Monday, January 29, 2001

Convention center may face space glut

But plans to grow hall still pushed

By Ken Alltucker
The Cincinnati Enquirer

        Midwest cities are spending millions to expand convention centers and snare lucrative business meetings, while Greater Cincinnati leaders continue to be mired in a years-long debate on whether the region can afford it.

        But industry experts warn that new space is being added faster than the largest users demand, which could mean a lot of empty convention halls in a few years.

        As a result, Cincinnati could be building at a time when a glut of convention space is projected — making the city's bid to expand its convention business potentially precarious.

        “Governments are bullish on adding new space and most expansion proposals go through eventually,” said Michael Hughes, director of research services for Tradeshow Week, an industry publication. “We're concerned that the political will may tip to the other direction after some of these major expan sions don't deliver what they promise.”

        A task force appointed by

        Cincinnati Mayor Charlie Luken is trying desperately to circulate the message that a $335 million expansion of the Albert B. Sabin Cincinnati Convention Center will generate a huge economic boost to downtown businesses and local government coffers.

        But Tradeshow Week projects a 15.5 percent increase to 16.4 million square feet of exhibit space from mid-2000 to 2005, surpassing a 3.9 percent increase in demand for that space. Business travel will grow at an even slower clip, 1 percent.

        Despite industry warnings of overbuilding, Mr. Luken's task force chairman, Dan Meyer, said Cincinnati can't afford not to expand. He said the city has all the ingredients of a great convention destination — professional sports teams, museums, restaurants, downtown shopping and good airport service — except a top-notch meeting space.

        “We have something that cities we compete with don't,” Mr. Meyer, chairman and CEO of Milacron Inc., said Friday. “It's not a concern” that competitors are far ahead in the convention race.

Competitors building

               Mr. Hughes said the glut of new space may stall the expansion plans of some cities, but Cincinnati's closest competitors such as Indianapolis and Columbus are barreling ahead on projects that will be completed within the next couple of months.

        Louisville's 100,000-square-foot expansion at one of its two major convention centers helped lure a John Deere convention that preferred Cincinnati but had to pass because downtown's convention center couldn't handle two shows at once.

        Proponents of expanding the convention center hope to remedy that by expanding from the current 161,900 square feet of exhibit space to 350,000.

        Mr. Hughes said new convention space usually brings a spike in business, and that spells trouble for a Cincinnati convention market that has struggled to keep its ground.

        Cincinnati's downtown center boasted an occupancy rate of 74 percent to 78 percent from 1991 to 1994, but that rate dropped to 64 percent in 1999 and 2000. Projected bookings show 2001 will check in at about the same rate, said Mike Wilson, president of the Greater Cincinnati Convention & Visitors Bureau.

Bargain-conscious groups

               Not only are fewer people using the center, the groups visiting Cincinnati spend less money at hotels, restaurants and retail shops.

        The bargain-conscious SMERF (social, military, educational, religious and fraternal) conventions were frequent visitors in 2000. The more desirable business and trade groups came to Cincinnati less often.

        The drop in convention business has rippled through downtown's restaurants, said Nat Comisar, a task force member and chairman of Mai sonette Restaurant Group.

        Restaurant guest counts have dropped 55 percent since 1976, he said.

        Rob Hazard, consultant for Atlanta-based Strategic Advisory Group, said available space is the most important factor for conventioneers. Also vital are hotel rooms and entertainment.

        “Expansion may not be right for every city,” Mr. Hazard said. “You need a total product.”

        That's where Cincinnati leaders think the area compares favorably. A $2 billion investment on the riverfront will give visitors two new professional sports stadiums to visit, a one-of-a-kind National Underground Railroad Freedom Center and a new neighborhood/entertainment district spanning the two stadiums.

        Of course, the costly riverfront is the major fiscal barrier to expansion. Hamilton County has committed so much to the construction of Paul Brown Stadium and Great American Ball Park that commissioners fear they cannot help pay for the city-owned convention center.

        A funding plan endorsed by the task force calls for the county to match the city's $51.8 million commitment. Other sources include Delta Air Lines ($30 million for naming rights), Cincinnati Equity Fund ($10 million), corporate contributors ($20 million), Kentucky ($10 million), Ohio ($45 million) and city and hotel tax increases.


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