The Cox Center is being subsidized fairly heavily compared to counterparts in similar markets, losing an average of $3.4 million yearly between 2006 and 2008. But a new convention center would still require subsidization by the city.
Convention Sports and Leisure International (CS&L), the company whose study recommended Oklahoma City expand its convention center, is now subcontracting to help bring the MAPS 3 convention center to fruition.
Those involved with that project said CS&L’s participation does not bring into question the independence or objectivity of its previous analysis. In fact, city officials said, the knowledge CS&L gained from that study has given the company valuable insight about what’s needed for the planned center.
The $250 million MAPS 3 convention center is the crown jewel, and easily the most expensive project, of the $777 million MAPS 3.
However, city officials, citizens and local news media have raised questions about whether the convention center budget is sufficient to elevate Oklahoma City to the next tier of convention sites. There are also concerns regarding its proposed site and whether one should even be built, given that the convention industry is currently in a downturn.
Work on the project nevertheless continues apace. A conceptual design of the new center is expected early in 2013.
Size and management
The CS&L study almost has the air of legend to it — often referred to, but few have actually seen it.
Completed in February 2009, it details why the city needs more convention center space. Although it holds critical implications for public policy and the spending of taxpayer money, the report itself is not a public record.
Instead, it is kept by the Greater Oklahoma City Chamber of Commerce. The chamber recently provided Oklahoma Gazette with access to the study. A reporter was allowed to read it under supervision and take notes, but not to copy or photograph any of the materials.
“The rationale behind the study was we have a 40-year-old convention center that is not built to industry standards. If we’re going to grow our convention business, what do we have to do?” said Roy Williams, president of the city chamber.
The report concluded that while the “practical maximum capacity” occupancy rate — the amount of sellable space being occupied per year — is around 70 percent, the Cox Convention Center had an average of only 26 percent occupancy between 2003 and 2009.
The current usable space is too small and not high-quality enough to attract many large-scale conventions, according to the study. CS&L recommended a center with at least 285,000 square feet of usable space to better compete with peer cities.
This part of the study is often cited by officials and boosters as justification for a new convention center.
But another reason for the low occupancy levels, the study continues, is the fact that management of the Cox Convention Center is shared by two companies: SMG, which manages and leases out arena and event space; and Renaissance Hotel, which manages and leases out the center’s ballroom and meeting rooms.
In the late 1990s, city leaders had used management of some convention center space to help entice the Renaissance to locate downtown.
But that bifurcated management situation “is highly unusual in the industry and likely impacts overall ability to book events” at the convention center, the CS&L report says. “For any future hotel development, we strongly recommend that a hotel operator not be given rights to book or operate space in the convention center.”
City Manager Jim Couch disputes the notion that the unusual management has hurt occupancy.
“It’s not the preferable way to operate anything,” he said, “but I can’t point to any lost business because of it.”
His sentiments are echoed by Mike Carrier, president of the city’s Convention and Visitors Bureau. Still, Carrier said that sort of structure won’t be repeated with the MAPS convention center.
“I’m pretty comfortable in saying the new convention center will be managed by one entity,” he said. “We recognize that’s a challenge in terms of being as successful we’d like to be. It’s not something meeting planners are used to seeing. It does create issues for them.”
Although most convention centers lose money and require annual public subsidies, the amount lost by the Cox Center is higher than the average mid-market convention center losses of around $2 million, according to the CS&L study. The city’s agreement with the Renaissance — as well as with a parking service — is cited as part of the reason for a higher-than-average subsidy, since much of the money generated from those areas does not go back to the city.
Subsidies would decrease, but not end, with a new convention center.
CS&L claims that economic development from conventions would nearly triple with a new center.
“Communities are often willing to subsidize the operations of such facilities in exchange for the new spending that takes place as a result of drawing thousands of out-of-town event attendees to the area and other resulting economic impacts,” the study states.
Conflict of interest?
About two years after providing its expertise on Oklahoma City’s convention market needs, CS&L was hired by the MAPS 3 convention center contractor, Populous, to help determine a suitable site for the planned facility.
CS&L, which has offices in Dallas and Minneapolis, has also been brought on board as part of Populous’ conceptual design work.
CS&L is currently providing information on how best to fit the market demand in Oklahoma City, said Ryan Eshelman, principal at GSB Inc., the local associate architect on the project.
Todd Voth, senior principal at Populous, said that CS&L is a nationally recognized firm with expertise in convention market issues and market-driven programming. He said the company was a good fit for the current project.
John Kaatz of CS&L said it is common for market consultants to be brought on board a project after making an initial assessment.
“I can’t imagine you would want to build something without the market consultant commenting on the program,” he said. “It would seem ludicrous to do that.”
Carrier agreed. He said several firms vying for the contract had listed CS&L as a potential subcontractor.
“This is a specialized industry,” Carrier said. “The people of the industry know CS&L and respect their work.”
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