With all the new convention hall space opening around the country, you might think getting a center opened or expanded is a piece of cake. Think again.
The idea was to open in 1998, recalls Carol Wallace, president and CEO of the San Diego Convention Center Corporation. In fact, groundbreaking for the center's expansion didn't take place until 1998, and the opening is now scheduled for September 2001.
What happened? Convention hall square footage is growing so rapidly across the country it might appear that building or expanding convention centers has become a routine civic enterprise: Consider that 87 new and expanded facilities will add 14.2 million square feet of exhibit space and 3.3 million square feet of meeting space to the current inventory between the second half of 1999 and the end of 2004, according to the 1999 Major Exhibit Hall Directory, published by Tradeshow Week.
But those upbeat statistics mask a protracted process. The elapsed time from gleam-in-the-eye to opening day for a facility can be as much as 10 or 15 years. During that process, convention and visitors bureaus play a key role in getting the buildings built. Often, they must educate the populace and politicians, many of whom haven't the foggiest notion of what a convention center is, let alone its economic impact. Sometimes CVBs also face active opposition, as in San Diego.
In 1991, market studies supported expanding the San Diego center; a site was chosen and a funding mechanism approved. To promote the expansion, the San Diego Convention Center Corporation (SDCCC), which operates the center and two other city facilities, developed a "public relations program to talk about the benefits of the industry," Wallace says.
Initial opposition came from a group claiming that the building would block the view of San Diego Bay, as well as pedestrian accessibility.
"I worked closely with them, trying to understand their issues," says Reint Reinders, president and CEO of the San Diego CVB. (The convention center and the San Diego CVB merged their sales departments three years ago into a single sales team that reports to both Wallace and Reinders, who jointly promote the center's expansion.) Ultimately, the convention center design was revised to incorporate a grand staircase leading to the bay.
After many additional meetings with city and state agencies, "We believed we were home free," says Reinders. But in May 1996, a tax activist group, The Libertarians, sued, claiming that the funding mechanism, lease revenue bonds, was illegal. Even though such bonds had been used for 30 years, says Wallace, the Libertarians had the right to sue "and we had to go through the process."
The lawsuit dragged on for two-and-a-half years, eventually reaching the California Supreme Court. But the CVB and SDCCC couldn't wait, and they couldn't take chances. A new plan was presented for voter approval. Reinders chaired the committee that raised $1 million to con- duct the vote.
"I went to forums on radio and TV where I spoke in favor of the expansion and debated the opponents," he says. The efforts paid off: The new plan won 62 percent of the vote. Six months later, the California Supreme Court ruled that the original financing plan was legal.
Victory was bittersweet. "We canceled 75 conventions, one million room nights, and lost $700 million in business because of the delay in expansion plans," Wallace says.
CVBs as Educators: Philadelphia, Washington, San Antonio Obtaining approval for a city's first convention center requires "enormous education of the political leadership," says Tom Muldoon, president of the Philadelphia CVB. "They ask, 'What is a convention center? What is the benefit?' The CVB is 90 percent of the time the lead agency because it has the industry knowledge."
The Pennsylvania Convention Center opened in Philadelphia in 1993; the Convention Center Authority recently hired an architect to prepare schematic drawings for an expansion. "In an expansion, there's a track record," says Muldoon. "People in political office can look at that track record and don't have to rely on the CVB. Expansions are a simple process."
There are those who might disagree: Dan Mobley, president of the Washington, D.C., Convention and Visitors Association, for example. Mobley needed both local and national political approval to replace the existing facility, which opened in 1982. "We're probably the only center in the country that has to get the approval of the President," says Mobley. A Congressional OK was also required.The CVB also had to restart the education process with each new mayor.
Expanding the existing site was not an option because that required bridging a street, which is frowned upon in Washington. When the new center opens in 2003, 15 years will have elapsed from the date expansion talks began.
In San Antonio, it was the public, not the politicians, who needed the education. Armed with a three-phase study detailing the reasons to expand the Henry B. Gonzalez Convention Center, the funding mechanism, and the site impact study, proponents thought they had everything. But they hadn't anticipated public opposition to clearing land by razing the outdated HemisFair arena. The arena had sentimental value for many people. If the city needed more convention space, they said, why not build a second building?
"We were shocked to find out how difficult it was to explain the need for contiguous space," says Steve Moore, executive director of the San Antonio Convention & Visitors Bureau. It took everyday examples to get the message across.
"We said, What if your congregation grew so fast that there weren't enough seats for everyone? Why not just build two chapels? What if your child were getting married and the hall wasn't big enough for all the guests? Why not put one-third of them on the other side of the wall? We had to explain how separating people isn't the best way to communicate."
The CVB also enlisted public show organizers. "Those groups are typically in opposition with the convention bureau because of the date protection issue," says Moore. But the organizers of the local automobile, dog, and boat shows all needed more space, and all of them "have great relationships in the community," says Moore. "I'm not sure we could have done it without them."
Funding Bugaboos: Minneapolis, Pittsburgh, Portland Funding is always an inflammatory issue. No citizen wants to pay more taxes; no government entity wants to allocate more funds. The deal requires a delicate balance of compromise and pressure.
For example, in Minnesota, plans for a convention center originated at the state level. When Minneapolis was chosen as the site, the state government said the city should pay for the facility, which it did. "But the city has no money for an expansion," says Greg Ortale, president and CEO of the Greater Minneapolis Convention & Visitors Association. "The governor opposed giving state funds to a local product. Our position was it's the state's convention center."
The CVA helped form the Minnesota Coalition for Convention Center Completion, which included the state hospitality association, the state association of CVBs, and the Minneapolis Downtown Council. "We secured letters to persuade the legislature how important the convention center is," says Ortale.
Finally, the governor relented. "The state gave us $87 million in bond funds to pay down the debt from the existing convention center," says Ortale. "That enabled us to restructure the debt. But it took us five years to win the battle." The expanded center is to open in January 2002.
Funding is sometimes further complicated by other issues. Pittsburgh needed two new stadiums, says Bob Imperata, executive vice president of the Pittsburgh Convention & Visitors Bureau. "The dilemma," he says, included "financing, location, and getting the community to buy in. Somewhere along the line, tax money would be involved."
The CVB was part of a coalition that helped craft legislation for both the funding and the design of the expanded facility, scheduled to open in 2002. The legislation contained three parts. A move to create a referendum for a one-half percent increase in the sales tax failed. But a one percent increase in the hotel tax and the creation of the Southwestern Pennsylvania Convention Center Design Commission both passed.
The CVB obtained state funding for the initial Convention Facilities Needs Assessment Study. As a state-appointed task force reviewed the study and made recommendations, the CVB grew "a little nervous," says Imperata: "We weren't sure they were moving fast enough." The CVB created its own task force to accelerate the process.
A different funding challenge was faced in Portland, Ore., where agreement was reached in August on a complex plan that funds the convention center expansion and urban enhancements. The Portland Oregon Visitors Association (POVA) "negotiated the deal with the hospitality industry and the three governments involved," says POVA president and CEO Joe D'Alessandro. "The county will increase the hotel tax, the city will finance bonds and contribute general funds, and the metro government will operate the convention center. The expansion was approved as part of the financing agreement.
"We've seen too many cities put all their efforts into the building and not into infrastructure," D'Alessandro continues. Thus funds are also allocated for renovating and enhancing the performing arts complex and a historic stadium, plus free transportation linking those facilities. Says D'Alessandro, "Residents will also benefit. I don't think we could have come up with the package otherwise."
Still Waiting: Cincinnati In Cincinnati, the expansion process was derailed when two sports teams, the Bengals and the Reds, said they'd leave unless new stadiums were built.
When a sales tax was passed to support the stadiums, "We had to revamp our funding strategy," says Mike Wilson, president of the Greater Cincinnati Convention & Visitors Bureau. The new strategy included debt service and commitments by both the city and county to raise funds in the tri-state area.
"We worked with the hotel association to get a city and county tax endorsed," says Wilson. "Now we're working with the restaurant association to get a restaurant tax passed, but that will probably be challenged at the state level," he acknowledges.
Meanwhile, the "centerpiece of our success," says Wilson, was enlisting Delta Air Lines to pay $30 million for naming rights. The CVB also formed a planning committee that obtained the support of the business community, plus $20 million in contributions.
"We want our funding complete by year-end," Wilson explains. "We'd like to open a 200,000-square-foot addition to the convention center in 2003." That proposed opening is a dozen years after the CVB paid for the initial expansion feasibility study in 1991.
Association executives today have more space options than ever--thanks in large part to the CVBs that continue to fight the good fight.
Dallas: The Peaceable Kingdom Expanding a convention center isn't always a struggle. The second expansion in eight years is under way at the Dallas Convention Center and is on schedule to open in 2002. The market study was done in November 1997, less than five years earlier.
Dave Whitney, president and CEO of the Dallas Convention & Visitors Bureau, says that the CVB, which funded the market study, "Took that information to our city government and said, 'If we want to remain a first-tier city, this is what we have to do.' We did a lot of lobbying with the city council to show them what impact the expansion would have. They debated briefly, found a funding mechanism, and said, 'Let's go.'" The city council voted 15 to 0 for the expansion, which will increase exhibit space to 1.1 million square feet from the current 850,000 square feet.
Are We Overbuilding? Tradeshow Week's 1999 Major Exhibit Hall Directory reports that 14.2 million square feet of exhibit space and 3.3 million square feet of meeting space will open between mid-1999 and 2004; that's a 29 percent increase over the projections in the 1998 directory. Last year's numbers, meanwhile, were a staggering 129 percent above the 1997 projections.
Great! say industry executives. "A recent poll of show organizers disclosed that their major concern is the difficulty of getting dates and space," says Steven Hacker, president of the International Association for Exposition Management. In addition, says Hacker, media industry merchant bank Veronis & Suhler Associates forecasts that the exhibition industry will expand by 14 percent next year--and 10 percent the year after that.
Doug Ducate, president and CEO of the Center for Exhibition Industry Research, is equally optimistic. "I'm not sure there's a downside to having more space," he says. "From the organizer's perspective, more space means more options." He also notes that facility expansions will permit more vertical, specialized events, which are more valuable for both exhibitors and attendees.
"Some cities, especially large ones, will easily absorb the expansion," says George Kirkland, president and CEO of the Los Angeles CVB. "Trade and consumer shows will coexist better, he says, because there will be more space for them. "Secondary markets will be sustained more by consumer shows, and therein lies an opportunity for a lot of centers."
Las Vegas Centers Duke It Out Opposition to the expansion of the Las Vegas Convention Center is coming from an unexpected quarter: another facility. The Venetian Resort Hotel Casino has filed suit, claiming that the financing mechanism, revenue bonds, is illegal. The suit claims that the Las Vegas Convention and Visitors Association (LVCVA) switched from the previous financing method, general obligation bonds (which require voter approval) in order to avoid putting the expansion plan to a vote.
The Venetian has its own convention facility, the adjacent Sands Expo. The Venetian and Sands combined have 1.7 million square feet of exhibit and event space. The Las Vegas Convention Center currently has 1.9 million square feet of exhibit space and proposes to add one million square feet.
Some observers believe that Sheldon Adelson, owner of the Venetian and the Sands, is more concerned with competition than with legality. When Adelson owned the mammoth Comdex, held at the Las Vegas Convention Center, "he was one of the most vociferous proponents of expansion," says a spokesperson for the LVCVA.
LVCVA's move to have the Venetian's suit dismissed failed, and the case goes to trial October 5. Because of the litigation, LVCVA President and CEO Manuel J. Cortez cannot comment directly. He does say that "several groups have joined us as friends of the court--the Teamsters, the Culinary Union, and the Clark County District Attorney's office." Meanwhile, sale of the bonds to fund the expansion is on hold.