LOUISVILLE, Ky. — Churchill Downs has scrapped plans for a $300 million project that would have seen a 156-room, seven-story hotel built at the track.
"We may decide to build a hotel at the racetrack in the future, but now is not the right time," CEO William Carstanjen said in an earnings call Thursday.
Carstanjen said the project was scrapped after the company evaluated a "number of evolving factors," including consumer travel trends and the ability to invest less money in projects with a "more immediate return."
Carstanjen did not describe those projects but said the first is expected to be completed in time for the 148th Kentucky Derby in 2022. Another project will be completed in 2023 and then, for the 150th Derby in 2024, people can expect the “most transformative” project to be complete.
"We have developed a multiyear, phased set of projects that we believe will create significantly improved experiences for our guests at the Derby and will generate consistent adjusted earnings growth in the coming years for this iconic asset," Carstanjen said. "We are developing the final designs, completing the due diligence and obtaining firm construction estimates for these projects."
Initial plans for the $300 million hotel development were announced in September 2019. The hotel was set to include meeting rooms and event space for year-round use, along with a second-floor party deck for watching races, and rooms with private balconies overlooking the entire track. Plans called for 4,700 permanent stadium seats to replace the grandstands that currently occupy the space overlooking the first turn.
The project also called for a 900-machine historical horse racing (HHR) venue. HHR machines are similar to slot machines, with one key difference. Rather than rely on an algorithm to randomly determine results, HHR machines determine winners based on a previously-run horse race. In the Thursday earnings call, Carstanjen said Churchill Downs still intends to expand its HHR footprint in Louisville, which currently includes a facility with more than 1,200 games off of Poplar Level Road.
The cancellation of the hotel project comes after Churchill Downs suffered significant pandemic-induced loses in 2020. Revenue was down 21% in 2020 from the year prior. The company has blamed the losses largely on the lack of spectators at Derby 145, which was moved from the traditional first Saturday in May to Labor Day weekend last year. The company said the fan-free Derby last year resulted in a lost ticket revenue, a drop in sponsorships, and lower than normal levels of wagering.
Rebecca Wells-Gonzalez lives in the shadow of Churchill Downs and was looking forward to the hotel's arrival in the neighborhood. She said she was optimistic about it spurring more development and increasing economic activity in an often-overlooked part of Louisville.
“It is unfortunate that Churchill has chosen the bottom line instead of becoming a source of pride and investment for the local community,” she said upon learning that the company canceled plans for the hotel.
A property owner, Wells-Gonzalez said she assumed the hotel would raise the value of her home. She acknowledged that could harm some of her neighbors, though. "We're gentrifying and that's problematic on many levels," she said. "I have neighbors that can't afford to rent here anymore."
Ultimately, Wells-Gonzalez said the pandemic made Churchill Downs' decision understandable. And history made it unsurprising.
“Promises of investment in the south end have come and gone before,” Wells-Gonzalez said. “Unfortunately, this is the norm.”