Oklahoma City’s level of risk in building a new convention center might all be in the eye of the beholder.
On one hand, the decline of the national convention industry and the failure of many recently built facilities to hit original benchmarks could point to a troubling future for OKC.
However, the relatively low $250 million price tag for the city’s new center, along with a the absence of debt to pay for the project, makes Oklahoma City’s gamble a lot less risky.
The city’s current convention facility is outdated and unattractive to prospective groups, said Mike Carrier, president of the Oklahoma City Convention and Visitors Bureau. Voters seemed to agree in 2009 when Metropolitan Area Projects (MAPS 3), which included the convention center project, was approved.
“Our current facility presents an inability for many of our clients to grow their business,” Carrier said at a recent forum held to promote the convention center project.
Carrier said the current center had low ceilings and an inefficient layout for the setup and tear-down of conventions and shows that limit how many events can be booked.
The city has moved forward with the eminent domain process in order to secure the land west of the Chesapeake Energy Arena for the new convention center. Despite some opposition to the project, it is coming. But what can Oklahoma City expect based on the experience of other cities that have recently build their own convention centers?
Revenue projections used in support of building a new OKC convention center claim guest spending would more than double and hotel room bookings would also dramatically increase with its construction. However, other cities provide a cautionary tale that initial projections are not always met.
A new convention center in Nashville has fallen short of initial projections in hotel occupancy and economic impact, reports Nashville Business Journal. The Tennessean reported last month that critics of the convention center say proof has already surfaced that a new facility in Nashville was unwise.
“In its first year of operation, the Music City Center convention hall failed to meet projections for hotel bookings, saw its surplus revenue fund drop by nearly $8 million and had its bond rating downgraded,” reported Nate Rau for The Tennessean.
Critics of building new convention centers point to cities like Nashville and Charlotte, where convention center space has doubled while attendance has remained flat.
In Charlotte, where a new convention center was built in 1995, 19 years of data hasn’t pointed to economic success there, either.
“Since its 1995 opening, the center has fallen dramatically short of projections,” wrote Steve Harrison in The Charlotte Observer. “It was forecast to produce 528,800 hotel-room nights a year to fulfill its mission of putting ‘heads in beds’ ... In fiscal year 2011, it produced 142,000 room nights.”
Beyond economic and tourist data, even those who were skeptical of the Charlotte convention center acknowledge it has helped the city attract high-profile events, such as the 2012 Democratic National Convention.
However, Harrison adds, “It would take hosting five Democratic conventions a year, every year, to meet the original projections.”
Boston is another example that the “if you build it, they will come” mantra is not always accurate, at least not based on original forecasts. The city opened the $850 million Boston Convention and Exhibition Center in 2007, but studies show it has never drawn the level of business originally promised.
“[Pre-construction] study said the BCEC would generate 794,000 hotel room nights annually,” said Charlie Chieppo, a senior fellow at Pioneer Institute, a Boston-based think tank. “Not only has the facility never achieved that number, but it has never even reached 500,000 in any year.”
Chieppo, who wrote a column last week on the convention center for Boston Business Journal, said the expected economic development of new hotels to the area has also not materialized.
However, Boston is also considering a nearly $1 billion expansion to the center, based on the idea that the 7-year-old facility is not big enough.
Smaller price tag
While other cities indicate the convention center game can be risky, OKC’s advantage is its price tag is much lower and the center won’t be built by accruing any debt. Boston’s convention center was an $850 million investment. Nashville spent $623 million on a new center, while Anaheim, Sacramento and San Antonio are considering expansions that cost nearly as much as Oklahoma City’s proposed new convention center, if not more.
“It may only be ambitious to us,” Sen. David Holt, R-Oklahoma City, said about OKC’s proposed downtown convention center and its relatively small $250 million cost. “It is ambitious for us, but it is actually just keeping our head above water when you compare it to what other cities are doing.”
Holt, who served as Mayor Mick Cornett’s chief of staff from 2006 to 2010, said MAPS has a history of taking on seemingly ambitious projects that are relatively cheap compared to other cities.
“If you do any traveling across the United States, you are immediately reminded that our current convention center is not on par,” Holt added. “But we aren’t spending what other cities are or have.”
There remains some skepticism about the new convention center, but Cornett, whose opponent in this year’s election was critical of the new center, said the citizens have already spoken on the matter.
“Council and I have our marching orders from the citizens,” Cornett said.
A LOOK AROUND:
How convention centers in other cities compare:
Boston Convention and Exhibition Center (BCEC)
Cost: $850 million The new convention center was expected to generate an extra 794,000 hotel room booking each year. However, it has failed to hit the 500,000 mark, based on a BCEC study.
Music City Center
Cost: $623 million A year after opening, city officials say attendance and hotel bookings have fallen short of original projections. The center added 266,805 room nights in the first year, which was far fewer than the 445,558 projected.
Phoenix Convention Center Expansion
Cost: $600 million Partially built with state funds, the expansion project promised certain economic benchmarks that, if not met, would mean money would be returned to the state. State leaders in Arizona have said its possible tax dollars will be held back from Phoenix if business does not improve at the center.