Are sprawling convention centers worth the money cities need to spend on them?
It was a big question during the pandemic as cavernous meeting rooms sat empty, and it remains one even now that business travel is back.
In fact, companies are pulling back on spending on annual conferences and fewer people are attending them. Despite a vigorous post-pandemic rebound, companies are cutting travel costs, remote gatherings are becoming more standard and the corporate world is increasingly conscious of how travel contributes to climate change.
“The travel pent-up demand that we saw in 2023 seems to be all but gone now,” said Miguel Neves, editor of Skift Meetings, a trade publication.
Still, cities continue betting on convention centers because securing a large gathering, like the annual meeting for the American Heart Association, is seen as a way to draw tourism dollars and spending for the local economy.
But the evidence of economic benefit remains uncertain, and most of the 175 convention centers across the country operate at a loss, said Robin Hunden, founder and chief executive of the development consulting firm Hunden Partners in Chicago.
Last year, conferences and corporate meetings generated about $119 billion in economic activity, down from the $139 billion added to the U.S. economy in 2019, according to the U.S. Travel Association.
In Las Vegas, the Consumer Electronics Show, a multiday annual trade show considered one of the largest in the industry, has seen attendance dwindled. There were 139,000 attendees this year compared with 182,000 in 2018. Fewer companies marketed their products at CES, too: 53,000 exhibitors at CES this year compared with 89,000 in 2018, according to data compiled by Heywood T. Sanders, an emeritus professor at the University of Texas at San Antonio and the author of the book “Convention Center Follies.”
“There are some headwinds out there,” said Amy Calvert, chief executive of the Events Industry Council. “To assume that we’re just going to go back to doing things the way we did them because it seemed to be safe, I think, would be a mistake.”
Changes in the industry have led to intense competition among cities: An analysis performed by an industry logistics firm last year found that just 20 convention centers host 82 percent of the 250 largest recurring events.
“There’s a lot of square footage of meeting space chasing a certain number of national conventions,” said Mike McGinn, a former mayor of Seattle who opposed the recently-completed $2 billion renovation of the city’s convention center (the project was undertaken long after the end of his term).
Yet city officials and industry experts say they have no choice but to continue spending for a chance at landing the biggest, most lucrative events. “What you see across the spectrum is that you have to continually invest in the building to keep it relevant,” said Rob Svedberg, who leads the convention center team at TVS Architecture and Interior Design in Atlanta.
In recent years, Las Vegas, Denver and San Francisco invested hundreds of millions of dollars to expand and update their convention centers. The Javits Center in New York completed a $1.5 billion expansion in 2021 that included an upgraded main hall and a seven-acre “green roof” that features a farm and an apiary.
Dallas is spending $3.7 billion to build a 2.5-million-square-foot convention center next to an existing one built in 1973. In Orlando, Fla., the Orange County Convention Center will be expanding at a cost of $560 million. And the City Council in Los Angeles approved a $1.4 billion plan this year to add nearly 350,000 square feet to the city’s aging convention center as well as to renovate an adjacent plaza. The project is expected to be completed ahead of the 2028 Summer Olympics.
In less prominent markets, Buffalo and Cleveland have recently renovated their convention centers. In Durham, N.C., which has a convention center, officials are planning to spend $315 million to build a new one, as well as an additional $225 million for an adjoining hotel.
Ascertaining whether these projects — usually financed through bonds backed by hotel taxes paid by visitors — live up to their promises is difficult, Dr. Sanders said, because most convention centers mask their losses and exaggerate their benefits.
Industry reports about the economic impact on convention centers often highlight full hotels and packed restaurants, he said, but “in my research and analysis, the conclusion is that kind of a result rarely happens.”
The Connecticut Convention Center in Hartford lost about $2 million a year in 2022 and 2023, according to its financial statements. In Oakland, Calif., operators of the city’s convention center are asking for $1.7 million to keep the facility running, according to a recent memorandum circulated to city officials. In Maryland, lawmakers have devoted $25.7 million to fixing Baltimore’s convention center, though it has been losing business for years.
Despite recent shocks and long-term trends, those who are bullish about the business say a successful convention center can act as both a landmark and an economic hub. Sherrif Karamat, president of the Professional Convention Management Association, an industry group, pointed to the convention center in Washington, D.C., which opened in 2003. He argued that the venue helped revive a swath of downtown by attracting hotels and high-end retailers including Apple.
Having “the right amount of activities and life around the building” is important, said Mr. Svedberg, who worked on the recent expansion of the Javits Center. Nashville, the country music epicenter offering all types of cultural thrills, has been able to attract big conventions at Music City Center, which opened in 2013.
In Atlanta, the redesign project for the Georgia World Congress Center, a 220-acre compound with four million square feet of interior space across three buildings, includes remaking a huge area of the downtown. The plan reimagines two enormous parking lots on the north and west sides of the convention center with mixed-use retail and residential projects, said Sheba Ross, a partner at the architectural firm HKS and the lead designer for the project.
As she surveyed the concrete expanse broiling under the summer sun in September, Ms. Ross said she envisioned pedestrians instead of cars, trees instead of concrete, activity instead of emptiness. A neglected, overgrown thoroughfare fittingly named Gray Street would become, in her vision, a lively connector to the Georgia Tech campus. There would be a better path to Vine City, home to Atlanta’s esteemed historically Black colleges and universities, and to a spur of the city’s BeltLine park. The project could cost more than $1 billion, according to the Georgia World Congress Center Authority.
If the push for bigger and better convention centers has long been fraught, Ms. Ross said the current shocks to the industry made this the perfect time to overhaul and upgrade aging complexes — transforming windowless fortresses that gobbled up city blocks, displacing small businesses and residents alike, into world-class structures that are vital to a city.
“There is this desire for the convention story to become the city’s story,” she said. “When people leave here and go back to Hong Kong, we don’t want them to remember a concrete box.”
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