Special Series: "When Pigs Fly" This is a collection of articles on the facts, problems and issues other communities are having with their current or planned Conference/Convention Centers. CONTENTS: - Executive Summary - The Great Space Race - Revenue Bonds and Dedicated Visitor - Taxes - The Big Fish - Promising Predictions - Facing the Facts - The Hynes and the Lessons of History - Expanding the Hynes - From Projections to Performance - The Gap - Between Projections and Performance - The Larger Question The Question for Boston - Conclusion

If We Build It, Will They Come?
And Other Questions About the Proposed Boston Convention Center

The Hynes and the Lessons of History

Heywood T. Sanders - Department of Urban Administration - Trinity University White Paper No. 1 - February 1997

Seventeen thousand dentists are wining, dining, sleeping and spending money in Boston today because the Legislature expanded the Hynes Convention Center. The Yankee Dental Congress convention is the first of hundreds of major conventions to be held in the renovated Hynes. The Legislature should approve additional funding to allow full use of the Hynes and provide money needed for convention centers throughout the state.

"Hynes Allure," Boston Globe editorial, January 22, 1988.

The Yankee Dental Congress was no doubt just the sort of major convention that Commonwealth officials had in mind when the $234 million Hynes expansion was planned. Indeed, the image of thousands of convention-goers attracted to the Hynes, spending their dollars and boosting the Boston and Massachusetts economies, was a powerful one. It was just not entirely accurate.

For one thing, the Yankee Dental Congress was manifestly not in Boston because the Legislature expanded the Hynes. The Massachusetts Dental Association had held the annual meeting in Back Bay and at the Hynes since 1976, years before the expansion began. During the three-year period when the Hynes was closed, from 1985 to January 1988, it continued to meet in the same Back Bay hotels, using the Sheraton’s garage for its exhibition space. It has been at the Hynes each year since. And even if the Commonwealth goes ahead and constructs a massive new convention center on a South Bay site, it is likely that the Yankee Dental Congress will continue to be held at the Hynes, with its combination of convenient nearby hotels and with abundant meeting rooms.

But if the Yankee Dental Congress was not in Boston because of the Hynes expansion, surely the wining, dining, sleeping, and spending made an economic difference? The Congress’ 17,000 attendees were a significant fraction of the 348,147 visitors to the Hynes Convention Center in 1988.51 Yet if today’s pattern is a reasonable approximation, about half the dentists, and perhaps more of the hygienists and dental students attending the convention, came from Massachusetts. Their spending on wining and dining may have aided the Boston economy, rather than Fall River’s, Framingham’s, or Falmouth’s. But their net impact on the Commonwealth’s economy was almost nil.

Since many of the attendees came from Massachusetts and the immediate environs, the "sleeping" was also open to question. The 1997 Yankee Dental Congress attracted some 25,600 attendees over six days. But its hotel room usage was only some 7,500 to 8,000 room nights, a relatively small ratio.52 Many of the convention-goers simply drove to the Hynes for the day and returned home. The fact is that in 1997, as in 1988, the promise of convention center development and expansion has often outpaced the substantive results.

The original opening of the War Memorial Auditorium in 1965 was widely expected to be a boon to the city’s convention and tourist economy. The actual result was less obvious. Annual figures from the Greater Boston Convention and Tourist Bureau on total conventions and convention-goers for the city, a definition broader than just those who visited the Hynes, are shown in figure 4. Although the attendance totals fluctuate from year to year, there is little evidence of a regular increase after 1966. Indeed, the 1978 figure of 268,560 is almost exactly the same as the 1967 total.

In contrast, the national convention industry was regularly expanding through this period. In the words of the March 1979 Boston Redevelopment Authority convention center study, "What is new is the growth in the industry, both in attendance and facilities requirements—hotel rooms, meeting rooms, assembly hall seats, and exhibition space—of many groups, as well as the total number of A NAME="53">groups." The BRA report goes on to note a New York Times report of 6 percent annual growth in display and meeting space requirements and another story reporting a 12 percent per year increase in the number of meetings held between 1973 and 1977.

The relatively flat convention business in Boston stands in stark contrast to certain other cities. In Atlanta, for instance, convention attendance boomed over the period of the mid-1960s to the late 1970s. Atlanta drew 195,000 conventioneers in 1965, and grew to 545,000 in 1975, as shown in figure 5. By 1980 it had reached a total of 1,003,000 convention visitors and 1,090 individual conventions.

Boston’s stable total convention attendance in light of Atlanta’s expansive growth is difficult to explain. In 1960, downtown Boston offered a total of 6,630 hotel rooms. The hotel room total stood at 6,925 in 1978.55 Downtown Atlanta offered 2,492 competitive hotel rooms in 1960 and 4,418 in 1970.56 A somewhat later 1982 study placed Atlanta’s downtown hotel room count at 7,250.57 The hotel room figures suggest that Atlanta had no advantage in hotel space from the mid-1960s through the late 1970s. If there was a difference, Boston probably offered more rather than fewer rooms.

The Boston pattern is even more difficult to explain in light of the common convention industry assumption that a new or expanded center will gradually "fill up" to a reasonable capacity level over three to five years after opening. The convention business just did not expand at the new Hynes.

If the Hynes was proving not to be the magnet for convention visitors touted in 1965, nor was it a clear stimulant to the city’s economy and employment. The most obvious place to seek an employment impact is in the hotel and lodging industry, although convention-goers will undoubtedly have an additional impact on restaurants, retail sales, and other parts of the local service economy. In 1965, when the War Memorial Auditorium opened, Suffolk County had 4,754 employees in the "hotel, tourist courts, and motels" category reported in the Census Bureau’s Annual County Business Patterns. By 1970, it was up to 5,639 and by 1980 employment stood at 5,919. While the Boston hotel industry was affected by a number of factors, including the city’s massive urban renewal efforts, hotel employment clearly did not boom with the new Hynes.

Expanding the Hynes

The Hynes Auditorium is the city’s largest convention center, but it is wholly inadequate. Among major cities, Boston ranks near the bottom in available convention space. The Greater Boston Convention and Tourist Bureau estimates that there are 500 national conventions that would like to schedule meetings in Boston but cannot because of insufficient space.... First, a healthy convention business will bring in millions of new dollars to Boston and underwrite the creation of hundreds of jobs, notably entry-level jobs for the low-skilled urgently needed here. Second, a thriving hotel industry will pay the city badly needed property tax revenues.

"The Hynes Expansion," editorial, Boston Globe, March 9, 1982.

The Greater Boston Chamber of Commerce, concerned about what it considers the urgent problem of expanding Hynes Auditorium, wooed three of the seven members of the newly appointed Massachusetts Convention Center Authority at a breakfast meeting yesterday.... [Chamber president] Sullivan told the authority members that the Boston business community is united behind a current plan to expand the Hynes from its current 150,000 square feet to 300,000 square feet. The expansion is needed to attract convention delegates to the city, who

in turn would fill many of the 5000 new hotel rooms currently under construction, he said.... The renovated Hynes would be able to handle about 90 percent of the over 400 major conventions now held in the United States, according to Robert E. Cumings, president of the Greater Boston Convention and Tourist Bureau.

"Chamber of Commerce Pushes Hynes Expansion," Boston Globe, September 25, 1982.

The premise that Boston’s convention future lay in more space at the Hynes was reported repeatedly in the early 1980s. That conclusion was based in large part on a host of studies and analyses of the city’s hotel and convention business, done from 1977 to 1985. Those studies were consistent in urging a bigger Hynes. They were no less consistent in forecasting substantial gains to the city, in terms of new hotel rooms, increased numbers of meetings, more convention visitors, and greater spending and revenues for the city and the Commonwealth. Indeed, some of the city’s staff studies circa 1980 portrayed the expansion of the Hynes as merely the first step in a vast expansion of the local convention business, to be sustained by an even larger new center located in the Fort Point Channel area.

The passage of almost a decade since the January 1988 opening of the expanded Hynes provides the opportunity to revisit those studies and their forecasts, and to judge how well Boston and its convention industry have performed compared to the predictions. What sort of guide does the recent past provide for the conclusion that a vastly larger new convention center will boost Boston’s convention business and the city’s economy?

The table below presents the major studies of the city’s convention "needs" that justified the Hynes expansion, their major conclusions and forecasts. The section following summarizes those results across a set of measures of convention activity, and compares them to the reality of the Hynes’ performance since 1988.

From Projections to Performance

From the late 1970s to a point when the expansion effort was actually under construction, the studies uniformly predicted substantial gains in national convention events, convention attendance, hotel room demand, and local employment. Indeed, the most common forecast was for a doubling of convention business and a substantial boost in local hotel development. But what actually happened after the new Hynes opened in January 1988?

Hotel Room Development

In 1978, Boston appeared to suffer from a deficit in hotel rooms, the product of an aging hotel stock, conversions, and demolitions resulting in part from the city’s vigorous urban renewal efforts. The city also appeared poised for a "take off," with 19 new hotel proposals documented in the March 1979 BRA report totaling some 10,050 new rooms. As figure 6 indicates, Boston did indeed add a large number of new hotels and hotel rooms while the Hynes expansion was being discussed and debated, although fewer than half as many as had been proposed.

A number of those new hotels were the product of local and national policies for urban revitalization. The Swissotel in Lafayette Place and the Marriott and Westin in Copley Place were both assisted by federal grants under the Urban Development Action Grant (UDAG) program. And other Boston hotels were located on sites cleared and made available for development at a reduced price by the federal urban renewal program. Similarly, Hyatts, Westins, Hiltons, and Radissons bloomed in central cities from Akron to New Orleans, Cincinnati to San Antonio, New Orleans to Cleveland, all assisted under the UDAG program. Indeed, the early to mid-1980s was a period of booming growth in hotel development nationally, particularly in the high-end market. Growth was by no means limited to Boston.

Yet while Boston’s hotel growth through the early 1980s may have been affected by the prospect of an expanded Hynes and new convention business, the impact of the Hynes after 1988 is open to serious question. Figure 6 shows that hotel room growth effectively stopped in 1985—three years before the expanded Hynes opened for business. The BRA’s predicted values are also shown in figure 6. The actual number of hotel rooms in 1990 fell more than 3,000 short of the BRA’s 1979 prediction. Indeed, all of the BRA predictions of hotel room demand have consistently over-predicted hotel room growth even in a projection made as late as 1987.

By itself, the lackluster growth in hotel rooms does not prove that the Hynes failed to spur demand, since it does not take into account changes in actual hotel use. A more sensitive measure is the actual annual consumption of hotel room nights.

Hotel Room Nights

The 1985 Touche Ross report forecast that room nights generated by the Hynes would increase from 163,000 circa 1984 to 546,000 at "full market potential" in the early nineties—a predicted increase of 235 percent. Like the overall supply of hotel rooms, no count of annual room night consumption can separate out attendees at the Hynes from other visitors to Boston. Still, room night figures provide a sense of the scale of change in visitors. Room nights also provide a more sensitive index of changes in hotel activity for, while some new hotels may have been built in the early 1980s in anticipation of the Hynes expansion, the new hotel rooms would gradually fill up with new convention-goers as the Hynes generated increased business. As figure 7 indicates, room night consumption did increase as new hotels opened in the 1980s, to some 2.8 million in 1985. But with the Hynes closed from May 1985 to January 1988, room night consumption showed no decrease. Despite the conclusion of one prominent hospitality consulting firm that "The closing of the Hynes Auditorium has negatively impacted convention business," hotel room use actually grew in 1986 and 1987. Yet after the Hynes opened, room night consumption remained effectively level through 1991. Indeed, the 1991 total is almost exactly the average of 1985 and 1986, the years when the Hynes was closed for construction. The number of room nights has increased somewhat, with increased occupancy rates since 1993. Still, there is not any indication of an increase in hotel room use directly attributable to the 1988 Hynes expansion.

New Conventions and Trade Shows

The "meat" of an expanded convention center lies in how much out-of-state convention business it generates. Indeed, the Peat, Marwick, Mitchell & Co. study made it clear that the Hynes would focus on attracting out-of-town visitors, limiting the number of local "gate" or consumer shows, which generate income for the center but not visitor spending. The "baseline" performance of the Hynes from 1972 to 1976 was an annual average of 30 conventions and trade shows. The March 1979 BRA study cites a figure of 42 conventions and trade shows in 1976. The 1981 Peat, Marwick report provides a baseline figure of about 30 circa 1980. And the 1985 Touche Ross report counts 41 conventions and trade shows in 1982, 37 the following year, and 35 in 1984.

The consistent prediction was that at full potential, the number of conventions and trade shows would roughly double to somewhere between 60 and 65. Nationwide growth in the convention industry after 1990 would likely produce some additional business.

Recent event counts, circa 1992, provide some sense of what the expansion effort produced.62 The 1993 Price Waterhouse report on the proposed new Boston center indicates the Hynes housed 54 conventions and trade shows in fiscal year 1992.63 The February 1993 study by Coopers & Lybrand shows that the Hynes accommodated 38 events in 1990, 32 events in 1991, and 37 events in 1992.

While it is difficult to reconcile the divergent figures of the two consultants, it is clear that the expanded Hynes is attracting far fewer events than forecast. Indeed, with a total of 33 conventions and trade shows at the "old" Hynes in fiscal year 1975-76, it is not evident that the Coopers & Lybrand numbers for 1990 to 1992 represent any real increase at all from 1983 or 1984. Indeed, these figures suggest the absence of any substantive return on the Commonwealth’s investment of $200 million in long term debt for the expansion.

Convention and Trade Show Attendance

Touche Ross directly addressed the "baseline" and projected attendance at the expanded Hynes in its 1985 report. Translating their "visitor-days" annual average for 1982 to 1984 into an attendance number provides an attendance estimate of 339,000. That estimate should probably be considered a range, somewhere between 320,000 and 360,000 attendees per year. The expansion was then projected to generate attendance of about 500,000 per year.

The first returns on attendance were developed by consultant Alan Bell for the Massachusetts Convention Center Authority, owner of the Hynes. Bell estimated 348,187 convention and trade show visitors in 1988, 302,063 in 1989, and 335,578 in 1990.

More recent Hynes convention and trade show attendance figures are available from the 1993 Price Waterhouse report. The expanded Hynes hosted 314,000 attendees in 1992, and "Average annual attendance for fiscal years 1990-1993 has approximated 330,000 for convention and trade shows...based on data provided by MCCA management."

Three things stand out in comparing the Hynes’ attendance "before" and "after." First, the actual convention attendance figures have been well below the predicted figure of nearly 500,000. Second, the post-expansion attendance figures are about the same as those from the early 1980s, perhaps even slightly smaller. There has been no discernible gain in attendance from the investment in expansion. Finally, despite the repeated argument by BRA staff and outside consultants that the national convention and trade show business has been expanding each year through this period, the Hynes probably did better in 1988 than in the years immediately following. Upon releasing the 1988 Bell figures, Massachusetts Convention Center Authority director Francis X. Joyce boasted in April 1989, "We have outperformed the forecasts."

The apparent success of the new Hynes in its infancy may not be all that difficult to explain. Seeking to boost early attendance, the Convention Center Authority offered a number of incentives to meetings planners, including "free rent of the convention center to the first 25 groups that booked and confirmed dates during a specified time period, and the assurance that no 1,000-room-night event would be canceled due to inclement winter weather...backed by a $5 million Lloyds of London insurance policy."

The figures on Hynes convention visitor attendance should also be placed in a somewhat larger context. For 1992, when Price Waterhouse counted 314,000 Hynes visitors, the Greater Boston Convention and Visitors Bureau counted 8.76 million total visitors to Boston, with perhaps about half, or more than 4.3 million, staying in hotels. Compared to that sum, the expanded Hynes accounted for a bit over 7 percent of the hotel-room-using visitors to greater Boston in 1992.

Total Attendance

The Massachusetts Convention Center Authority provided annual figures on the overall attendance at the expanded Hynes from 1989 to 1994, thus excluding the first year of operation. These total figures cover a broad swath of activities, from conventions like the Yankee Dental Congress and the American Dietetic Association (both booked for 1997), to trade shows like Networks Expo, and largely local events like "A Taste of the Back Bay." Figure 8 shows the annual attendance totals. While the time span does not allow for a before and after comparison, the pre-expansion forecasts indicated that the center would "ramp up" to full use over three or so years. But the attendance figures do not show any pattern of annual increase. Indeed, with some fluctuation from year to year, they are remarkably stable. And although the Convention Center Authority did not provide an annual listing of events from which attendance totals were compiled, it appears quite likely that a single event—First Night, held at the Hynes since 1989 and with 1994 attendance of 50,000—regularly accounts for about 10 percent of the total annual attendance. In sum, at a time when a host of studies have described regular annual growth in the national convention attendance, the attendance at the Hynes has been flat.

Hotel Employment

One of the most common and central promises surrounding the expansion of the Hynes, or the investment in any convention center, is that of new jobs. The 1985 Touche Ross report, for example, estimated that the Hynes expansion would generate some 9,000 new hospitality jobs. While new visitors and their dollars may have an impact on everything from restaurants to bay cruises, their most direct impact is likely to be on the lodging industry. Figure 9 presents annual numbers on employment in hotels and motels from 1985 to 1994 the most recent year available, from the Census Bureau’s County Business Patterns. The figures include all of Suffolk county, and are thus somewhat larger than just the city itself. Hotel employment grew from about 7,400 in 1986 to over 10,000 the following year, as new hotels were opened. But from 1986, there has been no substantial increase in hotel employment for the county. Once again, the predictions that the Hynes expansion would prove to be a major economic and employment generator have fallen quite wide of the mark.

The numbers on hotel employment should also be seen in perspective. The 1994 figure of 10,534 hotel and motel jobs amounts to 2 percent of the Suffolk County employment total. The figure is comparable in size to the 9,933 employed in doctors’ offices, and not very much larger than the 8,633 employed in food stores.

The Gap Between Projections and Performance

The expansion of the Hynes was touted and promoted, studied and analyzed over almost a decade. The project probably generated more studies, reports, and forecasts than any comparable convention center project in recent American history. Yet for all of the debate and all of the analysis, the results of the expansion have been remarkably modest. The reasons why are open to any number of individual interpretations. For now, it is important to focus on two central conclusions.

First, despite the quality of the Boston city staff and the credibility of major accounting firms and consultants, the forecasts and predictions of almost every dimension of Boston’s convention business in the wake of the expansion proved overly optimistic. With impressive regularity, studies backed up by surveys, market share analyses, convention tradeshow databases, and national models projected that business would double. It didn’t. At the very least, such a pattern should raise some questions about the current crop of consultants’ studies and reports on an entirely new center. The expanded Hynes began with the locational advantage of nearby hotels, restaurants, shops, and urban activity. The proposals for a new center would not.

A second conclusion involves Boston and the national convention market. The May 1995 Price Waterhouse study of a new convention center concludes, "Boston continues to underperform as a convention and trade show destination due to its lack of convention and exhibition facilities, relative to other major U.S. markets." The first part of that statement is quite evident. The "due to" is open to some debate.

When the Hynes was expanded, it was targeted to a "middle market," in part because of Boston’s strength in attracting medical, educational, and scientific groups. Indeed, this strategy was lauded in 1989 by David C. Petersen of Price Waterhouse, responsible for the firm’s 1993 and 1995 reports on a new center, "Boston’s strategy to penetrate the middle-tier market and to focus on simultaneous events is a well-conceived one and, given its options, probably will suit the city well."

Today, the Hynes continues to do well among just those medical, scientific, and educational groups. But the Peat, Marwick study noted two other factors that would affect the city’s convention business. For one, even with 11,500 hotel rooms, the city’s room supply was still outclassed by other, larger communities. It still is, and will likely continue to be for some time.

Second, the Peat, Marwick staff also surveyed more than 120 organizations and their meeting planners on their attitudes about Boston. They concluded, "Interviewees expressed negative perceptions concerning harsh winter weather and large city mobility problems that make proximity of hotels to the exhibition and meeting areas important." The appeal and success of a convention and trade show destination is affected by a great many factors. The size of a convention center "box" is merely one among them.

There is one additional central factor that affects Boston’s competitive position—its hotel room rates. Chicago’s Metropolitan Pier and Exposition Authority commissioned Coopers and Lybrand to produce a financial feasibility study for the planned hotel adjacent to McCormick Place. In the words of the Coopers report, "In addition to the number of commitable rooms, hotel room rates are an important factor when event organizers consider an event destination." Table 3 presents the Coopers data on comparative hotel rates, together with the $133 average daily rate for 1995 for Boston, which was provided by the Greater Boston Convention and Visitors Bureau. Boston comes in third most expensive, behind New York and Washington. The major tourist destinations like Orlando and San Diego, as well as New Orleans, come in well below. Chicago, too, appears considerably less expensive, and Las Vegas weighs in with an average rate less than half of Boston’s.

Nonetheless, it is important to recognize where the Hynes and Boston have succeeded. The city now regularly houses a number of trade shows oriented to the medical, scientific, and high tech communities. National meetings of medical, scientific, and educational organizations are regular users of the Hynes. Those trade shows and conventions are not dissuaded from coming the Boston because of its size. They come to Boston and Massachusetts because of what Boston and Massachusetts offer—because of its software developers, its medical education, its technical communities, its brainpower. Such organizations can and will make do with a smaller facility because the market in the Boston area is so valuable to them. Indeed, a conversation with one high tech-trade show producer revealed that his Boston show is "better" than a second regular one in Chicago—partly because of springtime weather in Boston, but largely because of the larger concentration of software companies in eastern Massachusetts. Even McCormick Place’s 2 million plus square feet of exhibit space do not compensate.

The unfortunate consequence of developing a new convention and trade show facility in Boston is that its strength as a meeting location—its concentration of highly educated professionals—provides far less economic benefit to the Commonwealth than a projected visitor totals might suggest. Much of the medical and high-tech convention market for Boston, like the Yankee Dental Congress or Networks Expo, consists of Massachusetts residents and other nearby New Englanders who drive to Boston and return. Across a number of computing-related shows and meetings now at the Hynes, the rough proportion of attendees from Massachusetts is 60 percent or more.

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