Tourism officials spending $5.8M to bring in convention

S.A. is seen as benefiting for years through more visitors and their money

San Antonio tourism officials are so excited about hosting the U.S. Travel Association’s annual conference in 2023 that they plan to spend at least $5.8 million to cover rent at the Convention Center and to pay for lavish parties for attendees and for travel journalists’ expenses.

While the city has been quietly budgeting a few million dollars each year for such giveaways to attract convention business, the 2023 meeting appears to be the biggest recipient ever. Officials say the multiyear plan was approved in 2015 — part of a package offered by the city to bring the travel association conference to San Antonio.

The initial $1 million was approved Thursday by the City Council as part of its $3.1 billion budget for the 12-month period starting Oct. 1. More public money is in the pipeline for the association’s convention, which is set for late May 2023. An additional $2.5 million to $3 million from the city’s hotel tax is scheduled to be included in the city’s fiscal 2023 budget, though it will require council approval next year, said Patricia Muzquiz Cantor, the city’s director of convention and sports facilities.

The rest is to come from funds being put aside by Visit San Antonio, the city’s private-public tourism marketing organization, the related San Antonio Tourist Public Improvement District and a planned fundraising effort.

Tourism officials say the spending will benefit San Antonio for years to come by drawing visitors and tourism spending.

But critics say it’s money that could otherwise be spent on direct tourism promotion through Visit San Antonio’s website, television ads and other means.

It could also pay for staff that could book other conferences and conventions. The tourism marketing organization furloughed half its 80-person staff in 2020 and closed its downtown offices when tourism and hotel tax revenue plummeted after COVID-19 shut down travel.

Or it could go to other public purposes such as arts organizations, which also have lost funding during the pandemic.

‘Chance like none other’

The multimillion-dollar contribution will benefit the city, said Marc Anderson, president and CEO of Visit San Antonio.

The estimated 6,000 meeting planners, travel agents, tour operators and travel journalists from around the globe who attend the 2023 conference will fall in love with San Antonio and will send tourists and business meetings to the city for years to come, he said.

“It’s unlike anything the city is going to see, thousands of attendees from Europe, Asia and even South America who probably have never been to Texas but definitely not to San Antonio,” Anderson said in an interview. “The chance for us to highlight our city, the diversity of our city, authenticity and realness of our city, is a chance like none other.”

He predicted that the conference will make San Antonio a big draw for Chinese tourists in particular. Visitors from Dallas and Houston currently drive most of the city’s tourism.

Anderson’s budget presentation to the City Council suggested that previous host cities’ airports saw increased international flights as a result. Some question that conclusion.

“There is no evidence that a several-day event will bring more international flights to San Antonio,” said Denver aviation consultant Michael Boyd.

San Antonio International Airport has no direct international flights — other than to Mexico — and is lagging other airports in restoring domestic flights lost during the pandemic.

Nevertheless, Anderson is making big plans for the travel association’s time in the city. He envisions opening and closing parties on the River Walk or at La Villita Historic Arts Village, though he said nothing has been set in stone and wants to preserve the element of surprise for attendees.

This much is certain: Conference participants will enjoy the food and drink of South Texas courtesy of Visit San Antonio.

Anderson said travel journalists from around the world will apply through the U.S. Travel Association for all-expenses-paid, Visit San Antonio-funded trips to attend the conference and tour the city.

‘It’s an arms race’

The spending highlights a littleknown reality of the convention business. Tourism officials across the U.S. are spending big in the battle for conventions and meetings in a nation with a surplus of convention space.

The dealing has been going on for years as city after city, including San Antonio, expanded their convention centers and built convention hotels.

Spending to attract conferences isn’t the only way the city is subsidizing tourism.

Since last July, it has contributed $10.4 million to the Grand Hyatt, the hotel connected to the Convention Center. The city is on the hook because it guaranteed $208 million in bonds issued in 2005 to build the hotel. Since the pandemic hit and its occupancy and revenue have tumbled, Hyatt Corp. has been unable to make the payments.

The giveaways to draw meetings are accelerating, spurred by concerns that COVID-19 and the ease of virtual meetings will cut the in-person convention business for years to come, said Heywood Sanders, a public policy professor at the University of Texas at San Antonio who has written extensively about the convention business.

“It’s an arms race,” he said of the competition between cities to attract meetings.

Now, a resurgent pandemic is leading to a new wave of meeting cancellations. This past week, Visit San Antonio said five conventions scheduled for this fall had been canceled because of the fastspreading delta variant. The events were expected to bring 17,500 visitors to the city. Since 2020, nearly 300 meetings scheduled for San Antonio have been canceled.

The U.S. Travel Association’s IPW conference — it was formerly known as the International Pow Wow — isn’t the only meeting group receiving funds from San Antonio.

The city budget approved Thursday awarded Visit San Antonio $2.5 million to lure conventions and meetings to San Antonio and an additional $1.3 million specifically for meetings at the Convention Center in fiscal 2022 and 2023.

On average, $2.5 million in incentives are issued on an annual basis to attract convention business, Muzquiz Cantor said. The average from 2015 to 2019 was $64,000. Ninety percent of the funds was used to cover rent for city facilities.

The largest incentive provided for any one convention between 2015 and 2019 was $326,000, Muzquiz

Cantor said.

A July report by consulting firm CSL found that between 2017 and 2019, conventions on average received a 29 percent discount off the list price for Convention Center rent.

The consultant, which was hired by the city, also looked at convention centers in eight other cities, including Austin. It found incentive rent breaks ranging from 10 percent to 50 percent.

Could have been more

While the city apparently has never paid as much to one group as it will to attract the IPW, the $5.8 million promised to the U.S. Travel Association is less than was originally committed. In 2015, the group was promised more than $8 million in incentives, said Richard Oliver, a spokesman for Visit San Antonio.

“The current pandemic caused us to re-evaluate this investment,” he said.

Muzquiz Cantor said the funding plan was amended after objections from City Councilman John Courage, who represents District 9 on the North Side.

In an interview, Courage said he understands the meeting’s potential, but is worried about the cost.

“It’s an extraordinarily high amount of money,” he said. “I can understand why they want to attract and impress that particular convention, but I am still concerned about the amount of money we need to spend to do that.”

New language in the agreement calls for Visit San Antonio to utilize already-budgeted funds and fundraising proceeds before any new city funds.

Oliver said Visit San Antonio and the Tourist Public Improvement

District, which is also funded by a tax on hotel stays in the city, have put aside $1.59 million and are planning to reserve an additional $2.5 million in case the City Council doesn’t approve more funding next year.

U.S. Travel Association officials would not discuss their deal with San Antonio or whether the convention is being scaled down because the city is contributing less than the original commitment. They emphasized that the association receives no direct payment from San Antonio.

The full amount the convention is getting from San Antonio was never presented to the public. A city budget presentation last month detailed only that the incentives will account for $1 million in the new budget. With one annual exception, Visit San Antonio board meetings aren’t open to the public.

But Oliver said the City Council, Mayor Ron Nirenberg and City Manager Erik Walsh have been aware of the financial commitment to the conference and its expected “powerful impact” on the city.

He said Nirenberg accompanied Visit San Antonio officials to the travel association’s 2018 conference in Denver. Nirenberg did not respond to requests for comment.

In a statement, Walsh said in part: “Helping our hospitality and tourism industry recover from the devastating losses brought on by the COVID-19 pandemic is critical. The City’s support was important to secure such a high-profile event in San Antonio, which will come at an opportune time and further spur recovery. This investment will support our local hospitality and tourism industry for years to

come.”

‘Smart decision’

Anderson joined Visit San Antonio about three months ago, and the deal for the conference was made before he arrived. But he said he supports the decision.

“And what a smart decision it was on behalf of the city and the former Convention and Visitors Bureau to make this decision in 2015,” he said. “Because to have this opportunity coming out of COVID recovery is, in my opinion, one of the best investments we can make.”

Before 2016, the city ran its own tourism marketing organization. It now outsources the work to Visit San Antonio.

The U.S. Travel Association would have bypassed San Antonio if incentives weren’t offered, Anderson said.

“They would go to another city,” he said.

At a City Council meeting Aug. 25, Anderson predicted that the association’s conference would reinvigorate tourism here.

He cited a study by consulting firm Rockport Analytics, which showed San Antonio would see 395,000 more international visitors in the three years after the travel show and $614 million in international spending. The numbers do not include visitors from Mexico.

Rockport, which was hired by Visit San Antonio to conduct the study, said its assumptions were based on a full recovery in international travel to the U.S. by 2023, a projection many travel analysts say is unrealistic.

In his budget presentation, Anderson told the City Council that tourism won’t return to pre-pandemic levels until 2024.

Sanders, the UTSA professor, said it’s difficult to attribute increases in tourism to any one conference. He noted that San Antonio International Airport currently cannot accommodate nonstop flights from Asia or Central Europe.

“We’re going to get 300,000 more people in the three years following the event?” he said. “It’s just slightly ridiculous hyperbole.”

John Kaatz, president of the consulting firm CSL, said that although the benefit may be hard to quantify, winning the Travel Association’s convention is a positive for the city.

“The beauty of it is that not only does San Antonio have a booth, but the entire city is on display,” he said.

In his budget presentation, Anderson said the host cities for past travel association gatherings saw increases in tourism afterward.

He said the group’s May 2018 conference in Denver led to the addition of 13 international flights at Denver International Airport. He said he based this on information from Visit Denver, the city’s tourism marketing organization.

Officials of Visit Denver did not respond to requests for comment. A spokeswoman for Denver International Airport said four international flights were added after May 2018.

She said the conference helped bolster tourism in Colorado and that the airport benefited, but she did not offer details.

Boyd, the aviation consultant, said the added flights to Denver International stem from the city’s strong economy, not the travel association conference.

“Denver is a huge market. It is the fourth-largest airport in the U.S. That’s why they got it,” Boyd said of the international flights.

Anderson, meanwhile, is in Las Vegas this weekend for the 2021 U.S. Travel Association conference.

He’ll be selling conventioneers on why they should come to San Antonio in 2023.

Kin Man Hui / Staff file photo Marc Anderson, president and CEO of Visit San Antonio, said the convention is “unlike anything the city is going to see, thousands of attendees from Europe, Asia and even South America.”

Staff file photo The Tower of the Americas looms over the Convention Center in 2015. San Antonio tourism officials plan to spend at least $5.8 million to host a U.S. Travel Association conference in 2023.