Tuesday, January 29, 2008

Unconventional Thinking Needed On Convention Center

Memphis Mayor Willie W. Herenton has now taken the new stadium off the front burner, and in its place, he’s now put forth an idea equally vexing - another expansion for the Memphis Cook Convention Center or a new convention center altogether.

Recently, we were talking to a friend in Portland, Oregon, who had taken a prominent public position questioning whether a new publicly-subsidized hotel there would in fact be the magic answer to his city’s convention ambitions. The story that he told has played out in cities across the U.S. as they participate in the arms race of new convention centers, convention hotels and expansion of convention center.

Even today, as think tanks dispute claims that convention centers are wise public investments, cities continue to escalate the competition to see who can spend the most and build the biggest. A new convention center proposed in Nashville is now projected to cost almost half a billion dollars, and city boosters are pushing the new building as if the economy of our capital city hangs in the balance.

Bigger Is Better

In recent years, about 40 cities have built new convention centers or expanded existing ones, totaling about $2.4 billion in public funding a year. It’s no surprise that in just over a 10-year period, convention space increased 51 percent.

Dreams of being a convention destination run deep in cities everywhere, and in pursuit of these dreams, promises and projections are more and more extravagant, like the ones for new hotel room nights in Richmond that ended up being off by two-thirds. Such overstatements are more the rules than the exception when it comes to convention centers.

Most remarkable of all, all these new facilities have come on line despite declines in conventions. Most of all, not even the most vocal supporter would argue that these buildings really do anything to address poverty, loss of middle class families, workforce challenges and population loss.

Cold Reality

We don’t mention this to throw cold water on Mayor Herenton’s announcement or to diminish the importance of the question that he’s raised. However, we do believe that he should take a step back before he begins.

Rather than beginning with the assumption that Memphis does indeed need a new or expanded convention center, what would really be valuable for Memphis is an independent, real market analysis (and not by the cadre of convention center cheerleading consultants who regularly churn out Pollyannish projections) that discerns what the Memphis niche can really be.

In fact, if City Hall officials are looking for the best model for doing this, we recommend that they schedule a meeting immediately with Steve Bares, guru for the Memphis Bioworks Foundation. With city after city throwing money into “feel good” biotechnology programs, he understood that only a handful of cities would succeed and it wouldn’t happen from a “build it and they will come” attitude that was prevalent across the U.S.

Finding The Niche

So, Mr. Bares took a more innovative and strategic approach. He identified Memphis’ unique assets, he evaluated locations with the best synergy and energy and he set up a process known for its accountability and measurements. In the end, because of it, Memphis now has a unique opportunity to succeed.

We’ve seen Mr. Bares’ explanation of the process that he and his colleagues at the Bioworks Foundation followed, and we think City Hall staffers who will conduct due diligence on his convention center idea would do well to use it as their template.

After all, if the past is the best predictor of the future, our convention center will be underperforming and disappointing. Perhaps, with a clear-eyed, skeptical analysis of our realistic opportunities, we can in fact finally find a position in the convention industry that makes sense.

Point Of Agreement

From where we sit, no city in the U.S. can compete with us when it comes to authenticity, attractions and attitude. It just seems reasonable that we can develop a market-based niche that creates the kind of convergence that brings us new success and a new position in the marketplace.

There is one thing on which we can surely all agree: It is hard to find a major convention center that provides an experience that is as dismal and unappealing as ours. Built apparently from German bunker blueprints and with the attendant lack of charm, the convention center cannot create the same kind of ambiance as the striking glass and steel centers that open to the surrounding urban fabric of its city.

It’s the difference in a building that looks outward and one that turns inward. Unfortunately, for us, Memphis Cook Convention Center looks inward with a vengence, and as a result, there is no connectivity with the city that it serves.

Starting Over

Because of this, we were particularly intrigued by Mayor Herenton’s suggestion that perhaps a new convention center makes more sense. He also said that he would appoint a committee to evaluate our city’s options. We suggest that they start by digging out the study that was conducted before the convention center was expanded.

Back then, local government and the board of the convention center wanted to know what their best course of action was to make the aging facility more competitive. After months of looking at the options and weighing alternatives, the consultant came back with a startling conclusion.

His verdict: Close the existing convention center and build a new one in the area of the Peabody Hotel.

Go Where The Market Is

Essentially, the report said that the energy downtown and the real convention anchors were not at Main and Poplar but at Third and Union, and if Memphis wanted to be more successful, it needed to respond to the market and put the facility where the market wanted it.

In the end, the decision made by city and county governments wasn’t based on the analysis but on politics. There was concern by government officials about the negative impact on the Pinch District by the move, the future of the public investments made in the area and the perception of abandoning the north end of downtown.

The report was quietly filed away. The expansion was given the go-ahead. Its cost and schedule would end up being twice construction estimates, and the convention center expansion became the poster child for public waste and incompetence.

Now For The Hard Part

Looking back, it seems clear that the report was right. The Pinch District continued to flounder even with the expanded convention center, and the conventioneers walking from the convention center to where the action is in the Peabody Hotel area are testament to the report’s recommendations.

It’s worth resurrecting that report and reviewing it again. However, regardless of what decision is made about a convention center, that’s the easy part of the analysis. The hard part is figuring out how to pay for it.

The hotel-motel tax is already stretched to the breaking point, and it’s almost certain that new tax sources would be needed to pay the massive price tag that this project would have. In fact, if a new convention center is built, its cost will easily surpass the public building project that was previously the most expensive – FedEx Forum.


There’s already a tourism development zone downtown and it’s hard to imagine how its revenues could support this level of bonded indebtedness. Maybe there’s potential for a TIF (Tax Increment Financing) district, but with so many tax sources already tapped to pay for the $92 million expansion of the convention center and the new arena, conventional wisdom is that city government would need to create some new revenue sources (translation: new taxes).

Even with a solution about the financing, the hardest problem remains: Memphis’ need for more first-class rooms in full-service hotels. More than anything else, it’s our city’s inability to supply the required number of contiguous hotel rooms that strangles many convention center bids.

Just think about it. Some major conventions require 1,500 full service hotel rooms, but the Marriott next to the convention center has only 600. That means that people have to be shuttled all over Memphis to the 900 other rooms that are needed.

Just The Facts

Because of this, any analysis undertaken by city government needs to answer the question of how Memphis responds to this long-standing need. A bigger and better convention center means nothing without the rooms that are convenient and attractive for conventioneers.

It’s too early to take sides on the convention center issue, but if Mayor Herenton will undertake the kind of serious, independent analysis that is needed on all aspects of this issue, he will have done all of us a service,

Finally, we could separate fact from fiction on this issue.


Midtown said...

I agree that just building a new convention center isn't a great idea. We've poured more than enough public money into downtown without starting another grand project.

As someone who has attended several conventions, I can say that you're correct in that having a room close to the convention is a priority ... and if not that, then easy and cheap public transportation. Otherwise there needs to be organized transport such as shuttle vans.

So getting another hotel to locate downtown would be a better idea than building a new convention center.

The next thing I look for are places to eat both near the convention site and my hotel.

My question is about the needs of the convention organizers. Is the current building sufficient? Is it so out-of-date? If it is, could it be updated quicker and cheaper than building another one?

If you locate a new one at Third and Union, that may help the Peabody but doesn't it hurt the Marriott?

And I see a lot of convention goers on the Trolley. Putting a new one at Third and Union could hurt the ridership of the Trolley as well.

My initial reaction is to update the current one if needed. Not to favor one hotel over the other. I would really need to be convinced spend another huge bundle of money.

Anonymous said...

If Herenton was there when the report was written, why did he let the expansion go ahead back when he could have done something about the "land locked" location of athe convention center.

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