Airport hotel still under study, but gets $57M budget cut
The cost reduction is part of a redesign requested by the board ahead of an expected vote later this year on whether to begin construction. The budget for the proposed Indianapolis International Airport’s terminal hotel has been reduced by $57 million, in an effort to secure funding. The Indianapolis Airport Authority board of directors eliminated several features, including a pool, wood beams, a garage passageway and some decorative elements. The hotel budget was reduced from $262 million to $205 million, a cut of nearly 22%. The project is still undergoing a feasibility study and is expected to cost about $195 million, not including a $10 million reserve budget. The airport plans to finance most of that expense through financial reserves, with about $40 million going towards construction costs and the remainder towards debt service. The decision to reduce the budget was part of a redesign ahead of a vote later this year on whether to begin construction.
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The budget for the proposed Indianapolis International Airport’s terminal hotel has been slashed by $57 million, part of an effort to give the project a better chance to fully secure funding.
The Indianapolis Airport Authority board of directors on March 15 eliminated several features for the Marriott Westin project, including a pool, wood beams, a garage passageway and some decorative elements totaling $57 million. The move reduces the budget for the hotel, which would be built on the west side of the parking garage, from $262 million to $205 million, a cut of nearly 22%.
IBJ first reported on the project in September, when plans tentatively called for a four-star, 262-room property.
The budget reduction was first reported by not-for-profit news outlet Mirror Indy
The reduction is part of a redesign requested by the board ahead of an expected vote later this year on whether to begin construction. The project is still undergoing a feasibility study, which is expected to be completed in April, but airport officials told the board that the goal is to complete the project for about $195 million, not including a $10 million reserve budget.
The airport plans to finance most of that expense, but about $54 million would be used for upfront costs to begin construction. That money would come from the airport’s $126 million in financial reserves, with about $40 million going toward construction costs and the remainder going toward debt service reserves.
Any bonds issued for the project would be repaid over a period of 17 years.
Jonathan Weinzapfel, general counsel for the airport authority, told the board that there’s a lot of interest in making the hotel “special” and that staff remains confident the project would bolster the airport’s operation.
Board leadership and airport staff landed on several specific changes to reduce costs. It would eliminate the pool, a $10 million passageway from the third floor of the parking garage and a $1 million water feature.
He said the changes made to lower the budget are sensible for the project and keep the project in line with Westin’s standards.
“We feel pretty confident in the number that we’ve come to, and it’s required some tough decisions, but I think that they’re all reasonable,” he said. “I don’t think any of them detract from what I think is going to be a very special hotel in Indianapolis.”
The IAA board approved a franchise agreement with Marriott for the proposed hotel to carry the Westin brand in September. As part of its agreement with Marriott, the airport would have the right to terminate the deal if it can’t obtain adequate financing to construct the hotel or decides not to move forward with the project.
A finance committee for the airport is set to meet April 25 to discuss the hotel project and how moving forward would affect the board’s reserve funds.
Airport officials have flirted with the idea of building a hotel next to the terminal since planning for the current midfield complex began in the early 2000s. IAA most recently revived considerations for such a project in late 2022.
So far, the authority had spent a total of nearly $3.4 million on a series of contracts dating to November for the proposed development, starting with a feasibility study from CSO Inc. ($354,000) followed by another deal with CSO for architectural services ($2.56 million), an agreement with the Louderback Group for hotel consulting services ($254,300), and a construction management and pre-construction services contract with Shiel Sexton Co. Inc. ($225,000).
During its meetings the board approved several contract updates tied to the hotel that will increase that figure, largely due to sending the design back to the drawing board to incorporate affirmed changes. Those new contracts allot up to $4.13 million to CSO Architects Inc.; $1.14 million to Shiel Sexton Co.; up to $320,000 to Wischermann Partners Inc.; and up to $200,000 to Louderback Group LLC.
Officials with the Indianapolis Airport Authority did not return a request for comment on Thursday.