hotel will amount to USD 22 million. The $8 million difference provides a buffer for renovation plans and pre-development projects.

“This hotel has been an inconvenience to us,” Kevin Kane, president and CEO of Memphis Tourism, said during Tuesday’s council committee meetings.

Dean Dennis, senior vice president and general manager of Resanant Convention Center, said the board’s decision helps develop a plan for the convention center’s sales team and assures meeting planners that the venue has a future.

Kane said the Sheraton’s ownership situation creates planning uncertainty. This had an impact on the planning and securing of several groups for events in 2027–2029, he added.

During the Sept. 24 City Council meeting, Young acknowledged why the city was stepping into action. In 2017, Hotel Memphis LP acquired the Memphis Sheraton Hotel. Hotel Memphis LP is a joint venture between Starwood Capital Group and Schulte Hospitality. The group introduced the hotel to the market in February 2024.

A local development group led by Carlisle, Burroughs and Hardy submitted a bid for the hotel. It was one of two that Young knew about. This offer was terminated in August. The current ownership group, Hotel Memphis LP, plans to put the hotel up for auction by Dec. 31 if the deal isn’t finalized soon, Young said.

This timeline caused the city to urgently step into this transaction, secure the property and begin renovations.

The hotel has not been renovated since 2004. In October 2022, Starwood Capital Group received from Center City Revenue Finance Corp. 30-Year Payment in Lieu of Taxes (PILOT) for $226 Million Renovation of Sheraton Hotel in Downtown Memphis.

This renovation included a 300-room expansion and the inclusion of a 5% Tourism Development Zone (TDZ) surcharge to finance the expansion. When the hotel entered the market, Hotel Memphis LP notified DMC that it would not proceed with the renovations contemplated in the PILOT agreement.

On Tuesday, Young said the tourism surcharge previously approved for the property would be carried over. Any further incentives such as PILOT should be proposed.

Neil Strebig is a journalist for The Commercial Appeal. He can be contacted at [email protected]901-426-0679 or via X/Twitter: @neilStrebig

This article originally appeared on the Memphis Commercial Appeal: Memphis City Council approves purchase of Downtown Sheraton hotel