by Brendan M. Lynch | May 01, 2005

Heywood SandersEnough already: Professor Heywood Sanders says new facilities are not the panacea many cities hope for.

This winter, a wave of news stories on municipal convention center spending and industry demand swept the pages of daily papers and magazines across the country, driven by a scathing study released by the Brookings Institution, titled “Space Available: The Realities of Convention Centers as Economic Development Strategy.”
    The 32-page report, written by Heywood Sanders, a professor with the Department of Public Administration at the University of Texas at San Antonio, presents the convention marketplace as being stuck in an era of decline, laden with an ever-growing “glut” of new convention center space that will not bring significant new business to any given city.
    Nonetheless, Sanders argues, municipalities across the country are overspending public funds on new centers and, worse, building attached hotels and offering deep discounts to attract a steadily shrinking pool of attendees. In fact, some cities, desperate to live up to pie-in-the-sky attendance expectations, are giving their multimillion-dollar convention center space away for free.
    “This analysis should give local leaders pause as they consider calls for ever more public investment into the convention business,” Sanders writes.
    But in the wake of the Brookings report, institutions and individuals in the convention industry are howling over the methodology Sanders used in reaching his conclusions. They even question the honesty and motives of  Sanders himself, who has earned notoriety as the naysayer-in-chief of the meetings and conventions trade. 
    “The Brookings Institution report was very disappointing and troubling because much of the analysis was faulty, incomplete and based on erroneous assumptions,” says J. Stephen Perry, president and CEO of the New Orleans Metropolitan Convention and Visitors Bureau. “The analysis was theoretically unsound, and the methodology was suspect. It was far from an objective report and reflects unfavorably on Brookings’ usual high standards.”
    Steven Hacker, CAE, president of the Dallas-based International Association for Exhibition Management, calls the report “an assault on academic integrity. It’s not worth the ink it’s printed with. It’s the equivalent of standing in a crowded theater and shouting ‘fire!’ It’s a way of saying these buildings are somehow corrupt.”
    Clearly, the meetings industry’s rebuttal to Sanders and his Brookings report is intense and at times quite personal. A nerve has been hit. But can Sanders back up his theories?

Center dissenter
Sanders conducted his study by first examining attendance and occupancy data from convention centers and nearby hotels in several cities, using numbers from convention and visitor bureaus or the centers themselves, and then making comparisons with consultants’ earlier forecasts. Time after time, Sanders found, the city-financed consultants’ projections were fantastically rosy. “The promise that is always laid out is high attendance, thousands of jobs, millions in economic impact and huge returns on these public investments,” he says. “Those results, certainly in this market environment, just haven’t happened. What has happened, however, are calls for more spending and more space and a massive publicly owned hotel next door to the center. Those keep happening.”
    Even some of the most dominant cities in the convention business have seen declines, says Sanders, who cites significant attendance slippage at several centers. Among them:
    " Atlanta’s Georgia World Congress Center, where attendance in fiscal year 2004 was less than half of that in fiscal 1997, despite a 2002 expansion;
    " New Orleans’ Morial Convention Center, which posted a 41 percent attendance decline from 1999 to 2003, despite a 1999 expansion;
    " Chicago’s McCormick Place, which saw a 24 percent drop in attendance between 2000 and 2003, and with a massive new building due to open in 2008; and
    " New York City’s Javits Center, which is down 32 percent in attendees since 1997 and has plans to expand the facility, build a hotel and an adjacent stadium.   
    Sanders says even convention industry powerhouse Las Vegas is not immune to this gloomy trend. In 1999, the average event at the Las Vegas Convention Center saw 26,154 attendees, but that head count dropped to 16,369 in 2003, despite a huge expansion the year before.
    Sanders also examines so-called regional centers and finds plummeting business at the major publicly owned facilities in Atlantic City, Baltimore, Charlotte (N.C.), Cincinnati, Dallas, Denver, Houston, Indianapolis, Phoenix, San Jose (Calif.) and Washington, D.C.
    The report concludes, “The bottom line: With events and attendance sagging in even the hottest destination spots, few centers are even able to cover basic operating costs and local economic impacts have fallen far short of expectations.”