San Diego Convention Center
The consulting firm of Convention, Sports and Leisure International has come out with a $90,000 study telling San Diego that if it builds a contiguous convention-center expansion, it will gain $157.1 million in direct convention-attendee spending.
According to the study (paid for by the convention center, City of San Diego, and JMI Realty — the realty arm of John Moores's empire), annual hotel-room nights generated by the expanded center are projected to rise from an average of 926,000 over the past seven years to 1.2 million. Direct attendee spending will rise from $576 million a year to $733 million.
San Diego's leadership is accepting these forecasts as word from on high. But it is time to look at the track record of Convention, Sports and Leisure International. The book, Convention Center Follies, by Heywood Sanders, the ranking expert on convention centers, sheds light on this record, as well as the record of other consulting firms that tell cities what they should do about their convention centers. The advice is almost invariably, "Expand it!" despite a glut in the industry that is forcing centers to slash their prices by 50 percent. San Diego's center is slashing its prices by that much, too.
Here are just three examples of the record of Convention, Sports and Leisure. It told Washington DC that if it expanded, it would enjoy 654,632 room nights in 2006. The actual figure was 455,379; last year, it was down to 375,000.
The consulting firm told Philadelphia that if it expanded, its 2012 room-night count would be 786,000; the actual figure was 431,000 and last year it dropped below 400,000.
How did the consultant get it so wrong in Philadelphia? Well, the city's largest convention regularly is the Federal Office Systems Expo. In 2003, the firm told Philadelphia that this event would show total annual attendance of 60,000 into the future. According to Sanders's book, the event attracted 20,951 attendees in 2006. "By 2010, it was down to 13,398," says the book. "The 2011 edition attracted a mere 8,160." But Philadelphia's expectation for booming room nights was based on the prediction that attendance would be 60,000 into the future.
Another example: when Convention, Sports and Leisure International was concocting its forecast for Washington DC, it "assumed that each and every convention attendee stayed in the Washington metro area more than three days, with three nights' spending on hotel rooms — a total of more than $1000 in spending for each attendee." But for fiscal 2010, a total of 267,000 attendees produced just 274,379 room nights — "a far cry from an average stay of three or more days," says the book. Indeed, to me, the 2010 number suggests an average room-night stay of a little over one night.
I called Sanders, a professor at the University of Texas San Antonio. He pointed out what is going on in the industry: in 2008, the biotech industry trade group BIO International had attendance of 20,108 at its huddle in San Diego. Last year in San Diego, attendance was 15,667. Overall convention attendance rises slightly over time but the amount of new convention space zooms. Consulting firms tell cities that they must expand because other centers are expanding. The industry itself admits that it is greatly overbuilt — the reason for the price-slashing. But the consultants keep telling cities to expand into a glut.
"It is not plausible that every one of these centers could do better by expanding," Sanders says. And they aren't doing better. The consultants "only look at the demand side. They don't look at the supply side."
In my opinion, that's because the consultants know that the industry is oversupplied, but they don't want to look at the facts. If they admitted the truth, what would happen to their business?