Uncertainty dogs convention center

THE BALTIMORE SUN

Local tourism officials, who won $150 million in taxpayer money to double the size of the Baltimore Convention Center, are now warning that the investment may not pay off without additional funds to promote it.

But there's a dispute over where that money should come from, and whether even a heavily advertised convention center can live up to its promise of creating 6,600 new jobs and adding $30 million a year in new taxes by the year 2000.

For as workers dig the foundation of an addition to the 15-year-old hall on West Pratt Street, dozens of cities are undergoing similar expansions. The upshot: A nationwide marketing war threatens to erupt over convention business.

"This is a very big concern to us in the industry," said Gary A. Oster, general manager of the Stouffer Harborplace Hotel. "We are going to open a newly expanded convention center and then whisper."

Even if Baltimore is successful in winning business, some independent analysts warn that the competition may have changed the calculus used to make the rosy economic promises.

"There are a lot of underused convention centers in other cities," said Marc Levine, a University of Wisconsin historian who has studied Baltimore's investment in things like the convention center.

"All the experts in the field agree [the payback] is very uncertain," he said.

For their part, local tourism officials say they need more promotion money to ensure they can fill the 300,000 square feet of exhibit space that will become available in 1996.

And, after being rebuffed thus far, they plan to launch a campaign again next year to convince the city and state, as well as area businesses.

The private, nonprofit Baltimore Area Convention and Visitors Association has spent nearly $3 million a year since 1989 to promote both Baltimore tourism and the convention center.

The biggest chunk -- about $2.4 million -- is a grant from the city government. Local businesses kick in about $400,000 a year in membership dues and fees for services.

More than half the total budget -- $1.6 million -- goes for salaries and benefits at the 40-employee tourism office. Another big expenditure: sending staffers to trade shows for meeting and event planners. Booths, supplies and staff expenses for those events can top $20,000 apiece, according to association officials.

What's left pays for other marketing efforts like a $42,000 video about the new center and $40,000 worth of advertisements in publications for travel agents and meeting planners.

And that's not adequate, insists Wayne Chappell, the association's executive director. One reason: The budget hasn't risen with inflation. In a cost-cutting move, the office laid off five workers two years ago, Mr. Chappell said.

Also, other cities are outspending and outpromoting Baltimore. Baltimore's budget, while not the smallest, is comparatively lower than that of cities with centers of about the same size.

San Antonio, for instance, will spend $8.6 million on tourism and convention promotion this year -- including $1 million a year on advertisements for its 241,000-square-foot convention center.

Philadelphia, which expanded its center to 435,000 square feet last year, spent about $4 million on convention marketing alone last year -- and another $2 million on general tourism promotions.

In addition, Baltimore has suffered a drop in convention bookings as business shifted to larger centers. The number of major events here fell from 105 in 1991 to 89 in the fiscal year that ended in June. That falloff -- and the assumption that convention centers pay off economically -- was the main argument employed to convince the city and state to fund an expansion.

"Every city in the U.S. believes there is a pot of gold at the end of the convention rainbow," said R. C. Staab, vice president of the Philadelphia Convention and Visitors Association.

And that's the problem.

The number of cities with public convention centers has tripled to about 350 since the 1970s. And because of expansions in cities ranging in size from Chicago to Duluth, Ga., the amount of space available for conventions has quadrupled to about 61 million square feet.

"Everybody views this as a way to save downtown," said Heywood Sanders, a Maryland native who is a political science ** professor at Trinity University in San Antonio.

"They have made the political decision to do whatever it takes" to make their centers a success, despite signs that demand for space may be leveling off.

Trade show attendance up

Trade show attendance has doubled since 1989, but attendance at conventions and meetings fell about 10 percent, according to trade publications.

All this means many cities are caught in a vicious cycle of building and marketing, Mr. Sanders said.

"This is not an activity driven by economic rationality. It is driven .. by politics," Mr. Sanders said.

And it is driven by image.

The center's potential customers confirm that Baltimore is facing increasing competition and is losing business to cities with tonier images.

A decision to book a convention in a particular city can hinge on factors like weather and popular perceptions, explained Bob Lucas, convention director for the National Federation of School Board Associations in Alexandria, Va.

When Mr. Lucas asks his members where they'd like to hold conventions, two cities always top the list: San Francisco and New Orleans. Baltimore is never a finalist, he said.

"I love Baltimore. I take my visiting relatives there. But if the members are going to have one trip a year, they make an effort to go someplace they really want to go," he said.

"There are some people who, unfortunately, see Baltimore as a ** second-tier city."

State gave $100 million

Mr. Chappell, however, insists that additional money for advertising will pay off for the city, which contributed $50 million of the expansion costs, and the state, which contributed the remaining $100 million.

Baltimore's 7 percent hotel tax brought the city about $8.4 million last year, and additional bookings will increase tax receipts, he said. In addition, the convention center has helped create thousands of jobs and contributed to $1 billion worth of downtown hotel construction since the center was built in 1979, Mr. Chappell said.

So far, the association has booked 30 conventions into the expanded convention center over the next 10 years, including the National Association of College Bookstores, which had outgrown the old center.

To get more bookings "We do have to be aggressive," Mr. Chappell said.

More money would allow him to "do something dramatic," he said. He'd like to buy more advertisements, send more staffers to more trade shows and try to bring customers from overseas.

So far, though, no one has come forward to contribute extra money for additional marketing.

The state legislature mulled pumping in another $150,000 last year, but decided instead that the city should take the lead.

" 'We're already paying for the building. Why should we pay for this?' That was the general tenor," explained Sen. Barbara Hoffman, a Baltimore Democrat.

City has pressing needs

Mayor Kurt L. Schmoke said he wishes he could give the center more money, but the city has more pressing needs -- ranging from crime prevention to street sweeping.

"They should have more money," Mayor Schmoke said. "But it is going to have to come from the private sector, because we have competing demands for our resources."

But managers of businesses that would benefit from an expanded convention center say they are already doing more than their fair share. They say either the public sector or other businesses should foot the marketing bills.

Mr. Oster, the Stouffer general manager, balks at suggestions that the hotel -- which gets about 20 percent of its bookings from convention business -- should make an additional contribution to the marketing fund.

He said the Stouffer spends more than $2 million a year marketing Baltimore and the local hotel on its own. And it often contributes to other joint marketing efforts.

Mr. Oster said he plans to try to raise money from other downtown businesses that benefit from conventions but haven't contributed to the marketing effort.

"We are pretty big contributors. . . . Can we spread the responsibility a little bit?"

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