Of Cheeseburgers and Publicly Funded Convention Centers

The Maryland Public Policy Institute’s Marta Mossburg is beating a drum that simply can’t be beat loud enough: Stop throwing public tax dollars down the convention center rabbit hole. Or maybe it’s a political black hole because these white elephants just seem to suck up more and more money despite increasingly dismal performance. Once the conventional center (inevitably) fails to live up to the rosy forecasts of its promoters, elected officials dump millions of dollars into hotels through direct subsidies and tax incentives to prop up a failing industry. Still, the convention centers fail to generate the revenues the subsidizers had hoped, so politicians are sucked into piling more tax dolalrs into the economically doomed projects.

As Marta notes in a recent Baltimore Sun (June 7, 2011) commentary:

“Expecting a convention center to lead to job growth is like expecting a diet of double bacon cheeseburgers to lead to weight loss.

“Pretty much every person who lives in a city with a convention center and every economist knows it — except for people in organizations like the Greater Baltimore Committee (GBC) and Visit Baltimore. They are the ones pushing the nearly $1 billion public-private expansion of the Baltimore Convention Center, arena and Sheraton hotel.

“Take Baltimore, where 53,000 jobs exited the city over the past decade, along with 30,000 residents. Those figures are difficult to spin. So are the huge declines in attendance at many convention centers around the country and concomitant drop in hotel room nights.

“Consider Las Vegas, a top destination, where convention center attendance was 1.31 million in 1999 and 1.16 million in 2010 after a massive expansion earlier in the decade. Lest people think it was all due to the economy, peak attendance was 1.7 million in 2006 — or a 30 percent increase in attendees after a doubling in size of the center. The GBC proposal would more than double the current convention space in Baltimore.”

Marta’s column has a lot of good infor on how these projects have turned out to be misguided, off the charts dismal public investments. Here’s another taste:

Is it déjà vu, or do convention pushers suffer from a collective medical problem? As the saying goes, the definition of insanity is doing the same thing over and over again and expecting different results.

Either way, expanding the city’s convention center is “just wacky,” said Heywood Sanders, an expert on convention economics and a professor at the University of Texas at San Antonio.

He said that economic developers in Baltimore originally argued for a convention center with Camden Yards. After a center was built, it became a reason to lobby for more hotel space and entertainment venues to attract tourists in a never-ending treadmill of “If we build it, they will come.”

But don’t city’s need convention centers? Well, no they don’t. Yes, they need space to hold meetings, but they don’t need large convention centers, particularly ones that are empty most of the year. Private hotels have been providing convention space for decades, perhaps centuries, so they should be the primary providers of covention space now. The demand for large conventions, in fact, is fairly concentrated in a few key destinations: Las Vegas, Orlando, Chicago. Baltimore? Nope. Cincinnati? Nope. Note even Boston or Houston. So, let the private sector provide the space based on their ability to gauge demand and fund their facilities in private capital markets.

Reason has published lots of articles on these issues, and a lengthy magazne article by yours truly, “Ground Zero in Urban Decline,” may be worth another perusal.