Monday, April 20, 2009

COGIC Exodus May Hint At Genesis Of Problem

Perhaps, the main lesson from the COGIC move of its convention to St. Louis isn’t that we took the saints for granted.

It just might be that more to the point, we’re guilty of taking our tourism industry for granted.

In recent years, our tourism and convention marketing – funded primarily by city and county governments through a hotel-motel tax that partly goes to the Memphis Convention & Visitors Bureau – has flattened. As a result, our impact in the marketplace is not only stagnant. We’re losing ground.

It’s a long way from the ambition that gave birth to the so-called Superfund in 1984 that pumped $1.5 million in public-private funding for an amped-up CVB, then an afterthought in our economic development planning. The new vision was one of the milestones of an era when Ron Terry, then-chairman of the board of First Tennessee Bank, was the spark for so many progressive ideas in Memphis.

Impressive ROI

He and his fellow business leaders convinced city and county mayors to support an amendment to the state hotel-motel tax law that added the CVB as a recipient of funding with promised funding increases of 5% a year. According to county finance staff, despite the legal assurances, the CVB in recent years has not received its budget increases in recent years at the request of a county government desperate to ease its budgetary pressures.

Way back in 1984, Memphis had big ambitions about our city staking out a prominent place in the growing tourism industry. Back then, tourism marketing was modest and limited, and the tourism industry employed about 16,700 people and had an economic impact of $745 million.

The vision was to leverage Memphis’ distinctiveness and its heritage to elevate the tourism industry to a new level. It exceeded beyond all expectations. Today, the “hospitality industry” employs about 50,000 people and has an economic impact of more than $2.5 billion annually.

That’s an impressive return on a budget that’s about half of Nashville and Pigeon Forge and one-third of St. Louis, now home at least for one year for the Church of God in Christ convocation that has never met anywhere but Memphis. The move seems the result of a power plan within the denomination and was a foregone conclusion when the committee met to take a vote on the move.

The Fall Of Jerusalem

Sadly, COGIC did not even allow Memphis to make a pitch to keep the convocation, and in fact, when CVB president Kevin Kane learned that the meeting was under way, he rushed to the meeting site, whereupon he was escorted off the property. It was a sad commentary by the church about its respect for its home city, once called Jerusalem by church fathers.

There’s much grumbling among members about the heavy-handed treatment of Memphis, and there are growing suspicions that the decision was made on the basis of promises for special perks in St. Louis for the church hierarchy.

The truth is that Memphis has done about all that it could, short of a government subsidy to the gathering. The CVB was paying the rent on the Memphis Cook Convention Center, which seems strange since the facility also receives hotel-motel taxes and the rent payments essentially moved money from one pocket to another.

According to state law, the county hotel-motel tax originally could only be spent on the operations and bond debt for the convention center and for the annual budget of the CVB. In 1995, The Pyramid was added to the law to get $11.5 million to build out the space on the north side of the facility for The Wonders Cultural Series.

Losing Ground

At the time, tourism and convention officials and hoteliers, whose accommodations produce the special tax in the first place, were assured that the use of these funds for The Pyramid would not result in any future problems in funding the CVB.

That said, there was also $500,000 for renovation of the DeFrank Hall in the convention center, mainly for an acoustic shell that was to improve the sound for the Memphis Symphony. Later, $200,000 more was appropriated to pay the balance of the bill for the acoustic shell and $685,000 was loaned for the video replay board at The Pyramid. In the most complicated financing plan ever conceived in Memphis, hotel-motel tax was funneled to pay for FedExForum while revenues from the Tourism Development Zone were used to offset them, but this was not to affect CVB funds.

Key leaders of the hotel industry believe now that the tourism industry relied too much on assurances from county officials who no longer are around to verify the agreements and promises to make the CVB “whole.” As a result, county finance staffers said that in the past five years, the CVB has essentially operated on a flat budget from the county hotel-motel tax.

Today, the CVB budget is #51 in the U.S.

Other key measurements are rooms within mile of convention center, #40; total hotel/motel rooms, #34; convention center exhibition space, #40; and largest ballroom, #41. We are falling in our ability to compete with most of the other top 50 cities in our ability to attract conventions.

Getting The Questions Right

But the challenge is about more than just a better convention center (and regardless of any investigation, if it is built, it should be in the area of Union and Fourth), Memphis is desperate for full-service hotels within walking distance of the convention center. There are two full-service hotels in downtown Memphis with a total of 1,100 rooms. By way of comparison, there are two hotels in Tunica with more than 1,200 rooms each and three others have 500 rooms apiece. The total number of hotel rooms in the resort area of Tunica is 6,000.

Memphis is at a significant competitive disadvantage because of the lack of hotels with room blocks capable of accommodating 500 people or more and a downtown committable block of 3,500 rooms (we now havea 1,800 in 10 different hotels) needed for major conventions. In other words, unless we can figure a way to lure a hotel of about 700 rooms, it’s wishful thinking that a larger convention center is going to solve our problems, despite conventioneers’ attractive daily spending of more than $300.

The Memphis convention center expansion – setting aside for the moment the fact that it cost twice its original projection and took twice as long to complete – was the architectural equivalent of putting lipstick on a pig (no political commentary intended). The expansion did little to offset the gloomy interior and the gloomier meeting experience in the convention center, and in truth, the Cannon Center for the Performing Arts – as much of an upgrade as it was from the old auditorium - is equally meager when compared to similar halls in other cities such as Nashville.

But more fundamental questions have to be answered before a new convention center is even considered: What is our niche in the convention industry? Is it realistic to think that we’ll ever be a first-tier convention destination? Can a new convention center really improve our competitive position? What would we have to do to attract a new major full-service hotel?

Taking Care Of Tourism

We are now at best a third-tier convention city, and we have become a skeptical lot. After all, we were told that if we had a convention center hotel, it would make us a successful convention site. Then, we were told that we needed to expand the convention center. Then, we were told that we needed an expanded convention center hotel. Then, we…well, you get the picture.

So, what we really need is to determine what Memphis really needs and what results are realistic. Most of all, we need to consider warnings by the Brookings Institution that the arms race among cities is producing mammoth investments in convention centers that can never pay off.

All of these are important questions, but first, we need to answer the question of how we can set higher ambitions for our tourism industry and what we can do to achieve them. It's normal that when we talk about economic development plans here, we immediately center on the Greater Memphis Chamber and the Memphis Fast Forward plan set out to raise the money so it could be competitive.

It seems like in the wake of the COGIC exit, we now need to show equal attention to making sure our tourism marketing is as well.


Anonymous said...

I've dealt with hotel contracts around the globe, and I am often ashamed and disappointed with the way our "boutique" local hotels treat business. Until Memphis' hotels learn to compete on a national scale instead of with a rural mentality, we will never be able to attract and KEEP return visitors.

It's unfortunate that the Westin didn't build more meeting space, because the Starwood group understands customer service across all of their brands. And I do hope that more upscale brands will take a look at the possibility that Memphis holds for the travel industry.

Michael said...

Having adequate hotel and other facilities is only half the equation. The other half is there being a reason for people to want to come to see Memphis. No matter what we say, Memphis actually disprespects its own history. We don't believe in ourselves. We'd rather emulate or transplant the attractions and destinations we envied in some other city -- or hire people in other cities and even other countries to design something "world-class" for us. Tom, I just emailed you some material on this very point.

Anonymous said...

Ill-mannered people and too many "courtesy cars" with "park-anywhere" immunity. Good riddance to them.

Anonymous said...

anybody want to buy a Great Big feathered hat?

Zippy the giver said...

Develop the industry that brings people in, not ourism per say, but, something that is attractive, if it's just the city, that isn't enough, if it's just the tourism stuff, it's not enough, maybe if we released the pyramid from it's shackles and the USSR style entertainment booking policy of Forum dominance, maybe we could book things that more than only one type of person wants to see.
Concerts bring people in, but, we're in bed with the casinos and can't compete.
Bye Bye future, just move Memphis to Tunica and call it a day.

Anonymous said...

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