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.
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.