Kennewick's $118M Bet on a New Horizon: Hotel and Convention Center Expansion Nears Key Milestones

By Frank Reed

KENNEWICK, Wash. – May 26, 2026 – The Kennewick skyline is visibly changing as a transformative, $118 million-plus development reaches critical construction milestones, signaling a new era for the region's economy and tourism industry. MHR Capital Group announced today that the structural framing and roofing are now complete on the new AC Hotel by Marriott Kennewick. The upscale hotel is a cornerstone of a larger project that includes a major expansion of the directly connected Three Rivers Convention Center.

This dual-pronged development, a coordinated investment between private developers and public entities, is progressing on schedule. The convention center expansion is slated for completion by December 2026, with the AC Hotel targeting a grand opening in April 2027. Together, they represent one of the most significant infrastructure investments in the city's recent history, poised to reshape its capacity to host major events and attract visitors.

A New Economic Engine for the Tri-Cities

The economic forecasts for the completed project are substantial, promising a powerful boost for Kennewick and the surrounding Benton County. The combined developments are projected to create a wave of new employment, with estimates pointing to approximately 440 new full-time jobs in Kennewick and an additional 270 in the county. The hotel and its associated retail spaces are expected to add another 264 jobs to that total.

By its fifth year of operation, the expanded campus is anticipated to support over 1,000 full-time equivalent jobs. This economic activity is projected to generate an astounding $130.8 million in increased earnings within the community over the same period. The financial benefits extend to public coffers, with the project expected to generate $6.9 million in new sales tax and hotel/motel tax revenues.

At the heart of this economic model is a dramatic increase in visitor traffic. Officials anticipate the expanded complex will draw an additional 200,000 visitors to the Tri-Cities each year. This influx is expected to drive demand for nearly 71,000 additional hotel room nights annually, a boon for the entire local hospitality industry.

From Overlooked to In-Demand Destination

For years, Kennewick has been hampered by its own success. The existing 82,000-square-foot Three Rivers Convention Center has frequently been too small to accommodate growing demand, forcing the city to turn away larger conventions and lose lucrative business to regional competitors like Seattle, Portland, and Spokane. The expansion will dramatically increase its capacity and flexibility, allowing it to host multiple events simultaneously and compete for the larger-scale conferences that have previously bypassed the Tri-Cities.

The addition of the 150-room AC Hotel by Marriott is a critical component of this strategy. It addresses a gap in the market for upscale, contemporary lodging directly connected to a major event space. This synergy creates a seamless, high-quality experience for conference organizers and attendees, making Kennewick a far more attractive destination for business travel and large-scale events.

This project builds on an already robust tourism economy. In 2024, visitors spent over $643 million in the Tri-Cities, supporting thousands of jobs. The new hotel and convention center are set to significantly amplify these numbers, cementing the region's status as a premier destination in the Pacific Northwest.

Forging a Future Through Public-Private Partnership

The project's success is a testament to a complex and resilient public-private partnership. The development is a collaborative effort between MHR Capital Group, hotel developer A-1 Hospitality Group, the City of Kennewick, and the Kennewick Public Facilities District (KPFD). This alliance navigated significant financial and political hurdles to bring the vision to life.

The financing is strategically divided. The $47 million AC Hotel is a private venture, funded by a $32 million construction loan and a $15 million equity investment from A-1 Hospitality Group, a Tri-Cities-based company. MHR Capital Group serves as a key investment partner, leveraging the project's position within a Qualified Opportunity Zone to provide tax incentives.

Meanwhile, the roughly $71 million convention center expansion is a public undertaking. Its funding model was creatively “reinvented” after Kennewick voters rejected sales tax increases on three separate occasions. The current plan proceeds without new taxes on residents, relying instead on bonds backed by convention center earnings, a state sales tax rebate program, and a $21 million allocation from the City of Kennewick. This innovative approach, highlighted by city officials as a model of collaborative governance, was essential to moving the project forward.

"The collaboration between MHR Capital Group along with its investment partners, the City of Kennewick, and the Kennewick Public Facilities District reflects a shared vision for long-term economic growth and expanded opportunities for the Tri-Cities community," said Kamran Hasan, CEO of MHR Capital Group, in a press statement.

Overcoming Hurdles on the Path to Progress

The journey to this point has not been without its challenges. The project faced initial delays due to the global COVID-19 pandemic, which disrupted supply chains and created economic uncertainty. Furthermore, the developers had to champion their vision for an upscale hotel in the market.

Interestingly, Marriott initially suggested that a different brand might be a better fit, expressing concern that the Kennewick market was not yet ready for its premium, design-forward AC Hotel brand. However, the developers at A-1 Hospitality and their partners at MHR Capital Group held firm in their belief in the region's potential. Their persistence ultimately convinced Marriott to approve the AC Hotel, a decision that now stands as a strong vote of confidence in the Tri-Cities' upward trajectory.

This project is seen as just the first phase of a larger master plan. MHR Capital Group has already announced plans for a second phase that includes over 550 residential units and 200,000 square feet of retail space, further transforming the Vista Field area into a vibrant, mixed-use community hub. As construction crews advance on the exterior façade and interior systems, the project stands as a powerful symbol of community resilience, strategic investment, and a bold vision for the future of Kennewick.