Williamsburg is planning one. Virginia Beach and Hampton are expanding theirs. Norfolk officials recently announced that they, too, want to join the fray. And six months ago, Richmond held the grand opening of its own.
It's all the rage in economic development: convention centers. Across the country, new convention centers are popping up or expanding. Meanwhile, the national market for corporate meetings, tradeshows and industry conventions is on the decline, still reeling from Sept. 11.
The Greater Richmond Convention Center appears to be doing better than many. But the numbers send mixed messages:
ƒ?› The center has booked 22 conventions and more than 170 private and association meetings in 2003, and it is expected to draw more than 300,000 attendees.
ƒ?› The center has been in the running for and lost some 16 conventions so far. These would have brought in more than 77,000 hotel and room nights.
ƒ?› Of the nearly 200 events planned at the 700,000-square-foot center in 2003, about 150 of those have been booked by parties of 1,000 or fewer attendees. The convention center can typically accommodate between 3,000 and 5,000.
More competition is on the way.
“What you begin to realize is every city is trying to do essentially the same thing,” says Heywood T. Sanders, an expert in convention economics who chairs the public administration department at the University of Texas at San Antonio. “It doesn't make sense to compete with every other city with exactly the same strategy.”
Sanders says the convention industry has turned into a taxpayer-funded contest to see who can build the biggest facility to capture valuable convention dollars. En masse, conventioneers stop in for the weekend, spend lots of money on hotels, food and entertainment — and then leave, costing little in public service.
But there's a hitch. Nationally, convention-center supply is outpacing demand, experts say, and this has created a glut that has forced some cities to drastically slash rental prices, sometimes offering facilities rent free to stay competitive.
All this comes as Richmond begins $66 million in improvements along East Broad Street, and civic boosters make the case for building a $100 million Performing Arts Center — in part to help secure the convention center's future success. But will a prettier East Broad Street really make the difference in a crowded market?
John F. Berry, president and chief executive of the Richmond Metropolitan Convention & Visitors Bureau, says the 16 conventions that the city has lost can be blamed on the condition of Broad Street. The downtown improvements, a new hotel and the arts center are absolutely necessary, he says.
Berry, however, isn't particularly worried about competition from Hampton Roads and Williamsburg. He says the Greater Richmond Convention Center, which opened officially in February, competes primarily with larger centers located in places such as Columbus, Ohio, Baltimore and Pittsburgh.
Richmond, he says, has a larger capacity — namely more exhibit space and hotel rooms — and is better situated geographically than Hampton, Virginia Beach, Norfolk or Williamsburg.
The biggest thing holding Richmond back is Richmond, Berry says. Unlike larger cities such as Las Vegas and Orlando that have a well-regarded national image, Richmond lacks an identity that sells itself. And that, Berry says, makes cleaning up Broad even more crucial.
“Here, we just have to sell,” he says.
But even with all the improvements, Sanders counters that Richmond will still just be another city competing for a shrinking supply of conventioneers. But is demand really shrinking? The perception is a big part of the problem, Sanders says.
Consultants across the country have distorted the convention industry's growth rate, Sanders contends, and this has led cities to build and expand convention centers at a rapid clip. In fact, a feasibility study prepared for the city by C.H. Johnson Consulting Inc. in 1999 estimated that the number of “exhibition attendees” would swell from 110 million to 123 million nationally in 1999 and then 140 million in 2000. In actuality, the number of attendees dropped in 1999, spiked briefly in 2000, and then nosedived, according to the Center for Exhibition Industry Research, the source used by Johnson Consulting. (See chart.) This year, the center is projecting about 40 million exhibition attendees.
Meanwhile, more space than ever is being built. Tradeshow Week reported that in 2002 the amount of convention space increased 7.1 percent to 72.4 million square feet in the United States and Canada. Tradeshow also estimates a 3.1 percent decline in the use of that space last year as attendance decreased by 10 percent.
Industry followers agree that the Sept. 11 terrorist attacks had a devastating affect on the convention and travel industry, but it's beginning to show some small signs of recovery for 2003. Still, according to Sanders, the convention market is past its prime. It peaked in the late 1980s and has fluctuated up and down ever since, he says. Even before 2001 and the current economic downturn, Sanders says the industry data for conventions hardly establishes a pattern of steady growth.
Once the convention center is built, it becomes a “keeping up with the Joneses” phenomenon seemingly without end, he says. Cities are constantly encouraged to add more space, build hotels and to participate in retail developments to support their initial investments. In 1989, barely two years after the original $19 million Richmond center opened to the public, the Metropolitan Richmond Convention & Visitors Bureau was complaining that it needed to double its exhibit space to remain competitive. The cry for more expansion and additional infrastructure has continued.
For example, in city after city consultants tell officials that they are missing out on events because of a lack of hotel rooms, Sanders says, encouraging them to build new hotels in order to capture the larger conventions. Richmond is no different.
“And that means even with a hotel, Richmond is not likely to stand out from the pack,” Sanders says. “It's just likely to have a few more hotel rooms.”
Of course those in the tradeshow and exhibition industry aren't complaining about the oversupply. “It's more of a buyer's market than it has ever been,” says Steven Hacker, president of the International Association of Exhibition Management in Dallas. “Once you start giving away the store, that's a slippery slope. But what you see are a lot of value-added incentives and packages.”
Hacker says cities such as Norfolk and Richmond may actually benefit from a post-Sept. 11 trend away from long-distance conventions and tradeshows. Many event planners are looking for locations that are more accessible by car, he says. So places like Richmond, centrally located on the East Coast, are an easier sell.
Indeed, Berry says Richmond has set records in hotel sales in the last three years. While only about 25 percent of that business is convention-related, he says hotel receipts in Richmond and the counties of Chesterfield, Henrico and Hanover topped $184 million in 2001 — the best year on record — and $181 million in 2002. This fiscal year, which ended June 30, receipts are expected to exceed $184 million, Berry says.
“We're having a great year,” he says.
While the trend away from flying and toward closer-to-home conventions would appear to make Richmond more competitive with nearby Hampton Roads and Williamsburg, Berry says he isn't worried.
In fact, Berry says the state could use another convention center. “I wish we had another one. I wish it was in Northern Virginia,” he says. “It would make [the state] greater as an international destination.” S