By Steven Malanga

For two decades, American cities have used public dollars to build convention center space—far more than demand warranted. The result has been a gigantic nationwide surplus of empty meeting facilities, struggling convention centers, and vacant hotel rooms (see “The Convention Center Shell Game,” Spring 2004). Given the glut, you’d think that cities would stop. Instead, many are spending hundreds of millions of dollars to expand convention centers and open yet more dazzling hotels, arguing that whatever convention business remains will flow to the places with the fanciest amenities. If this dubious rationale proves wrong and the facilities fail—it’s telling that the private sector won’t build them on its own—taxpayers will wind up on the hook, as usual.

The convention business has been waning for years. Back in 2007, before the current economic slowdown, a report from Destination Marketing Association International was already calling it a “buyer’s market.” It has only worsened since. In 2010, conventions and meetings drew just 86 million attendees, down from 126 million ten years earlier. Meantime, available convention space has steadily increased to 70 million square feet, up from 40 million 20 years ago.

Boston exemplifies double-down madness. The city shelled out $230 million to renovate its convention center in the late 1980s. After the makeover produced virtually no economic bounce, Boston concluded that it needed a new $800 million center, projecting that it would help the city rent some 670,000 extra hotel rooms a year by 2009. The new center, which opened in 2004, fell far short of expectations: the actual number of room rentals that it generated in 2009 was slightly more than 300,000. Now Boston tourism officials are proposing to spend $2 billion to double the center’s size and add a convention hotel, to boot. The officials optimistically predict that the expanded facilities would inject $222 million annually into the local economy, including an extra 140,000 room rentals a year. Despite these bullish projections, officials claim that the hotel needs $200 million in subsidies.

Boston is far from alone. Hoping to help its limping convention center, Baltimore paid $300 million to build a city-owned convention hotel, which opened in 2008. The hotel lost $11 million last year and has barely been able to pay its employees or its debt service. Yet Baltimore is now considering a massive $900 million public-private expansion that would add a downtown arena, another convention hotel, and 400,000 feet of new convention space. The projected cost in public money: $400 million.

Convention-hotel mania has swept Texas, too. Dallas just opened a convention hotel financed with $388 million in Build America Bonds, and Arlington and nearby Irving are both proposing new hotels to boost tourism. These facilities will compete with alternatives in places like Austin, which opened a massive 800-room convention hotel in 2003 after a study predicted that it would generate more than 300,000 room rentals annually for the city. But Austin has yet to exceed 200,000 per year.

Perhaps recognizing this weak economic record, convention and tourism officials have been changing their sales pitch. Convention and meeting centers shouldn’t be judged, they now say, by how much business they bring to local hotels, restaurants, and local attractions. Instead, we should see them as helping to establish a tourism brand for their cities. The director of Boston’s convention center, for instance, boasts that it brings the city “tourism impacts”—purportedly an economic value beyond whatever dollars the convention industry manages to attract.
The main value of such nebulous concepts seems to be to obscure the failure of publicly sponsored facilities to live up to exaggerated projections. As far as city officials are concerned, that failure is nothing that hundreds of millions of taxpayer dollars can’t fix.

Source: California Political Review

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.

http://www.theatlanticcities.com/politics/2012/06/stop-building-convention-centers/2210/

Last night as was pointed in this mornings IS IT TRUE a group supporting the public funding of a downtown convention hotel blatantly stole the artwork of an existing Facebook site called “Citizens of Evansville Against a Taxpayer Funded Hotel” and reconfigured it for their own agenda. After having this theft pointed out repeatedly in comment sections and being called out in the City County Observer the “Citizens of Evansville for a new downtown convention hotel” has changed their cover photo to an aerial view of the City of Evansville. The ripoff evidence is still on their page but it does indicate that it was changed by whomever the administrator is. You may view the pages by cutting and pasting the following links into your browser.

https://www.facebook.com/EvansvilleSaysNo

https://www.facebook.com/EvansvilleSaysYes