Is The New OKC Convention Center Worth It?

Monday, July 21st 2014, 9:45 pm
By: News 9

"Convention business is strong," exclaimed Tom Murray, CEO of the Charlotte Regional Visitors Authority.

Whether it's Tom Murray in Charlotte or his counterpart in Oklahoma City, their statements tell the same story: the convention industry has rebounded from the recession and is once again a smart investment for cities looking to bring more life to their downtowns.

Oklahoma City, through its MAPS 3 program, is investing $250 million in a new convention center, to replace the aging and outdated Cox Convention Center. Although not officially part of the project, simultaneous construction of an adjoining 700-room headquarters hotel is expected to also involve some measure of public financing.

In response to questions about the wisdom of such a sizeable public expenditure, convention and visitors bureau (CVB) officials claim the new facilities will allow Oklahoma City to triple its convention business, which, in turn, would triple sales tax revenues and the number of industry-related jobs.

Another response is to suggest looking to other cities for proof -- cities like Charlotte.

Charlotte's convention center opened in 1995. With 280,000 square feet of prime exhibit space, 90,000 square feet of meeting space, high ceilings, and a 35,000 square foot ballroom, the facility is more than adequate to meet the needs of most mid-sized conventions.

And, on a Thursday in the middle of June, it is doing just that -- hosting a three-day meeting of the American Physical Therapy Association (APTA). The convention was booked in 2010.

"Charlotte came to our attention for a variety of reasons," said Allison McIntyre, APTA's Director of Meetings.

McIntyre explains that Charlotte has good 'lift' (industry parlance for air accessibility), excellent entertainment options near the convention venue, and plenty of restaurants downtown. More important, she says, it has the right mix of meeting, exhibit, and hotel space.

"I mean, hitting that sweet spot is really key," McIntyre said, "and Charlotte's done that very well."

But, by all accounts, the 'sweet spot' didn't just happen -- Charlotte had to work at it.

When the convention center wasn't generating the 500,000 annual hotel room-nights (a common industry performance measure) that the city's paid consultant had projected, city leaders convinced taxpayers to put $16 million into the creation of a 700-room headquarters hotel. The Westin opened in 2003.

"After the Westin came on board," said Mike Butts, Executive Director of Visit Charlotte, "we were able to book more business."

Charlotte also found it could book more business by doing what most every other city competing for conventions does -- offer incentives. Those could include providing use of the convention facilities for reduced or no rent, providing a discount on catering services, or throwing in the cost of wi-fi.

"We have a business development fund that we use to offer incentives to groups," said Murray, CRVA CEO.

Murray says the steps Charlotte has taken are definitely paying off.

"We've just completed our budget for next year," Murray stated, "and we're going to have a third consecutive record year in a row for convention center revenues."

But there are some who feel such statements hide the truth.

"It's often possible for local CVB's to spin the numbers a bit," said Heywood Sanders, "and, in Charlotte's case, that's exactly what's happened."

Sanders is a professor of public policy at the University of Texas, San Antonio, and author of the book "Convention Center Follies."

Sanders acknowledges that hotel room-nights did jump up the year after the Westin opened, but he says they quickly plateaued, and are now back down around 130,000 a year, which is still well below the 500,000 consultant's projection.

"It's not even doing what it was doing at the end of the 1990s," Sanders pointed out. "It's producing a tiny fraction of the area's hotel demand, and it's woefully underperforming."

But Sanders says this is hardly surprising, when you consider what's going on with convention business in other, more traditional convention hubs.

According to numbers provided by Sanders, convention attendance in Las Vegas, Chicago, Atlanta, and Orlando is either flat or down over the last 20 years. And yet, during that same period of time, Sanders says, cities have continued to build newer and larger centers -- convention space has increased 37 percent. It’s more competition for the same or less business.

That's why Sanders questions Oklahoma City's decision to spend a quarter of a billion dollars on a new convention center.

"Is that kind of cost really giving you something that's an economic benefit to Oklahoma City?" Sanders asked. "The case of Charlotte should make that answer pretty clear -- it just doesn't work."

In Charlotte, they couldn't disagree more.

Murray, Butts, and others associated with the local convention industry say there's a vibrancy downtown -- which, in Charlotte, is known as 'Uptown' -- that didn't exist 20 years ago. And they say they're able to book conventions they couldn't get before.

Charlotte hosted the Democratic National Convention in 2012 and has the American Legion coming this August.

Oklahoma City CVB officials see the same thing happening, once their new facilities are open in 2019.

"There are a lot of conventions that are in what we think is our sweet spot," said Mike Carrier, President of the OKC Convention & Visitors Bureau. "We feel very confident that we can be very successful here."