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If We Build It, Will They Come? Heywood T. Sanders - Department of Urban Administration - Trinity University White Paper No. 1 - February 1997 *This is the first of two papers on Boston's proposed convention center. This paper questions assumptions that underlie the debate as a special commission appointed by state and city officials readies its report on the convention center proposal. Following the release of the commission's report, the second paper will analyze the commission's recommendations. In 1965 Boston's War Memorial Auditorium (later Hynes Convention Center) opened to great fanfare and anticipation. But, by the mid-1970s, Boston officials were already proclaiming Hynes too small for growing conventions and promising that an expanded convention center would draw far more meetings and visitors to the city. An expansion of the Hynes was begun in 1985. When it finally opened three years later, the expectations were as optimistic as 23 years earlier. The center was expected to bring $500 million into the city's economy and create 8,000 new jobs. Yet the convention business did not expand at the new Hynes. Even with the promise of free rent for meetings that booked early, the Hynes attracted in 1990, 1991, and 1992 about the same number of conventions and trade shows it had in 1980. Nor did the expanded Hynes fulfill the promises of more convention visitors, new hotel development, and new jobs. Yet the conclusion of public officials was not that expectations had been unrealistic, or that there were some limits to the city's appeal to meeting planners. Their conclusion was that Boston needed more convention space, in a new facility, to compete. Today, the price tag for a new convention center is likely to be three or four times the $200 million in debt for the 1988 Hynes project. And the promises of more conventions, more jobs and economic growth are very much the same. A host of recent consultant studies have forecast that dozens of new convention and trade shows will be lured to the city each year. Just as the consultants in Massachusetts are making these predictions, they are presenting similar studies to justify more convention enter space in cities from Washington, D.C. to San Jose, CA. Each study contends that more space is the vital ingredient for competition, reviews the growth of competitors, and urges the need to respond. Each study notes the unique advantages and appeal of the city under examination. And every study assumes that annual growth in meeting and convention demand will outstrip increases in supply. Yet with cities across the nation seeking to build their way to convention success, the contemporary marketplace offers no guarantee that any new center will deliver on the promises and predictions of the consultant studies. While Boston and Massachusetts officials speak of expanding to keep up with and meet the competition, they are speaking of a rapidly moving target. The destination cities with theme parks and resorts, warmer climes, abundant airline access and tens of thousands of inexpensive hotel rooms will continue to prove attractive locales for convention-goers. These cities have the means to expand time and time again, thanks to dedicated revenue streams from taxes on everything from hotel rooms to restaurant meals. As a result, the exhibit space in major U.S. centers will likely increase by some 25 percent over the next few years. Much of that expansion will be driven by the biggest centers as they seek to both accommodate major shows and attract the kind of medium-sized meetings that the Hynes currently books. In the face of the regular premise that the convention and trade show business is growing, a number of convention centers around the country today are failing to meet earlier projections and performing poorly. The problems faced by Los Angeles and Tampa, Houston and Providence should raise some flags for any other city contemplating a major building effort. Those flags should be particularly high where a center is proposed on a distant or undeveloped site with an absence of nearby hotels. Those anticipated new hotels have a way of not happening in today's development marketplace, even with dire public subsidies. The most relevant evidence on Boston's likely convention future comes from its past. Before the expansion of the Hynes was begun in 1985, it was studied for almost a decade. The reams of studies consistently projected a doubling of conventions and trade shows, thousands of new convention attendees, thousands of new Boston hotel rooms, new jobs, and economic growth. Yet, in terms of hotel development, room night consumption, number of meetings, and hotel employment, the results of the Hynes expansion have been almost nil. In fact, during the period when the convention center was closed for renovation, there was no drop in Boston's hotel occupancy. Nor was there a boom when the expanded Hynes reopened in 1988. At the very least, the limited impact of the previous expansion should raise some questions about the prospects of a new center, particularly one without the locational advantages of the existing Hynes. Before the convention center debate shifts from the question of "whether" to the issue of "how," public officials should consider the lessons of other cities and the recent history of Boston. With a potential expenditure of $700 million hanging in the balance, it would be prudent to consider both the track record of the Commonwealth's consultants and the advice they have provided on similar projects around the country. The week of February 21, 1965 found Boston a city filled with formal civic celebration. The occasion was the grand opening of the War Memorial [later Hynes] Auditorium adjoining Prudential Center. With events ranging from concerts by the Boston Pops and the Harvard-Radcliffe Glee Club to the presentation of "Boston Medals" to such local luminaries as Red Auerbach and Arthur Fiedler, city officials heralded the new city facility as the "showplace of the New Boston...a magnet for visitors and a vital stimulant to the city's future growth and prosperity" Anthony Yudis of the Boston Globe noted that with the opening of the convention hall, Boston becomes competitive with other cities in drawing important convention business." The editorial writers of the Globe praised "Boston's Great New Hall," acknowledging that while "Ours is not the biggest convention hall in the country...[it] is big enough to handle a respectably high percentage of the potential convention and exposition business." The rhetoric of economic boon and development promise that surrounded the opening of the Auditorium proved merely to be the opening call in a lengthy series of promises and portents of jobs and growth through attracting conventions and trade shows to Boston. By the middle of the 1970s, Boston officials were proclaiming the Hynes too small for growing conventions and promising that an expanded convention center would draw far more meetings and visitors, together with their dollars. A 1977 study by Economics Research Associates promised that a larger convention center coupled with a new hotel could attract an additional 15 to 25 conventions and trade shows to the city per year, with a boost in annual convention-goer spending of between $4.8 and $8 million. Two years later, Mayor Kevin White would argue that "Boston loses scores of conventions that want to come here for one simple reason: our facilities are just not big enough," and the Boston Redevelopment Authority would forecast that an expansion of the Hynes could "double the number of shows which take place...[and] leverage some 3,500 additional When the expanded Hynes Convention Center opened in January 1988, the rhetoric was no less optimistic than 23 years earlier. The Globe's lead story termed the new Hynes "the first installment delivered on the promise of rejuvenated and successful convention business in Boston," noting that the center was expected to bring $500 million into the city's economy and create more than 8,000 new jobs. Hynes manager Mark Leahy was quoted as saying, "I personally think that the opening of the Hynes is going to launch Boston right into the top ten in the convention and meeting business. And before long, into the top five." Today, while the price tag for a new Boston convention center is likely to be three or four times the $200 million in debt issued for the 1988 Hynes project, the expectations for success are very much the same, with the promise of more than $430 million in annual visitor spending and 6,800 new jobs. And a host of recent consultant studies have forecast dozens of new conventions and trade shows lured to the city each year bringing hundreds of thousands of new Boston visitors. Yet, despite all of the rhetoric and promises, there has been almost no substantive analysis of the actual outcomes of decades of public investment in Boston convention centers. And for all of the forecasts of visitor growth and job creation, there has been almost no substantive analysis of the changing national meetings market and how well Boston is likely to fare in the future. This paper seeks to move beyond the political rhetoric and consultant studies to examine three central questions: How does Boston compare to other cities in the contemporary convention center "space race"? How accurately have other cities forecast the benefits of convention center development? How did the investment in expanding the Hynes affect the city's convention business and redeem the promises of the early eighties? An Uncertain Future Any major public investment project carries with it both costs and benefits. The costs are commonly clear and obvious in the short term, the benefits are distant and uncertain, the risks less well known. That is particularly the case with a major convention center, especially today. Armed with a host of feasibility studies and recommendations, the Commonwealth is considering precisely the investment choice and urban development vehicle that dozens of other cities are promoting with exactly the same goal. At the very least, such an investment carries a risk, and a future that will ultimately be determined by Boston's ability to compete in a demanding and highly competitive marketplace. The Commonwealth is seeking to go "upmarket," competing for ever larger meetings and trade shows with an expansive box, just the strategy employed by Houston and Los Angeles before it. Yet today the biggest centers, the very market leaders that Boston and Massachusetts seek to emulate and beat, are moving in precisely the opposite direction. They are going "downmarket," seeking to attract the hundreds of smaller meetings that represent the bulk of the convention and trade show industry. Chicago's McCormick Place, the largest convention facility in the country, is presently renovating its oldest structure to provide a flexible venue for groups that require some 100,000 to 150,000 square feet of exhibit space. According to the Metropolitan Pier and Exposition Authority, "the Authority's marketing plan [is] to secure and further the Convention Center's market share of mid-market tradeshow and other convention/meeting events." Atlanta's planned expansion effort is also geared in the opposite direction from Boston. The recent feasibility study by Price Waterhouse for the Georgia World Congress Center concluded, "an additional 200,000 attendees were estimated to be attracted to the expanded Center if an alternative booking policy were in place which would allow the GWCC to host relatively more mid-size events in terms of [occupied square foot days] [italics mine]. " The rationale for Atlanta's (and Chicago's) moving "downmarket" is obvious: the major centers are going where the meetings, trade shows, and visitors are to the numerous mid-size events that can keep a massive one or two million square foot center relatively active. At best, a Boston with a massive new center is likely to find itself pursuing a big meeting market that is increasingly elusive, and eventually settling for a quite modest share of precisely the same meetings it attracts today. Before the convention center debate shifts from the question of "whether" to the issue of "how," public officials should consider the lessons of other cities and the recent history of Boston. With a potential expenditure of $700 million hanging in the balance, it would be prudent to consider both the track record of the Commonwealth's consultants and the advice they have provided on similar projects around the country. |
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