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If there’s a vote on San Diego's convention center...
Convention-center numbers crunch — taste bad, more filling
The convention center’s doubling in size didn’t result in any substantial increase of conventions.
There is a new breeze blowing through the San Diego Convention Center Corporation. Unfortunately, it smells much like the last one. Since 2009, I have been interviewing Heywood Sanders, the Texas-based university professor who is the expert on convention centers. In 2005, he wrote a seminal paper for the Brookings Institution showing how convention centers were then greatly overbuilt and headed for a destructive arms race. In 2014, he wrote a book, Convention Center Follies, which showed that the glut had worsened.
In that book, Sanders described how business promoters get a self-touted “consulting” firm to predict that if a center is built or expanded, attendance and tax receipts will soar. The opposite occurs: all over the U.S., attendance is nowhere near what consultants had forecast, so taxpayers get fleeced.
Top U.S. convention centers ranked by amount of prime exhibit space (source: Trade Show Executive, 2013)
In my opinion, this is just another example of consultants distorting numbers to forecast success, which the nabobs paying the bill want the public to swallow.
Sanders follows statistics on most of the nation’s convention centers. Normally, he finds the most egregiously erroneous statistics in San Diego. In December of 2011, my column, using Sanders’s numbers, pointed out how San Diego had pretzeled its figures to deceive citizens preparing to vote on a center expansion. The column was sent to the city auditor, who tested the Reader figures further and found that hotel-room-night figures had been overstated by 29 percent. The cautious auditor said the error was not deliberate. Knowledgeable San Diegans disagreed.
But a new breeze is definitely blowing at the convention center, because for the first time I can remember, the center actually answered my queries. I interviewed the center’s chief executive, Clifford “Rip” Rippetoe, who was appointed last year. He could not argue with Sanders’s numbers, taken in part from the industry’s own research center, showing that in the year 2000, attendance at the nation’s convention and trade shows was 31.8 million. In 2016, it was only 33.4 million. But in those years, convention space soared 37 percent. “Convention centers are overbuilt,” concedes Rippetoe, noting big price slashes, but “what applies here doesn’t apply elsewhere.” For example, he cites the frigid winter in the Midwest.
Ah, but the largest center by square feet is in Chicago. Brrr. The eighth largest is in Cleveland. Brrr. Yes, San Diego (not in the top ten) has sunshine, but three of the largest are in sunny Las Vegas, which has gambling and titillating recreational services less available in competing convention cities.
Sanders points out that in 1997, there were 60 primary events at the San Diego center. In 2001, the center’s size was doubled. In fiscal 2017, there were only 66 primary events. Rippetoe argues that the number of shows is “the least important” metric in measuring a center’s success. Total square footage and the quality of attendees and exhibitors are better measures, he says.
But Sanders points out that convention-center touts rely most heavily on number of events — for example, one consultant said that the number of local annual events would leap from 71 to 99 if a contiguous expansion were built. “Getting more events is the fundamental basis for assuming that an expansion will yield more business,” says Sanders.
Officials with the Port of San Diego and City of Chula Vista have signed a letter of intent to build a $1 billion convention center in Chula Vista, to be operated by Gaylord Hotels, a brand of Marriott International. “Gaylord and Marriott are almost one and the same… have their own books of business,” scoffs Rippetoe. “I see that taking hardly anything from downtown.”
But Gaylord and Chula Vista had a deal ten years ago. Before it fell apart, the San Diego Convention Center hired a consulting firm to see what kind of a dent Gaylord might put in the downtown center’s business. The firm reported that Gaylord could potentially eat into 16 to 23 percent of downtown attendance and 17 to 30 percent of hotel-room nights. This could have been another case of a consultant giving its customer what it wants to hear, but Sanders, for one, says, “I am sorry. If [Gaylord/Marriott] have a large convention property they want to fill, then they are going to try and fill it.”
Here’s a startling claim that arose out of the 2016 Major League Baseball All-Star Game, held at Petco Park: the center’s current sales and marketing year-end report claims that the 676,850 primary business attendance (emphasis mine) that year was an all-time record. But Sanders points out that 100,000 of that number came from FanFest, a multiday congregation of baseball worshippers who attended to get autographs of past Padres players and the like. How can it be that 100,000 FanFest fanatics were there on primary business? Did they all write off these visitations on their expense accounts? There were 51,549 at the game itself, which means that roughly half those folks on primary business couldn’t even get into Petco Park for the game.
FanFest was considered primary because the center checked hotels and Major League Baseball for “sponsors, workers, athletes coming from out of town,” says Rippetoe. All these were considered primary business attendees. That number was “suspiciously rounded” and probably included local residents, says Sanders.
Some in the tourist business have candidly discussed whether the homeless problem, along with the outbreak of hepatitis A, can deter future convention-center attendance. “We have sat with convention planners, and no one is telling me attendees will not be showing up,” says Rippetoe.
Apparently, that goes for doctors. The center boasts how many medical conventions it hosts. In fiscal year 2017, San Diego wooed and won such groups as the American Academy of Orthopaedic Surgeons, the American Association of Orthodontists, and the Society for Neuroscience.
The center overestimated attendance by those groups by a collective 8982. Will the center, in toting up its year-end results, use the faulty estimates or the actual figure? Rippetoe says it will use actual numbers, unlike in 2011. Sanders says he is skeptical.
It’s not clear whether San Diego will vote on a center expansion next year. What is clear is that voters should be wary of statistics on convention-center performance.
Here's something you might be interested in.
If there’s a vote on San Diego's convention center...
Convention-center numbers crunch — taste bad, more filling
If there’s a vote on San Diego's convention center...
Convention-center numbers crunch — taste bad, more filling
The convention center’s doubling in size didn’t result in any substantial increase of conventions.
There is a new breeze blowing through the San Diego Convention Center Corporation. Unfortunately, it smells much like the last one. Since 2009, I have been interviewing Heywood Sanders, the Texas-based university professor who is the expert on convention centers. In 2005, he wrote a seminal paper for the Brookings Institution showing how convention centers were then greatly overbuilt and headed for a destructive arms race. In 2014, he wrote a book, Convention Center Follies, which showed that the glut had worsened.
In that book, Sanders described how business promoters get a self-touted “consulting” firm to predict that if a center is built or expanded, attendance and tax receipts will soar. The opposite occurs: all over the U.S., attendance is nowhere near what consultants had forecast, so taxpayers get fleeced.
Top U.S. convention centers ranked by amount of prime exhibit space (source: Trade Show Executive, 2013)
In my opinion, this is just another example of consultants distorting numbers to forecast success, which the nabobs paying the bill want the public to swallow.
Sanders follows statistics on most of the nation’s convention centers. Normally, he finds the most egregiously erroneous statistics in San Diego. In December of 2011, my column, using Sanders’s numbers, pointed out how San Diego had pretzeled its figures to deceive citizens preparing to vote on a center expansion. The column was sent to the city auditor, who tested the Reader figures further and found that hotel-room-night figures had been overstated by 29 percent. The cautious auditor said the error was not deliberate. Knowledgeable San Diegans disagreed.
But a new breeze is definitely blowing at the convention center, because for the first time I can remember, the center actually answered my queries. I interviewed the center’s chief executive, Clifford “Rip” Rippetoe, who was appointed last year. He could not argue with Sanders’s numbers, taken in part from the industry’s own research center, showing that in the year 2000, attendance at the nation’s convention and trade shows was 31.8 million. In 2016, it was only 33.4 million. But in those years, convention space soared 37 percent. “Convention centers are overbuilt,” concedes Rippetoe, noting big price slashes, but “what applies here doesn’t apply elsewhere.” For example, he cites the frigid winter in the Midwest.
Ah, but the largest center by square feet is in Chicago. Brrr. The eighth largest is in Cleveland. Brrr. Yes, San Diego (not in the top ten) has sunshine, but three of the largest are in sunny Las Vegas, which has gambling and titillating recreational services less available in competing convention cities.
Sanders points out that in 1997, there were 60 primary events at the San Diego center. In 2001, the center’s size was doubled. In fiscal 2017, there were only 66 primary events. Rippetoe argues that the number of shows is “the least important” metric in measuring a center’s success. Total square footage and the quality of attendees and exhibitors are better measures, he says.
But Sanders points out that convention-center touts rely most heavily on number of events — for example, one consultant said that the number of local annual events would leap from 71 to 99 if a contiguous expansion were built. “Getting more events is the fundamental basis for assuming that an expansion will yield more business,” says Sanders.
Officials with the Port of San Diego and City of Chula Vista have signed a letter of intent to build a $1 billion convention center in Chula Vista, to be operated by Gaylord Hotels, a brand of Marriott International. “Gaylord and Marriott are almost one and the same… have their own books of business,” scoffs Rippetoe. “I see that taking hardly anything from downtown.”
But Gaylord and Chula Vista had a deal ten years ago. Before it fell apart, the San Diego Convention Center hired a consulting firm to see what kind of a dent Gaylord might put in the downtown center’s business. The firm reported that Gaylord could potentially eat into 16 to 23 percent of downtown attendance and 17 to 30 percent of hotel-room nights. This could have been another case of a consultant giving its customer what it wants to hear, but Sanders, for one, says, “I am sorry. If [Gaylord/Marriott] have a large convention property they want to fill, then they are going to try and fill it.”
Here’s a startling claim that arose out of the 2016 Major League Baseball All-Star Game, held at Petco Park: the center’s current sales and marketing year-end report claims that the 676,850 primary business attendance (emphasis mine) that year was an all-time record. But Sanders points out that 100,000 of that number came from FanFest, a multiday congregation of baseball worshippers who attended to get autographs of past Padres players and the like. How can it be that 100,000 FanFest fanatics were there on primary business? Did they all write off these visitations on their expense accounts? There were 51,549 at the game itself, which means that roughly half those folks on primary business couldn’t even get into Petco Park for the game.
FanFest was considered primary because the center checked hotels and Major League Baseball for “sponsors, workers, athletes coming from out of town,” says Rippetoe. All these were considered primary business attendees. That number was “suspiciously rounded” and probably included local residents, says Sanders.
Some in the tourist business have candidly discussed whether the homeless problem, along with the outbreak of hepatitis A, can deter future convention-center attendance. “We have sat with convention planners, and no one is telling me attendees will not be showing up,” says Rippetoe.
Apparently, that goes for doctors. The center boasts how many medical conventions it hosts. In fiscal year 2017, San Diego wooed and won such groups as the American Academy of Orthopaedic Surgeons, the American Association of Orthodontists, and the Society for Neuroscience.
The center overestimated attendance by those groups by a collective 8982. Will the center, in toting up its year-end results, use the faulty estimates or the actual figure? Rippetoe says it will use actual numbers, unlike in 2011. Sanders says he is skeptical.
It’s not clear whether San Diego will vote on a center expansion next year. What is clear is that voters should be wary of statistics on convention-center performance.
Comments
Convention centers are businesses, and in business location is often paramount. San Diego, for all its attractions, is not well-located. Virtually all the attendance at conventions and trade shows comes from one quadrant of the circular area surrounding the city. Very few come from points to the south, and to the west it is all ocean. Add that to the "flyover country" that is between SD and most points to the east and northeast, and you have a need to travel large distances. Chicago on the other hand emerged as the rail travel hub of the nation in the 19th century, and in the 20th century, as rail travel waned, emerged as a hub of airline activity. Today, for much of the nation, it is not all that far away, and has offered many big-city amenities and attractions for a long time. Add in the small, single runway "international" airport, and you have a picture of a distant and hard-to access city. (I will concede that SD does have better airline connections than might otherwise be expected for a metro area of its size.)
In traveling around the US, whenever we mention being from the San Diego area, anyone who has visited here will exclaim that it is a "beautiful city." That often has me scratching my head, but I have to remind myself that typical tourists and conventioneers don't see the whole picture. If they stay downtown, the views from the convention center and the high-rise hotels are impressive, with blue water, blue sky and (usually) abundant sunshine. And it they don't go farther afield than the Zoo, Golden Triangle, and beaches up as far as La Jolla, they see attractive areas. But if they stray in other directions from the waterfront, some very bad looking areas are nearby. Think of Barrio Logan with its mixture of toxic industry, heavy truck traffic, mixed in with old housing. It may be an interesting area to see, but it's not beautiful.
Could a competing convention facility in Chula Vista pull business away? It most surely would, but as far as civic beauty goes, the western side of CV isn't something all that attractive. There's a reason that the Chula Vista center hasn't been built yet; it would not pay off. Private investors want some assurance that they'll turn a profit when they invest, unlike public entities. All you have to do is look at convention attendance, note the downtrend, and decide to invest in something else.
Visduh: You make some good points. Add another: San Diego's poor airport situation.
I agree that Chula Vista isn't a beauty center. But I do not dismiss it out of hand, as the head of the downtown convention center does. Best, Don Bauder
I was there on Saturday at one of three events. My event peaked at about 400 visitors, 40 exhibitors, 10 speakers upstairs, and still the place looked empty. All morning people wandered the vast lobby trying to find their group.
About twice a year the joint fills up. The rest of the time it is a silent void, awesome and intimidating, drafty and unwelcoming. Stephen King would find it an ideal movie set. And yet they want to expand it?
swell: I see your point. And I would add that convention centers in the U.S. are very overbuilt. It is no time for ANY U.S. center to expand. Plunging prices should tell this industry something about a glut. Best, Don Bauder
Most of the large trade shows are held in Anaheim, Las Vegas, Orlando, Chicago and New York City. The second tier cities are San Francisco, Dallas, Atlanta, New Orleans and San Diego. San Diego has enjoyed the largest exhibitor, Comic Con, because it was organic – it grew its base and support relationships in San Diego.
Trying to poach well-established trade shows from those other cities will be difficult. New trade shows will develop, but never the size of Comic Con. The biggest trade shows are also global. Take the Paris Air Show and the Hannover Messegelände in Germany that hosts a third of the world's largest shows.
New trade shows? Well new trades shows for 3D Printing, Drones, and Robotics will most likely emerge. More likely, those technologies will be absorbed by the respective market or discipline they fall into.
CES (consumer electronics) will probably remain the largest show in the U.S., held in Las Vegas. At one time COMDEX (computers) was the largest convention but it imploded as new, more nimble and specialty trade shows became established. I feel Comic Con is starting to look like the COMDEX bubble and eventually the Comic, Video game, Streaming movies, and other industries will peel away. Everybody wants something they can’t get and what makes Comic Con special is scarcity of tickets. If everyone could get in, the magic would fade away.
Ponzi: Wooing trade shows from other cities will be particularly difficult with prices down by 50 percent or so in this glut. In some markets, space is being given away free, and some centers are actually paying conventions to come to their cities. This is spelled g-l-u-t. Best, Don Bauder
Don: I am curious as to where you got your information on the size of the crowd at the MLB ASG at Petco Park in 2016. Per Baseball Reference, the attendance was 42,386.
By the way, the largest crowd ever at Petco was 45,567 for opening night of the 2014 season.
aardvark: I have gone through my research materials and can't find my source. I can tell you this: I am confident it is valid. I have an editor/fact-checker on my columns and she would have checked it. Also, attendance reports on pro sports events are not uniform. You can often find several different numbers. Sometimes attendance reports are based on number of people who went through the gate, other times on number of ticket sols. Best, Don Bauder
don bauder, The BASEBALL ALMANAC does indeed list the All-Star Game attendance at 51,549. Unfortunately, that figure is NOT for the 2016 game in Petco, but instead for the 1978 game at what was then San Diego Stadium. The Almanac does list the 2016 ASG at Petco attendance at the afore mentioned 42,386. OOPS! http://www.baseball-almanac.com/asgbox/all-star-game-attendance.shtml
danfogel: I goofed. It's not the first time. Best, Don Bauder
Don: Putting over 51,000 in Petco Park would consist of management putting thousands of fans on the field of play. Not sure that would go over very well with MLB.
aardvark: Mea maxima culpa. Best, Don Bauder
Don: Goofs happen. Besides, you were right. Sort of. Just wrong year and stadium. But other than that... :)
aardvark: Not even close and no cigar. Best, Don Bauder
"Back in the day" as it goes I attended several conventions a year. The favorite locations were, in order of popularity, Hawaii, Las Vegas, New York & New Orleans. The vast majority of the conventioneers were from everywhere but the aforementioned places.Many could not afford to visit those places but for the convention rates etc. We stayed at unionized hotels because we felt that the employees should benefit from our attendance. Of course San Diego was out.
AlexClarke: I have always been skeptical of San Diego's claim that its location alone will fill up the center. First, the center is hardly filled up now. Second, the industry is grossly overbuilt so an expanded center is hardly likely to boost attendance. The unsolved homeless problem does not bode well for the local convention center. Best, Don Bauder
Chris Brewster: Building and expanding convention centers in this glutted market is strictly corporate welfare on steroids. The only beneficiaries are the hoteliers. And, as you point out, they don't care because it's taxpayers' money that pays for it -- not their money.
Why do you think some centers are paying associations to put their conventions in their cities? It's so the hoteliers can benefit. It is a direct payment from taxpayers to hoteliers. Best, Don Bauder
Balboa Park Heritage Association: San Diego has room to expand its hotel tax. But NOT for a convention center expansion. The funds should go to infrastructure and cultural causes including Balboa Park. Best, Don Bauder
Right on! The Park is the heart of our city and the most significant tourist attraction. It's one of the only non-commercial places left. No neon lights, no gaudy signs; thank goodness for our parks. The other major parks are adequately funded, but Balboa really needs maintenance work.
swell: Balboa Park buildings were not built to last as long as they have. Nonetheless, they are serviceable -- and mostly beautiful. One of the most important improvements that must be made at the park is in safety. There are too many violent activities, or fears thereof, that drive away visitors. Of course, other large metro area parks, such as New York's Central Park, have similar problems. Money must be spent on security. Best, Don Bauder