Washington Post business and economics columnist Steven Pearlstein took aim at the potential economic effect of Washington, D.C.’s newly completed 1,175-room Marriott Marquis, which will serve as a headquarters hotel for the Washington Convention Center, in his June 27 editorial.
Will the tax-subsidized hotel help to make D.C. a meetings mecca for large citywide conventions? Or is it just a hornswoggle launched by the “Convention Industrial Complex” and local boosters to make the District cough up more dough to further expand the convention center, he asked. After all, he contends, that’s what recently happened in Boston when the Massachusetts House of Representatives approved a bill that would expand the Boston Convention and Exhibition Center to the tune of $1.1 billion—including building a new 1,000-room headquarters hotel.
According to Pearlstein, the Washington Convention Center’s history shows that,
As things turned out, rather than the 750,000 room nights a year that the consultants projected, the number has averaged about 500,000. … the peak came in 2005—at 590,000—and then only because Hurricane Katrina forced groups to move their gatherings out of New Orleans. At the trough of the recent recession, the number fell to about 300,000.
He then cites University of Texas at San Antonio professor Heywood Sanders, a long-time critic of cities’ investing in convention centers who recently published a new book, Convention Center Follies, about how D.C. and Boston are just two of many cities throwing good money after bad by investing in a commodity, a convention center, in a market that is, at best, stagnant. And then, he says, they blame the inability to live up to the room-night promise on the lack of nearby hotel capacity, arguing that the public needs to pitch in funding for that as well.
Karen Kotowski, the chief executive officer of the Convention Industry Council—an umbrella organization for meetings-related associations—fired back with both guns ablazing. As she did last year when a Wall Street Journal article denigrated the value of meetings, Kotowski responded by citing the full economic impact of meetings. Pearlstein’s column, she says, “only considers impacts of the expanded convention center and new Marriott Marquis in terms of hotel room nights generated, and you dismiss the impacts of spending, taxes, and jobs generated by meetings.”
Total output (including indirect and induced impacts) in 2012 related to meetings activity is estimated at $770.4 billion, while the total contribution to GDP was $393.8 billion. Meetings activity in 2012 supported approximately 5.3 million jobs and generated $234.6 billion in labor income, that’s paychecks and money in workers’ pockets.
She also cited the approximately $50.8 billion in federal taxes, along with another $37.9 billion at the state and local level generated by meetings-related personal income, excise, , custom duty, social insurance contribution, corporate income, property, sales, and other taxes.
John Graham, CAE, president and CEO of ASAE, the American Society for Association Executives, also chimed in by citing the CIC study’s findings on the economic impact of meetings and events on a city. He also called Pearlman’s denunciation of the new Marriott Marquis “short-sighted—or at the very least, premature.” Now that the hotel is open, he says,
… the District can land larger meetings, such as the 40,000-attendee American Dental Association conference coming to D.C. in 2015, which the city could not previously accommodate. This type of new-to-market business is important to the city because it augments existing business, and ensures the new Marriott property doesn’t siphon business from other hotels downtown.
What do you think? Are publicly funded efforts like convention center expansions and new headquarter hotel construction just more wasted salvos in “a convention center arms race that no city can win,” as Pearlstein says? Or are they, as Kowtoski and Graham contend, a necessary expenditure for housing meetings that “put money back into local communities and are a driver of job growth”? Leave a comment below or e-mail firstname.lastname@example.org.