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Meetings
and Conventions
“In a sense it’s the best economic stimulus a city can get. When
1,000-plus delegates or corporate travelers with expense accounts come
to your city for a few days, stay in hotels, eat at your restaurants and
shop in your stores and then leave, you don’t have to school their
children or build roads for them.”
Bill Krueger,
director of CSL International in Minneapolis,
a firm specializing in feasibility studies for convention centers.
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Money
Magnets
Cities big and small across the state
are gambling that new convention
centers will boost local economies
By Laura Williams-Tracy |
Riverfront Convention Center in New Bern opened in August 2000 and was
profitable in its second year, one year earlier than expected. Also, Why
Raleigh is eyeing Charlotte as it plans a new convention center. |
Grady-White
Boats Inc. puts on an impressive display every year of its 19 lines of
sport-fishing boats. But last fall’s event was the first time the company was
able to hold its annual showcase and dealer conference in its hometown. That’s
because another impressive craft also was making its debut – the
Greenville-Pitt County Convention Center.
Before the convention center opened, there wasn’t a facility large enough for
Grady-White Boats to display its product line in Greenville. All the money the
company spent staging the event, plus the hotel nights and meals for the dealers
attending the show, were spent elsewhere. The same was true for ElectriCities, a
trade organization for public power companies, which stopped holding its annual
convention in Greenville in 1988 when its 500 delegates outgrew the city’s
facilities. With the new convention center establishing Greenville as a business
and education hub east of I-95, the ElectriCities convention is coming back to
town in 2004.
Like several other cities across the state, Greenville learned the simple lesson
that it’s hard to market yourself as a meetings and convention destination if
you don’t have hotels and meeting space to offer. And the city learned
something about selling the sizzle along with the steak — that if you can
market other local attractions like museums, a waterfront or a pro sports team
— even a regional convention center can attract state and national conventions
and trade shows.
Cities around North Carolina now are taking introspective looks at what they
have to offer and studying whether to build new convention centers or improve
the ones they already have. Raleigh and Wilmington are among the state’s
larger cities on a fast track to become major players into the meetings market.
Jacksonville, Wilson, Morehead City and Elizabeth City all have recently
explored the issue, with some moving ahead.
While the effects of 9/11 have discouraged hotel development, municipalities
have seen that the time is ripe for public investment in convention center
construction.
Even though convention center and trade show attendance has slowed dramatically
since its heyday in the early 1990s, the appeal of the convention-goers’ quick
economic jolt to a city is an attractive lure for many municipalities. Meetings
and conventions are a $102.3 billion a year industry, according to the
Convention Industry Council, and account for one in every eight business trips.
“In a sense it’s the best economic stimulus a city can get,” says Bill
Krueger, director of CSL International in Minneapolis, a firm specializing in
feasibility studies for convention centers. “When 1,000-plus delegates or
corporate travelers with expense accounts come to your city for a few days, stay
in hotels, eat at your restaurants and shop in your stores and then leave, you
don’t have to school their children or build roads for them.”
In fact, Krueger says, many cities see convention business as a sound investment
to increase their tax revenue.
Going After SMERFs
Charlotte, which opened a new convention center in 1995 and this spring opened
an accompanying four-star, 700-room Westin Hotel, competes on a national level
to host major conventions with thousands of delegates. In May 2002, the Queen
City hosted its most prestigious convention yet — the American Institute of
Architects, a convention that more typically chooses to frequent cities such as
San Francisco and Chicago. The convention drew 15,000 architects, designers,
engineers and developers and generated an estimated $4 million in direct
delegate spending over the three-day event.
The state’s smaller yet sizeable cities, such as Winston-Salem and Greensboro,
make their mark with what’s commonly referred to as the SMERF market. The term
refers to sports, military, education, religious and fraternal associations that
tend to look for regional destinations within a reasonable driving distance.
Most of the cities that recently have invested in new convention centers, such
as Greenville and New Bern, are looking to become players in the SMERF market.
That’s also the down-the-line goal for cities such as Raleigh and Wilmington
when they get new facilities built.
Every city and every market has a different advantage, and each city must
examine its assets to determine whether it can compete for meetings business,
says Kelly May, vice president of the Burlington/Alamance County Convention and
Visitors Bureau and president of the North Carolina Association of Convention
and Visitors Bureaus. “You take advantage of the amenities your city has,”
says May. “It’s all about finding out who you are and what you have to
sell.”
Wilmington thinks its popularity as a beach vacation destination would easily
translate into success as a conventions destination — if only it had the
meeting space and nearby hotel rooms to offer.
The city boasts some of the state’s most popular travel destinations,
including miles of beaches and the Battleship North Carolina.
Wilmington’s existing Coastline Convention Center (left), a conversion
of a historic warehouse with 150 hotel rooms nearby, simply isn’t large enough
to draw large conventions capable of making a significant economic impact, says
Dale Smith, chairman of the task force studying a new Wilmington convention
center.
Beginning in March, New Hanover County began collecting an additional 3 percent
hotel room occupancy tax in anticipation of building a new convention center
large enough to host as many as 2,000 delegates. Smith says conventions of that
size wanting to meet at the coast are currently coming up short in North
Carolina and going south to Myrtle Beach.
Two years ago Wilmington had an outside consultant study the feasibility of a
downtown convention center, and it is now in the process of updating that study.
There’s no site yet, nor has a price tag been attached to the project, but
legislation to boost the occupancy tax states that Wilmington needs to have
bricks and mortar coming together within three years. A new center is slated to
open in June 2006 and it’s expected to be 120,000 square feet.
“A new convention center isn’t just good for Wilmington,” says Smith.
“It’s good for the whole region, especially if it keeps groups from going
out of state to hold their meetings.”
Profiting from Convention Centers
New Bern, which opened its Riverfront Convention Center in August 2000, found
that its vacation city appeal also makes it an attractive site for conventions.
The proof was in the accounting. Riverfront wasn’t expected to begin making a
profit until its third year of operation, but to the surprise of many it broke
into the black after only one year.
Eight years ago the city’s Tourism Development Authority hired a consultant to
do a feasibility study to determine the market for New Bern as a meetings site.
As the home of Tryon Palace, North Carolina’s colonial capital, the city
already had an impressive resume as a tourist destination as well as an
important cluster of 500 hotel rooms within walking distance of the eventual
convention center site.
The 45,000-square-foot center is built on the waterfront of the Neuse River and
features a 12,000-square-foot ballroom and can accommodate groups of 1,350
people. More than 500 guest rooms are within walking distance of the convention
center and 1,400 are within a close drive.
As happens in many cities contemplating a new convention center, New Bern
officials faced some opposition initially from local hotel owners and managers
who saw the center as both a possible boon for their business but also as a
significant source of competition.
To assuage concerns, New Bern established strict guidelines to minimize
competition with local hotels, says Sandy Richardson, director of the New Bern
Convention Center and Convention and Visitors Bureau.
Local businesses and groups cannot confirm space in the convention center until
nine months before their event, Richardson says. That restriction allows outside
associations and businesses to have first priority. The convention center does
not vary its rate for local businesses, and the center does not solicit business
locally.
Such guidelines keep the convention center on task to generate economic impact
for the city by drawing in business from outside the county, says Richardson.
For some cities, competition between government-run meeting facilities and
private hotels remains.
Statesville opened a city-owned Civic Center three years ago in its historic
downtown area. At 30,000 square feet, the facility is large enough to host 1,500
people at one event but doesn’t have the smaller breakout rooms that many
convention planners want. Statesville, at the crux of I-77 and I-40, also tends
to draw attention from the interstates where all of its hotels are located.
Thus, the building is promoted to mostly local groups looking for day
conferences. “The hotels resisted the building and they still do today,”
says James Meacham, CEO of the Statesville Convention and Visitors Bureau.
“The Civic Center is a wonderful building for small conferences, but it
doesn’t provide much benefit for the hotels.”
Hickory, on the other hand, opened its Metro Convention Center in 1997 near the
interstate to take advantage of the highway traffic already passing through.
Local hotels also clustered at the interstate serve the 70,000-square-foot
facility.
Executive Manager Steven Rosenblatt says the facility, which replaced a private
meeting hall that closed in the mid-1990s, allows the city to hold on to regular
trade shows that otherwise would have been lost. “Overall, the convention
center has performed above expectations,” says Rosenblatt. “We found a need
to expand in just three years — I had figured it might be six or seven — and
we are already looking at a second expansion.”
Mustering the Political Will
While many cities would like to have a bustling convention business, the
mountain often is too tall to climb. For some it’s difficult to assemble the
entire product, which includes not just the convention center but hotel rooms,
restaurants and cultural amenities to draw interest, says CSL International’s
Krueger.
Meeting planners make their living by picking destinations that delegates will
want to visit. If a venue isn’t successful in drawing delegates, the meeting
planner is out of a job and the city isn’t likely to continue to draw
business.
Other cities find it difficult to muster the political will to spend the money
— from $200 to $350 per square foot — to bring a convention center online.
Greenville found a way to avoid competing with local hotels and at the same time
limit the necessary public investment to open a new convention center in May
2002. The city already had hotels in the area with adequate meeting space, but
lacked a large exhibit hall.
To build an entirely publicly funded project would have cost $18 million or
more, says Debbie Vargas, CEO of the Greenville-Pitt County Convention and
Visitors Bureau. Instead, the city invested money from the county’s hotel
occupancy tax to acquire acreage next to the Hilton Greenville, a 143-guest-room
hotel, and the City Hotel and Bistro, with 193 guest rooms. The city then built
a new exhibit hall. The Hilton, in turn, agreed to expand its ballrooms and to
provide all food and beverage needs for the convention center.
By joining with private industry and leveraging the facilities already in town,
the facility was completed for $9 million, and existing hotels weren’t
threatened by competition.
Nick Glennon, director of marketing for Greenville Convention Center, says that
while an occupancy tax paid for construction of the facility, all operating
risks are assumed by Exhibit Hall Managers, a management company of the Hilton.
“Nobody else has structured their arrangement like this,” says Glennon.
The Greenville Convention Center has more than 74,000 square feet of meeting
space, 40,000 square feet of exhibit area, and advanced audio visual and
technical amenities. Nearby are 330 guest rooms.
“The partnership allowed us to leverage what we already had with new
construction and the hotel rooms right there,” says Vargas. “The hotels
already had an established client base. We’ve been able to make everyone
happy.”
Regional
jealousies being what they are, not many people in Raleigh are willing to admit
that they’re envious of Charlotte and eager to follow in the Queen City’s
footsteps. That is, except when it comes to convention centers and convention
center hotels.
Currently, Raleigh is studying taking the expensive step of tearing down its
26-year-old convention center and building a new $182 million facility. And as
the plans take shape, many city and Wake County officials are going to school on
Charlotte.
Eight years ago the Charlotte Convention Center opened in uptown, and today more
people visit Charlotte to attend a convention or business meeting than for
leisure travel, such as a visit to Carowinds. The new convention center put
Charlotte on the meeting planner’s map, but it fell short of earning the city
a reputation as a premier convention site.
That seems to be changing, however, with the opening of the stylish new Westin
Hotel adjacent to the Charlotte Convention Center. The new hotel is the largest
recently constructed in the Southeast. The opening of the 25-story Westin Hotel
may hold a lesson for Raleigh, which is hoping to build a bigger presence in the
meetings market by building both a new convention center and a new downtown
hotel at the same time.
“Ideally you want to get the convention center and the nearby hotel rooms in
place at the same time,” says Bill Krueger, director of CSL International, a
Minneapolis-based consulting firm that performs convention center feasibility
studies and advises municipalities on whether to make a public investment to
lure meetings business.
In Charlotte’s case, the lack of a full-service hotel offering large blocks of
rooms to convention-goers was a “glaring deficiency in that market,” says
Krueger.
The same conclusion was reached by a committee formed by the Charlotte City
Council in 1997 to explore ways to maximize the city’s investment in the
convention center, which by that point had been open for two years with
disappointing results.
To make the hotel a reality and to help solve a parking shortage, the city
contributed $16 million toward the development as well as $25 million through a
bond issue supported through parking payments from the city.
With financial contributions from local government, the Charlotte Convention and
Visitors Bureau gained leverage to use the hotel to attract more business to the
convention center. While some hotels opt to make only a small number of room
available for conventions — choosing instead to reserve rooms for
higher-paying business travelers — an agreement between the CCVB and the
Westin gives CCVB the right for 14 days each month to require the Westin to make
a block of 600 rooms available for convention-goers. Having that card to play
makes it easier for city convention promoters to ensure that groups can stay
together in one hotel rather than being spread across different hotels.
The Westin, a $143 million, 700-room structure, opened in April and is expected
to add $1.5 million to the local economy each year and to boost the city’s
marketability.
Having learned from Charlotte’s experience, leaders in the effort to replace
Raleigh’s aging Convention and Conference Center say it will be critical to
include a convention center hotel as a key part of the overall plan.
The political will for a new Raleigh convention center is strong, says Dave
Heinl, president and CEO of the Greater Raleigh Convention and Visitors Bureau,
but a hotel is crucial.
Currently there are only 616 downtown hotel rooms in proximity of the proposed
convention center site — a minimal number that makes the city a hard sell for
meetings business, says Heinl.
The city is in discussions with at least one developer, says Heinl, who declined
to divulge more about negotiations. Signing a deal with a hotel developer may
not be easy, given the current sluggish business travel environment and the
lingering travel effects of 9/11.
Heinl admits the private market may be skittish about a convention center hotel,
which can be a higher business risk because it commits large blocks of rooms to
the convention center events and may not always be able to fill available
capacity with other regular business travelers.
Still, he says, Raleigh has more to offer convention-goers than ever, including
the RBC Center, the Exploris museum and the BTI Center for the Performing Arts
— all amenities that meeting planners are looking for in a popular venue.
And if the city gets a successful mix of convention center and guest rooms, the
economic benefits will reverberate locally and statewide, Heinl says.
The convention center is expected to provide $259 million in additional economic
benefit in Raleigh and Wake County and $340 million statewide over the first
five years as post-convention trips around the state put money in other city’s
coffers.
“This is the best opportunity we’ve ever had” to replace the Raleigh
Convention and Conference Center, says Heinl. “The second largest city in the
state has needed this for a long time. It’s certainly overdue.” —
Laura Williams-Tracy
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