Throwing good money after bad – Convention Center headlines from cities across the country – Part 2 of 3

This is the second in a three-part series about Convention Centers and HQ Hotels. The first two entries cover the general topic of publicly subsidized Convention Centers. The third will be a specific look at what is being proposed for Palm Beach County’s Convention Center HQ Hotel to examine the ‘induced’ demand and perhaps ask some questions that we wished the County Commission had asked.

What is different about Palm Beach County/West Palm Beach versus most of the other cities listed is the apparent lack of opposition amongst the Commissioners and WPB City Council, as well as from the private sector. The business community seems to be as eager as the government entities involved to spend tax-payer dollars, all assuming that it is a win-win for them. Perhaps – but it is definitely not clear that the projected Economic Impact is real; just as it is unclear whether the risk to the tax-payer may exceed the benefits to the community.

If nothing else – this series will serve as documentation. When ‘down the road’ the optimistic results do not meet projections and the tax-payer is once again asked to bear the brunt of future expansions, renovations or new facilities – we can go back to these articles and say ‘we told you so’. If the results are wildly successful – we’ll be happy to ‘eat crow’. Readers – tell us who the odds favor……?

A recent article in the Sun-Sentinel found Orlando to be tops in the US for meetings July 2011-June 2012.  “After Orlando, the company found the next most popular cities for meetings and events are in order:  Washington DC, Las Vegas, Miami, Chicago, San Diego, Phoenix, Atlanta, Dallas and New Orleans.”   “Miami is No. 4, Fort Lauderdale No. 30 and Boca Raton No. 43”. 

So – let’s look at how some cities’ convention centers or HQ hotels are faring by looking at some recent 2010-2012 headlines…

Miami: Voters on Tuesday supported a Miami Beach bed tax increase to fund convention center improvements. But if and when a tax increase happens depends on city commissioners and a public corruption investigation. – August 2012

 “The commission voted in December to bid out a $1 billion convention center district project that aims to have developers renovate the convention center, build an adjacent hotel and redesign and lease the surrounding publicly owned acres into an iconic complex. That project, however, remains in the early stages due largely to a public corruption investigation into whether the city’s then-purchasing director tainted the bidding process.”

Washington D.C:  The sorry saga of the D.C. convention center hotel – Feb 2010

“I understand there may be reasons to subsidize a convention center hotel that agrees to set aside 80 percent of its rooms during peak season for low-margin convention business. But if the hotel really requires this much of a subsidy, then it raises a serious question about the economics of a project that, at best, is expected to increase convention spending in the city by $100 million a year. Right now, it looks as though the benefit of all those subsidies will be fully captured by convention attendees, the convention hotel’s developers and perhaps the owners of the city’s other hotels. If all goes well, the taxpayers will get their money back, but not much more.”

Ft. Lauderdale:  Fort Lauderdale to take $13 million hit as it loses its biggest convention – July 2012

“Leaders at the Greater Fort Lauderdale Convention and Visitors Bureau said it’s unlikely that a single convention can replace the business lost from ARVO. So the bureau is working to bring in several smaller events that might fill as many rooms as ARVO: about 24,000 room nights a year.

But competition for groups is stiff because big convention center destinations such as Orlando and Las Vegas no longer wait for mega-events. They go after smaller conventions that pieced together can fill up their space — events that would more typically go to smaller venues.

“Fort Lauderdale competes with everyone in the United States, just as we do, as it relates to small and medium shows,” said Gary Sain, president of Visit Orlando.”

Daytona Beach, FL:    If We Build More Will They Come? – June 2012

Raleigh, NC:   Raleigh Convention Center: Throwing Good Money after Bad  – February 2012

Boston, MA:  Panel Proposes Convention Center HotelMarch 2011

Pittsburgh, PA:  New Convention Center Hotel is Stalled – March 2012

Salt Lake City, UT:   Salt Lake City officials Balk at subsidy for Megahotel – August 2011

Portland, OR:  Oregon Convention Center Hotel Gets Another Chance at Life – August 2012

Virginia Beach, VAVirginia Beach convention center hotel deal killed – February, 2012

There are many more articles for many more cities – but each story just confirms the speciousness of the arguments and the lack of metrics or proof of economic impact.

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