Big convention center holds big hopes in D.C.

THE BALTIMORE SUN

The new Washington Convention Center is mammoth -- 2.3 million square feet, enough to hold six NFL football fields or four jumbo jets.

It sprawls over six blocks.

Its price tag is astronomical, too, at $833.9 million.

Washington is betting that the new center -- three times the size of its old one and among the nation's 10 biggest -- will catapult the city into the front ranks of the convention business, pumping as much as $328.5 million into the city's economy annually, from delegate spending alone.

With its grand opening set for next weekend, it has booked nearly 400 events through 2018, threatening to take business away from Baltimore's Convention Center and others.

"I would say that building the new venue in Washington is an attempt to solidify Washington as a first-tier trade show host city," said Michael Hughes, director of research for Tradeshow Week magazine, based in Los Angeles. "Washington would primarily be competing for major association trade shows and conventions, which tend to rotate around the country and go to different cities each year."

Washington's new center has 725,000 square feet of exhibition space, 70 meeting rooms totaling 125,000 square feet and a 52,000-square-foot ballroom that can seat 5,000 people for a meeting and 3,000 for lunch.

Its first event, a technology trade show for government professionals April 8-10, is expected to attract 20,000.

Baltimore's center is about half as big, at 1.2 million square feet, including 300,000 square feet of exhibition space, 85,000 square feet of meeting rooms and a 36,000-square-foot ballroom.

Washington's new center is opening as Baltimore's convention business declines and its convention bureau is racked with turmoil.

Carroll R. Armstrong, head of the Baltimore Area Convention and Visitors Association for seven years, resigned under pressure last month after a scathing review of his agency found hotel booking numbers had been inflated and incentive bonuses partly based on faulty numbers.

Convention and hotel bookings have fallen. During the first half of the fiscal year, BACVA's hotel room bookings were 62 percent lower than in the year-ago period.

And the Convention Center's operating deficit is expected to more than double this year and grow again in fiscal 2004, bringing the two-year loss to $10.3 million, according to a legislative report issued last month.

The Washington center also is opening amid fiercer competition than ever among convention centers, with new ones popping up while the convention business stagnates. From August 2001 through July 2002, 11 million square feet of new space became available through new convention centers or expansions. Twenty new centers and 60 expansions are under way.

"It's really tight for the industry right now, with little evidence that it's going to get better soon," said Heywood T. Sanders, professor and director of the public administration division at the University of Texas, San Antonio.

"We know, as in the case of the Washington center, there's lots more space coming on the market. We can only see how they end up performing and how many of them actually do the kind of business that they were forecast or predicted to do."

Even before its opening, Washington's new center is producing results, officials said. Of its 400 bookings, nearly half are national events, which bring large numbers and generate the most spending, said Tony Robinson, director of public affairs for the Washington Convention Center Authority.

"We estimate we're going to average about 125 total events a year," Robinson said. "We really are moving from about 20 national events a year to 30 or more a year. That's really why we built the building. The idea is that you're getting large association-type meetings."

The center is winning business from conventions that Washington's 20-year-old center wasn't able to book because it lacked exhibition space. Now, with three-quarters of a million square feet of exhibition space, that shouldn't be a problem.

"Many conventions do massive, massive exhibits, so now we have space to host these shows," Robinson said. "We can do any number of things in the space and are only limited by the imagination of those coming.

"Every 30 feet we have a utility box with gas, water and the Internet. Just about anything you can think of can be done in these spaces. From an operational point of view, at the old center we only had 12 loading docks and could do only one large show at a time. Now we have 70 loading docks and can do three large shows at a time."

One example is an Army show that is scheduled for October.

"We did not have the exhibit space to accommodate all of their exhibits," Robinson said. "They're showing off helicopters, planes, tanks and you need a lot of space to do that. ... Before they couldn't come because we didn't have the space."

Bordered by Seventh Street on the east, Ninth Street on the West, N Street on the north and Mount Vernon Square on the south, the center is about four blocks from the MCI Center, home to Washington's professional basketball and hockey teams, and across the street from the historic Carnegie Hall Library.

The center was funded through about $530 million in bonds issued in 1998. Robinson said officials also had $100 million in reserves and received additional funding from the annual dedicated tax collections from the restaurant and hotel tax.

The largest building in the nation's capital, it has 68 public restrooms, 38 escalators and 31 elevators. It also has more than 4 acres of glass walls, 160 types of lights and 30,293 light bulbs.

Even though Baltimore is the closest major city to Washington, Robinson said, he doesn't consider the city's Convention Center a top competitor.

"We tend not to get into talking about business and what we're taking from other places, but we generally are competing against cities like Philadelphia, Boston, Atlanta and Orlando on the East Coast," he said.

"Vegas and Chicago are sort of in a league of their own. They're bigger than our facility, and there are shows that go there that would never go to the East Coast. We think we're positioned to do well. Baltimore is a competitor, but we generally are not competing for the same business."

According to information supplied by BACVA 9 percent of the business that Baltimore sought and failed to land last year went to Washington.

Marshall E. Murdaugh, tapped as BACVA interim president and chief executive officer, said that even though Washington's new center isn't scheduled to open for a few weeks, Baltimore has been feeling the pinch for several years.

"It's not that we will now have to compete against the new center; we've been competing against the center for the last few years, a center that was never opened," he said. "First Philadelphia, and then Atlantic City and now Washington, D.C., all in the last few years have surrounded Baltimore with new convention centers."

Murdaugh said officials in Baltimore will continue strategies they hope can counter losses resulting from Washington's new facility.

"What we need to do is what we've just started. We need to put more aggressive solicitation on the street," Murdaugh said. "We need to be more aggressive in our sales efforts.

"I think we're making some great progress, by the way. We just announced in the last week a number of new marketing initiatives that we've taken on with a lot of partners. And one of the things that has not been announced is that we have just hired a firm based in Chicago, David Green & Associates, which has a great track record in soliciting destinations and attracting business. They're going to be out there making telemarketing calls about generating short-term business within the next 18 months."

Sanders, the Texas professor, said it's too early to gauge how Washington's new convention center will perform.

"It's tough to say what the impact will be," Sanders said. "We are in a market now where it's increasingly characterized by a very high level of competition around the country, and the end result is the convention centers are increasingly struggling just to stay even.

"What we see in an increasing number of cities are sales and deals. Convention center space on sale, in many cases being given away free, and increasing efforts to try and get in new convention and meeting business, with often limited success. The problem we have is that everybody is potentially taking business away from everybody else."

Hughes of Tradeshow Week, said that for the next few years, bookings could be volatile for centers the size of Washington's.

"One year bookings may be up, the next year they may be down, the year after that they may be down significantly, then the next year they may be up," Hughes said.

"It is possible that the economic impact numbers may come in slower than planned. The facilities are usually built to drive new spending, or to drive what we call business tourists to the city that otherwise wouldn't be there.

"The average trade show delegate generates about $1,300 to the city. It's good money. If a convention center hopes to have a return on its taxpayer investment in 10 years, it could be 15 or 20 years in this environment."

Another factor that could come into play with Washington's center is its location. But Robinson said he doesn't think its location in the nation's capital will hurt the new center's chances of attracting business, despite the threat of terrorism.

"I think Sept. 11 speaks well for the future of not only the convention center but the tourism industry in Washington in general," Robinson said. "We were actually hosting an event during Sept. 11, and because we had a strong emergency response plan, that show did not cancel. I think in many respects, many conventioneers view Washington as one of the safest places in the country."

Hughes said he doesn't think there's a big threat of terrorism at convention centers.

"The only real issue that we foresee for trade shows and conventions and venues when you talk about terrorism are really only for high profile or sensitive meetings or groups," he said. "Those groups know who they are and tend to have high-quality security. Really, the risk is group-related, not venue-related. The venue itself is generally not a target."

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