Are Convention Centers Worth the Investment?

The economic impact a convention center has on a metropolis is in the billions—but not all are without controversy.

Are Convention Centers Worth the Investment?

"Convention centers seldom make a profit in their own right," said James Ingo Freed in 1989 as his design for an expansion of Los Angeles Convention Center began. "Essentially they are architectural machines designed to generate business for the city." Twenty-seven years later, his statement still holds true as convention center renovations and expansions quicken across the country. Every aspect of a city depends on large group business to fill hotels, restaurants and taxis; bolster shopping revenue; and increase entertainment sales. So the answer to the question above? Yes. The economic impact a convention center has on a metropolis is in the billions—but not all are without controversy from taxpayers. This handy guide gives a quick rundown of five to watch.

LOS ANGELES CONVENTION CENTER

Venue Stats 300 events in 2015, attracting 2.4 million visitors

Economic Impact $486 million

Screen Shot 2016-03-22 at 5.09.05 PMWhat the City Says “Generating $9 million in occupancy tax per year, we’re in fourth place behind San Diego, Anaheim and San Francisco,” says Brad Gessner, senior vice president of AEG Facilities and general manager of Los Angeles Convention Center. “Anaheim has 11,000 hotel [rooms] within walking distance of their convention center. San Diego has 9,000 and [Los Angeles] has 3,500 rooms.”

Renovation Start Date Late 2017

Expected Completion December 2020

Expansion Details A new 97,000-sq.-ft. ballroom; 59,000 square feet of additional meeting rooms; 145,000 square feet of new exhibit space

Added Amenities A 75,000-sq.-ft. outdoor ballroom; a 1,000-room hotel connected to the West Hall; 755 rooms added to nearby JW Marriott Los Angeles L.A. Live for a total of 1,633 rooms; a new 900-room InterContinental hotel opening in 2017

Controversy The convention center's new square footage isn’t being put on an empty lot—it’s going vertical atop existing postwar buildings—“some more tired-looking than others,” describes the Los Angeles Times. Instead of a high-designed, statement structure, the building will be pieced together.

Bankrolled By Bonds issued to pay for this project could be paid for by taxes already being charged to hotel guests.

KENTUCKY INTERNATIONAL CONVENTION CENTER Louisville, Ky.

Venue Stats More than 100 events in 2014, attracting 225,000 attendees

Economic Impact $53 million

[caption id="attachment_30158" align="alignright" width="250"]OmniHotelLouisville Added Amenities A 600-room Omni Hotel one block from the convention center is set to open in March 2018.[/caption]

What the City Says “The redesigned center will allow us to compete for more convention business, which helps support existing jobs and creates new ones,” says Louisville Mayor Greg Fischer. The venue will be closed during the two-year renovation.

Renovation Start Date August 2016

Expected Completion Summer 2018

Makeover Money $180 million

Expansion Details Additional 54,000 square feet of exhibit space and a new 40,000-sq.-ft., column-free ballroom

Total Space After Expansion 40,000 square feet

Controversy Seventeen clients had booked the KICC already for the two years it will be closed for renovation, and now seven will have to meet elsewhere.

Bankrolled By $56 million in general fund bonds and financial backing from Louisville CVB

ANAHEIM CONVENTION CENTER Anaheim, Calif.

Venue Stats Around 300 events per year, attracting 1.2 million attendees

Economic Impact $9.5 million annually

What the CVB Says “We were at a crossroads and knew it was time to improve our product and raise the bar on the quality of experience we were offering our visitors and guests,” says Jay Burress, president and CEO at Visit Anaheim.

Screen Shot 2016-03-22 at 5.23.15 PMRenovation Start Date April 2015

Expected Completion Summer 2017

Expansion Details Additional 200,000 square feet of flexible space

Total Space After Expansion 1.1 million square feet

Added Amenities 100,000 square feet will be column free with 25-ft. ceilings; new loading docks; reconstruction of a parking garage

Controversy In March 2014, the nonprofit paper “Voice of OC” published an article claiming the convention center expansion was sure to fail. Industry experts said the plan would put the city’s general fund at "tremendous risk because flawed revenue assumptions are all but certain to fall short," according to the article.

Bankrolled By A redirection of funds previously used for Visit Anaheim’s marketing efforts thanks to the creation of the Anaheim Tourism Improvement District, which collects 2 percent of hotel room rent. Taxes will not increase.

MIAMI BEACH CONVENTION CENTER

Venue Stats 106 events in fiscal year 2015, attracting 591,000 attendees

What the CVB Says “Miami has world-class airports and hotels, but our convention center was not world-class,” says Barry Moskowitz, vice president of sales for Greater Miami CVB. “We needed a technologically updated venue in order to keep up with other cities.”

Screen Shot 2016-03-22 at 4.48.30 PMRenovation Start Date December 2015

Expected Completion 2018

Makeover Money $515 million

Expansion Details A new 60,000-sq.-ft. grand ballroom; 81 breakout rooms totaling 190,000 square feet; a 20,000-sq.-ft. rooftop junior ballroom with terrace

Total Space After Expansion 1.4 million square feet

Added Amenities A 6-acre public park with a food pavilion and plaza honoring the city’s veterans; $6 million project to incorporate art by Miami’s renowned artists into public spaces; adjacent 800-room hotel (the center is in negotiation with several brands)

Controversy In 2013, a local Miami developer and architect team won the bid for $600 million in public funds to pay for construction costs. The center became a hot topic in the election season and eventually led to a court case that removed the plan from the ballot later that year. In 2014, a runner-up Denver team got the contract and had a lot of trouble getting construction bids. However, the designs and plans are set and the city is negotiating a final price with the contractor.

Bankrolled By A combination of general obligation bonds from Miami-Dade County, resort tax bonds, redevelopment authority bonds and parking bonds

LAS VEGAS CONVENTION CENTER

Venue Stats 49 events held in 2015, attracting 1.3 million attendees

Economic Impact $1.7 billion

What the CVA Says “The Las Vegas Convention Center currently operates at capacity during the peak seasons,” says Chris Meyer, vice president of global business sales for the Las Vegas Convention and Visitors Authority. “In order to attract new business and accommodate our current clients’ needs, we need more space.” 

Screen Shot 2016-03-22 at 5.28.19 PMRenovation Start Date 2017

Expected Completion 2022

Makeover Money $2.3 billion

Expansion Details New 100,000-sq.-ft. general session space; additional 100,000 square feet of meeting space; 600,000 square feet of new exhibit space; upgraded technology

Added Amenities The convention center expansion is part of the new Las Vegas Global Business District, which will include a trade center and a multimodal transportation hub.

Controversy Casino giant Las Vegas Sands Corp., which runs its own massive convention center on the Strip, is pushing back against the project. It believes tax dollars should be used on local infrastructure, not to compete with the private sector—or in this case, its recently completed expansion of Mandalay Bay Convention Center.

Bankrolled By Up to $150 million of commercial paper could fund Phase 1 elements. Las Vegas CVA dollars and public funding are also in play.