Is It Time to Stop Building Convention Centers? from Atlantic Cities


Atlantic Cities covered this problem last year, in an article titled: Is It Time to Stop Building Convention Centers?

The highlights:

“Over the last 20 years, convention space in the United States has increased by 50 percent; since 2005, 44 new convention spaces have been planned or constructed in this country alone. That boom hasn’t come cheap. In the last ten years, spending on convention centers has doubled to $2.4 billion annually, much of it from public coffers.”

“But there’s a problem with this building bonanza, and it’s a doozy: There aren’t really enough conventions to go around. The actual number of conventions hosted in the U.S. has fallen over the last decade. Attendance at the 200 largest conventions peaked at about 5 million in the mid-1990s and has fallen steadily since then.”

“”So many were saying, ‘all you have to do is get one percent of the national market and you’ll do just fine,'” he says. “Three hundred cities bought the same logic.””

It seems like investing in a convention hotel would result in losing more money faster.

And from a discussion on a Minneapolis scheme to subsidize a 1,000 room convention hotel:

The fact that the massive subsidy in the convention center hasn’t come close to paying for itself should be enough to say no to subsidies. If a hotel like this costs $125M in subsidies (41% of the total construction costs), one would assume it would bring in a heck of a lot in local economic impact, right? If bonded, that’s $7.16M per year over 30 years for the state/city. To recoup that investment in sales tax (just break even), that’s convention guests spending $92M per year on food, shows, etc (assuming the current Minneapolis/Hennepin/MN sales tax rate of 7.775%). If you assumed that hotel was full with 1,000 people every day of the year (and that other hotels in the area maintained their demand as well), they would need to spend $252 a day on food and other taxable items for the public to recoup their investment. Good luck.


  1. “But there’s a problem with this building bonanza, and it’s a doozy: There aren’t really enough conventions to go around.”

    This is the way of ALL economic bubbles. And usually they are artificially created by government meddling in the market. Its always seems safest to jump in just as the water begins draining from the pool.

    The “conventional” wisdom, pun intended, would tell us a convention hotel is a “no-brainer” in the words of Weaver, but the conventional wisdom is often wrong, and it’s also very often behind the curve.

    The things that would eventually make Evansville compete are things like keeping a Picasso in our own Museum and using it as a tourism draw, like selling Roberts and using proceeds toward Mesker rather than building a dog park, things like looking into the future and realizing the fiscal challenges we face and planning to meet those challenges with open eyes rather than heads buried in the sand. If Evansville does not stop this precipitous rise in discretionary spending, this city will see an exodus that will rival Detroit. This hotel, if it gets built, could just be the death knell.

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