Boon or boondoggle: Convention center expansion plan draws fire
UT-San Antonio prof, consultant disagree on bigger-is-better claim.
A proposed expansion plan for the Austin Convention Center has rekindled a long-running, nationwide debate between an academic and a consultant, raising questions about the benefits a larger facility would deliver.
In one corner, there’s Charlie Johnson, head of Johnson Consulting and one of the country’s leading consultants on the economic impact of convention centers. His projections say more space would draw significantly more visitors and generate more hotel taxes for city coffers.
In the other corner, there’s Heywood Sanders, a public policy professor at the University of Texas-San Antonio and a regular critic of public spending on convention facilities. He suggests the forecasts are overblown and that city leaders should weigh expansion plans against other possible uses of prime downtown real estate.
Their dispute has boiled up in a few cities across the country, including Charlotte, N.C., and Des Moines, Iowa.
And now it has arrived in
Austin, where a master plan for the convention center proposes several expansion options — including a preferred proposal that would add a hotel and roughly double the facility’s exhibition and meeting space. That preferred expansion would cover a three-block area immediately west of the current convention center and cost an estimated $405.3 million to build.
However, the Austin City Council on Thursday night declined to approve the master plan, opting instead to explore it further and sending it back to the Economic Opportunity Committee. A motion from Mayor Steve Adler directed city staff to gather more information on more than a dozen factors, including traffic impacts, possible community uses of the facility and how the project’s cost might affect tax money that could go to other venues and events.
The motion absorbed questions raised by several council members, Adler said, and it reflected most of the concerns brought by residents who addressed the council Thursday.
“We really ask you to consider that this is the largest civic project that you have before you, and probably will be before you in the next five to 10 years,” downtown resident Lynn Meredith said. “You have total control over this project. ... This is your land, so we ask you to take great consideration and take your time when thinking about this project.”
One of the council’s top research directives — which sought more information on future convention industry and market trends — went directly to the core dispute between Johnson and Sanders. As in other cities, their beef in Austin has coalesced around Johnson’s projections of the additional visitors, hotel stays and hotel taxes such a large expansion would generate.
About the only thing that’s clear in their debate, though, is the lack of solid and consistent data. One number suggests failure; another suggests success; and still another suggests both at the same time, depending on whom you ask.
For his part, Sanders takes aim at the projections Johnson Consulting compiled for the various expansion options, starting with growth estimates for annual room nights — the number of nights people spend in area hotels due to convention center activity.
Johnson’s analysis suggests the preferred plan would boost convention-related room nights from 185,850 in fiscal 2013 to about 311,270 eight years after construction is completed.
Sanders, however, points to estimates Johnson compiled for Austin officials back in 1997, when the city hired him to analyze the convention center expansion it would eventually complete in 2002. Back then, Johnson estimated the project would boost convention-related room nights from 150,500 to 332,600.
If Austin only reached 185,850 room nights in fiscal 2013, as noted in the current report, Sanders argues, it fell far short of Johnson’s predictions.
Attendance figures suggest a similar shortfall. The 1997 report predicted that convention and trade show attendance would rise from 150,000 to 329,000 in 2005. By fiscal 2013, the center’s attendance for conventions and trade shows was 186,675, according to the current analysis.
“Johnson’s forecasts have a way of not happening, simply put,” Sanders said. “That is not uncommon for cities. The norm when it comes to convention center performance (is that) you don’t get what those consultants say.”
But Johnson and convention center officials counter that Sanders’ comparisons between 1997 and 2015 are misleading, especially when it comes to room nights.
In the late 1990s, most such event-related hotel bookings would go through the official blocks reserved for the events, and thus be captured as event-related room nights. Now, with the advent of online hotel and short-term rental bookings, more people book outside those blocks and aren’t captured in the official numbers, they say.
Events at convention centers generate anywhere from 20 percent to 45 percent more room nights than the official data show, Johnson says. A separate study released earlier this year by the company Tourism Economics found that a third of attendees at 115 events booked their rooms outside the official block.
Johnson said his analysis includes estimates of those stays as well.
“That’s a much higher number, oftentimes,” he said, “especially when an event repeats in the city.”
With that figure added in, room nights related to all types of events at the facility were closer to 242,000 in fiscal 2013, said Mark Tester, director of the city’s Austin Convention Center Department. That increased to almost 301,000 in the most recent fiscal year, according to city documents.
In addition, Tester said, those figures don’t reflect the impact of days the convention center purposely goes dark in deference to other large events that need hotel space — for example, the Formula One U.S. Grand Prix.
“We often make decisions that negatively affect our numbers, knowing it’s better for the city and hotels, so we get more money” in hotel taxes, he said.
He and Johnson suggest tax dollars as a better gauge for the convention center’s impact. Johnson’s 1997 report projected the Convention Center Tax Fund — a 4.5 percent portion of hotel occupancy taxes — to hit $8.7 million in fiscal 2005. According to the city, actual revenue for that fund was $15 million that year.
But the tax data note only the total revenue generated through that tax fund, not the portion generated solely through convention center-related activity. So how much of those gains stemmed from the convention center’s expansion and how much from the rise in Austin’s popularity as a tourist and event destination?
“There’s no way to put a true number on how much is attributable to us,” Tester said.
For Sanders and other critics, that makes tax projections an imprecise measure of the impact an expansion might provide.
No one disputes that Austin’s hotel demand has grown in recent years, but that growth stems from myriad factors, many unrelated to the convention center. And to the extent the data do tell a story, Sanders says, the projections fail to account for troubling trends across the convention industry. According to his research, convention center space nationwide rose 37 percent from 2000 to 2014. But over the same period, convention attendance increased just 4 percent.
Too often, he said, cities pump hundreds of millions of dollars into a resource in which supply already outpaces demand. And in Austin, he says, that level of spending doesn’t match the convention center’s impact on hotel occupancy.
Based on the city’s data, Sanders figures that convention center events contributed about 10 percent of all the room nights in downtown Austin hotels during fiscal 2013. If you expand that to consider all the hotels in the area, people going to convention center events accounted for slightly more than 2 percent of the room nights that year.
“You have to ask the question: What’s the likelihood of moving the needle on that number?” Sanders said.
He suggests Austin’s city leaders consider the master plan in context with other possible uses for those valuable downtown lots.
“The smorgasbord has one dish on it,” Sanders said. “It’s offered to the council as convention center expansion or nothing.”