Convention cities are spending hundreds of millions of dollars to remodel and modernize their meeting and conference facilities, along with adding hotel rooms, as the competition for this lucrative business heats up. But how will such moves play out in the long run? Here is a look at some prominent megaprojects that are paving the way for a new type of meeting experience.
A Bold Statement
When San Francisco revealed its vastly expanded and upgraded Moscone Convention Center in late 2018, the new space was greeted with a mixture of excitement over the bold structure and relief that the four-year monster building project was finally complete.
City boosters and meetings industry officials had promised that the hassles would pay off for local businesses and fill tax coffers. But locals saw it another way, bemoaning the constant construction, street closures and other inconveniences. In fact, San Francisco's visitor numbers had fallen dramatically in recent years, with room bookings for 2017 plummeting to 612,000 from the high of 1 million in 2014, due in part to the inadequacies of the available convention facilities while the overhaul was going on.
How to Protect Your Group From Renovation-Related Hiccups
It's not unusual for building projects to fall behind schedule. If you're planning an event soon after a grand opening, take extra care to protect yourself and your group from the consequences of construction-related snafus.
One red flag, says attorney Jonathan Howe, founding partner and president of Howe & Hutton of Chicago, is when properties offer sweet deals to bring business in after a renovation. "If someone says they are getting a terrific deal at a new or renovating property, I shudder," he says.
"I much prefer they arrange to be the second meeting." Here are some steps you can take to avoid pitfalls:
Keep tabs on the work. Request a monthly update on the construction; this could be in the form of a general con- tractor's report, standard for larger projects.
Set a drop-dead date. It's important to have a deadline for when you can walk away from the agreement without liability, if the contractor's report suggests that the space won't be ready by the meeting dates.
Get it in writing. Request written assurances that a property will be in complete compliance with building codes, and that the necessary facilities and amenities for the meeting, as well as the staffing, will be ready on time.
Have an alternative plan. Your contract should specify that if the work isn't done, the venue should be required to relocate your group at the property's expense to a comparable facility. It's a good idea to have a short list of appropriate options in mind, should the move prove necessary. And specify the remediations you will receive if the hotel is open but delivers a subpar experience due to renovation woes.
Stay in touch with local sources. Don't rely on the property; check in regularly with local hospitality reps and more objective sources closer to the scene. Set up Google alerts for updates on both the city and the property.
Even city tourism officials had to agree, with Joe D'Alessandro, CEO of San Francisco Travel, observing that the center's neighborhood had "suffered from the construction over the past few years."
The most tangible benefit from the $500 million investment in the Moscone Center's makeover is the 25 percent expansion in usable function space, creating a variety of areas that can allow for hosting more than one event simultaneously. The payoff already is evident: More than 1.2 million hotel rooms have been booked in San Francisco for 2019, a striking rebound from the slump of two years earlier. Major events scheduled for the first half of the year include the IBM Think Conference, expected to draw 30,000 attendees, and the American Psychiatric Association's annual meeting, with more than 14,000 delegates.
But it's more than just the added space that is generating buzz. The overhaul transformed the nearly 40-year-old Moscone Center from a drab, outmoded space into a striking work of architecture that won praise from design critics, and as such it is being watched closely by many other CVB and municipal leaders around the country. And some are even asking: Can convention centers — long dismissed as dull, warehouse-like structures on the edge of town — become an attraction themselves?
New Designs for the Future
"A lot of cities are having their Field of Dreams moment," says Henry Harteveldt, travel industry analyst at Atmosphere Research in San Francisco. "They're convinced that, 'If you build it, they will come.' "
While they might not grab the attention that marquee infrastructure projects like airports or high-speed trains tend to command, convention centers have been quietly transforming the very heart of the destinations they serve, and in the process are raising the expectations for what meeting planners are demanding in return for their commitment. "It's not enough to have space; it has to be attractive, open space," says Harteveldt.
And while many cities have sought to modernize their convention facilities over the years, the number of current and future projects in the works is staggering — meeting space in the current pipeline is up by 30 percent, according to some industry estimates.
The sense that convention business is booming has opened the spigot for the flow of investment into these public-works projects. The 10 largest opening from 2018 to 2023 (see chart, page 52) will cost more than $7 billion in total, not including all the ancillary development such as new hotels. San Francisco, for example, is expecting to add 3,000 hotel rooms within two years of the convention center's reopening.
Many destination officials insist that these projects will pay for themselves if they can grab a bigger slice of the convention-spending pie. Such spending is on the rise: The U.S. meetings industry generated $381 billion in 2017, according to a recent economic-impact study by Oxford Economics, an increase of 17 percent from the year before.
Also behind the current boom is the conviction — and worry — that if a destination doesn't get its convention space up to snuff, it'll increasingly lose out to competitors. "A lot of these cities are one-upping themselves" to come up with new inducements to draw big events and meetings, says Mike Davis, senior vice president for global consultancy ICF, who has studied urban private-public partnerships. "There is fierce competition going on among the cities that are in the league where they can draw this type of business."
Take the case of Miami Beach, where city officials came to the realization that their aging convention facility was a turn-off to meeting planners. "The building was old and lacked some things that could make it competitive for conventions and trade groups that draw tourists with spending dollars" was the damning assessment from none other than Miami Beach city manager Jimmy Morales. "We didn't have a big enough ballroom. We didn't have enough conference space."
Like San Francisco, Miami chose to make a bold statement by hiring top architects to redesign the exterior, which was out of step with the increasingly stylish local community that surrounds the facility. The collaboration between Fentress Architects and Arquitectonica incorporates more than 500 oversize "fins" of aluminum and glass to create a facade that's designed to evoke, appropriately enough, "an ocean wave rolling onto the beach," as one local tourism official put it.
Inside are no fewer than five ballrooms, including a 60,000-square-foot grand ballroom, and a 20,000-square-foot, glass-walled rooftop ballroom for VIP events. Less obvious to the naked eye, technology upgrades are fixing the center's unreliable WiFi and cellphone reception. Also vital to planners was the incorporation of tougher hurricane and flooding safeguards. The tab for this massive renovation, the main phase of which wrapped up last fall, is $620 million — scaled down from an earlier $1 billion projection. Among the larger meetings booked this year is Seatrade Cruise Global 2019, expected to draw more than 11,000 attendees April 8-11.
Another ambitious expansion recently took place in Louisville, where the Kentucky International Convention Center underwent a $207 million renovation that opened last August. The makeover added 50,000 square feet of exhibit space for a total of 200,000 square feet. And without expanding the walls of the building, the work managed to squeeze in another 40,000-square-foot ballroom. Officials predict the improvements will substantially increase the economic impact of the facility.
The expansion will allow the venue to bid for events of up to 10,000 people, giving it more clout to compete with regional rivals like Nashville, Indianapolis and Columbus, Ohio, according to Kentucky Venues, which oversees the KICC. Louisville's growing reputation as a jumping-off point for the "bourbon trail" — a whiskey lover's answer to Napa Valley — is also a potent draw for meetings.
Bigger Versus Better
Another big shift in convention center design is the trend toward opening the facility to the outside — making it more a part of the city itself. In Memphis, that mandate took on a particular urgency after the destination sought feedback from meeting planners about why, in a growing number of cases, potential clients had decided against holding their events in the Tennessee city — despite thriving music and foodie scenes.
"We reached out to local corporate users of our space, like FedEx and AutoZone, as well as planners from all over the country, and asked, 'What do you need to make it everything it can be?'" says Kevin Kane, president and CEO of Memphis Tourism.
What he heard was sobering. "Our building was seen as very inflexible," he says. "It needed to be more hotel-quality, with better breakout space." But perhaps one of the most surprising findings was "that we should take advantage of the river, take advantage of the outdoors." The center, after all, enjoyed a prime location on the Mississippi River, all but lost on most conventioneers if they were stuck inside a cavernous facility for much of the day.
"The style for convention centers 30 years ago was to be blocky and dark," Kane notes. "There was very little glass. Meeting attendees wouldn't know they were on a river."
Among the major changes delegates will see when the transformation of the Memphis Convention Center is completed in fall 2020 is a large glass wall on the side of the building facing the Mississippi, opening onto an outdoor veranda. Inside will be 46 breakout rooms that can be configured into different sizes, up from 30 now, and "everywhere there will be flexible walls," says Kane, to make the space more adaptable to different types of groups. "We're remodeling this facility with meeting planners and their delegates in mind," he says.
Like many such developments, this $200 million effort is being financed by a combination of lodging taxes and tourism-development-zone tax breaks. What's unusual is that the project will not grow the center's footprint. In fact, the available square footage for meetings will be slightly reduced in the renovation.
"Architecturally speaking," says Kane, "the exterior will have the look of a 21st-century landmark, with a lot of energy and atmosphere."
In recent years, the city of Buffalo, N.Y., has rebounded economically from a long period of decline and is increasingly a tourism draw — earning a spot on the New York Times' 52 Places to Go in 2018 list.
But that good news has not translated into a growth in convention business yet. In fact, it's just the opposite: The city's aging convention center — more than 40 years old — is a sore point for planners, who've made their feelings known to the powers that be.
"We've had the dubious distinction of being the oldest convention center in the U.S. that has never been renovated," says Patrick Kaler, president and CEO of Visit Buffalo Niagara. New York State's second-largest city has gone through "a complete renaissance" in recent years, he says, "with our waterfront development, our Frank Lloyd Wright sites and other attractions," not to mention its proximity to Niagara Falls. "But one of the things that the area is sorely lacking in is a modern convention center."
In 2017, as convention business continued to fall away, a consultant was hired to assess the situation. "He basically told us our current facility is functionally obsolete, and we should not bother to put any capital improvements into it," says Kaler.
Subsequently, two proposals rose to the top — one would build a brand-new facility on the river, and another would totally gut, renovate and expand the existing structure. Both concepts would effectively double the size of the current center.
[A consultant] basically told us our current facility is functionally obsolete, and we should not bother to put any capital improvements into it.
Patrick Kaler, President and CEO, Visit Buffalo Niagara
The jury is still out on which — if either — plan will proceed, but Kaler expects a decision to be made by this fall. That would likely mean at least another five years before the city would gain its much-needed center.
Kaler doesn't have a strong preference between starting fresh or razing and rebuilding — as long as one proposal gets the nod. "Either way, a new center will have a dramatic impact on our ability to attract major conventions," he says.
The community also needs to be convinced that a major investment of this sort will pay off for the local population. Kaler is hoping to persuade Gov. Andrew Cuomo to kick in a substantial sum to help Buffalo bring the project to life. He has reason to be optimistic: The governor has an impressive record for backing huge infrastructure projects, including the $1 billion expansion of the Javits Convention Center in Manhattan and multibillion-dollar overhauls of the city's two airports, LaGuardia and Kennedy.
Betting on the Future
Buffalo's dilemma is not unique: Many cities, from larger metropolises like Los Angeles to small cities like Fargo, N.D., are grappling with whether to take on the risks of major convention center projects for what can be an uncertain reward down the road.
For example, San Diego will ask voters to approve a multibillion-dollar expansion of its waterfront convention center when they go to the polls in 2020. The city says the upgrade is much needed, but local residents aren't so sure, having rejected previous proposals to upgrade the facility.
While there was virtually no debate on whether to increase the Big Apple's capacity to host major events, a different scenario has been playing out across the country in Los Angeles. There, the Anschutz Entertainment Group, a large entertainment and sports-management conglomerate, is pushing for a $1.2 billion project to expand the outdated Los Angeles Convention Center, which it owns. AEG also plans to build a new 850-room hotel adjacent to the center, featuring, among other amenities, what would be the city's largest ballroom. While LA Live and the Staples Center have brought more events to downtown, the convention center nearby is often derided as a white elephant, with critics calling it too small and inefficient to compete for big-name groups.
Developing these enormous convention centers was a big deal for many cities, particularly midsize cities. Not all of them were successful.
Mike Davis, Senior Vice President, ICF
AEG is poised to take on the job of both expanding the convention facility and building a new hotel, with a few caveats. One that has raised eyebrows: AEG wants to keep the occupancy taxes generated by the new property over the next decade, representing an estimated $167 million. That plan already has cleared several legal hoops, but it is also generating controversy, as a number of local politicians are questioning the notion of giving large subsidies to private-sector investors.
For ICF's Mike Davis, there are lessons to be learned from the building boom of a generation ago, which produced many of the structures that are now being overhauled to keep up with 21st-century design trends. "Developing these enormous convention centers was a big deal for many cities, particularly midsize cities, in the 1980s," he notes. "Not all of them were successful. Some took many years to fulfill their promise."
One problem in particular that these first-generation facilities suffered was the sensation of being cut off from their destination city, a decided drawback for delegates. The plan currently being floated in LA, Davis says, "is more in tune with the way we design now." The LA Live development, a cluster of retail outlets, restaurants and meeting spaces, along with outdoor promenades, is seen as more "livable" and feels like part of a local neighborhood, he notes. "It's more walkable. It has a sense of place."
With cities like San Francisco and Miami leading the way, more destinations will have to reexamine their meeting facilities if they want to stay in the game.