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Dallas Convention Center Has Difficulty Getting Signed Contracts for
 Major Events; Only 5 of 23 Scheduled Conventions in
 2005 Have Signed Contracts
The Dallas Morning News
Knight Ridder/Tribune Business News

July 7, 2004 - During the next six months, the Dallas Convention Center anticipates a full house -- at least 10 major shows bringing more than 160,000 guests and an estimated $283 million in economic impact.

But for 70 percent of those events, some as early as next month, the center has no signed contracts -- and no legal recourse if client groups decide to take their dollars elsewhere.

Convention Center officials blame a strong buyers' market. It's hard to put pressure on clients, they say, when groups aren't lining up to use Dallas' facilities.

"If we had people knocking at our door, yes, we'd issue a challenge," said Daniel Huerta, interim director of the center. "That's not the case. We have to be careful we don't upset them."

But city leaders and hotel managers call the practice unprofessional and say it's a sign of deeper-rooted problems at the center.

"Other cities come and woo [groups] away because we have no contract with them," Dallas Mayor Laura Miller said. "Then we're left with empty hotels, empty restaurants and no tourism."

It's the Dallas Convention & Visitors Bureau's job to persuade a customer to hold an event at the Convention Center. But contract negotiations are left to the city, which operates the center. And until a contract is signed, there is no cancellation penalty or deposit requirement.

While a few convention hot spots, such as Chicago, Las Vegas and New Orleans, can afford to require a hefty deposit or cancellation fee before a contract is signed, "most cities in America can't get away with that," said Tom Noonan, senior vice president of convention sales and service for the Dallas Convention & Visitors Bureau. "Certainly not Dallas."

The Dallas Convention Center's goal should be to have contracts signed two years out, Mr. Noonan said. But it doesn't happen often. So far, only five of 23 scheduled conventions in 2005 have signed contracts.

Steve Vissotzky, general manager of the Hyatt Regency Dallas at Reunion, said the city's contract process isn't working. He said the lax contract policy leaves customers, the bureau, the city and the hotels vulnerable to "he said, she said" situations when details are finalized at the last minute. Not to mention the risk of cancellations.

"When you don't have a contract, there's no clarity," he said.

The city felt that vulnerability keenly 2 1/2 years ago when Irving-based Promotional Products Association International announced it was moving its convention to Las Vegas after more than two decades in Dallas. The group drew about 18,000 delegates to its five-day annual event and about $29 million in economic impact.

"There was no contract, and they canceled all future years with six months' notice," Mr. Vissotzky said.

Last year, the American Rental Association canceled its booking for 2005 so it could move its annual event to Las Vegas. Because there was no convention center contract, the group paid penalties to hotels that had contracts with the group but none to the city.

And earlier this year, Addison-based Mary Kay warned the city that it would cancel some of its smaller Dallas meetings if the hotel occupancy tax were raised to fund a new Cowboys stadium. While the Cowboys talks with the county apparently failed, the Mary Kay threat sent chills down city officials' spines.

This summer alone, Mary Kay's five-week beauty consultant seminars are expected to have an economic impact of nearly $100 million. But the center didn't receive the company's signed contract until Thursday, two weeks before the convention start date. And it still has no contracts for the rest of Mary Kay's "definite" annual events -- scheduled through 2020.

Ms. Miller said she first learned of the lack of signed contracts six months ago from concerned hotel managers. She said she told Ted Benavides, the city manager at the time, "We have got to get those contracts."

"I was amazed -- horrified -- to learn that there was no penalty and that we were sometimes not getting contracts until a few days before [the event]," she said.

In a May letter to several high-ranking city officials -- including Mr.
Benavides, Mr. Huerta and Phillip Jones, president and chief executive of the visitors bureau -- Ms. Miller wrote, "With other cities chasing our business, there is zero financial incentive to fulfill a commitment to come to Dallas if they can cancel a booking at the last minute with no financial penalty."

Mr. Benavides replied that increased competition in the convention industry has made it possible for shows to shop around.

"While we strive to contract shows out as far as possible, it is a 'double-edge sword,' " he wrote.

He also said he could only recall one instance in which a show that had planned to use the Convention Center and had signed contracts with local hotels pulled out of Dallas.

Local hotel managers are pressuring the city to get contracts signed because of orders from their corporate offices, Mr. Huerta said.

"The reason they're so aggressive is that they have performance plans where they don't get a bonus unless they get contracts," he said.

But as convention groups have gotten more consumer-savvy, Mr. Huerta said, it's harder to get groups to commit in writing. They hold spots with several cities and tie up their contracts in legal revisions, he said.

"When times are lean, everyone's trying to lock things up," he said.

"We're no different than anyone else."

Across the country, convention center managers agree: Hardly anyone is getting contracts signed as early as they would like. While flexibility is key, many centers have settled on a six-month cutoff.

A spokesman for the city-operated Los Angeles Convention Center said it is "pretty unusual" not to have a contract signed six months out. And at the Massachusetts Convention Center Authority, the rule of thumb is to have them a year out.

Dawn Poker, executive vice president of the Washington, D.C., Convention & Tourism Corp., said that group requires signed contracts no later than six months out. But in the industry as a whole, she said, it's not uncommon to wait longer to sign.

"Unfortunately, with today's business environment and the legal back and forth, it takes time," she said. "We require a fast turnaround. But every city is different."

Mr. Noonan said the Dallas Convention Center is overburdened and understaffed and faces bureaucratic holdups as contracts are shuttled among customers, city attorneys and convention staff.

"The process is broken," he said.

In an April survey of 41 events at the center, City Auditor Thomas M.

Taylor found six instances in which invoices weren't mailed until more than 30 days after the event, four of which were sent after 50 days. Full deposits for three events were not received 60 days before the event date, and four events had no evidence of insurance.

Hotel managers say confusion at the Convention Center has contributed to declining sales. They say some groups want a convention contract before they'll agree to sign a hotel contract.

"They're two separate contracts, but they go hand in hand," Mr. Vissotzky said. "If a customer doesn't feel secure that they'll have the convention space, they're not going to book with me."

Sandi Bailey, executive vice president of the Hotel Association of Greater Dallas, said the Convention Center has not been as aggressive as its peers. And it shows in the business that Dallas is getting.

"If the city is only focused on the center's bottom line, it's going to miss the impact on the bottom line for the whole area," she said.

For the mayor, the first step is getting the Convention Center a full-time director. After that, she said, the system probably needs an overhaul. But she'll be up against opposition. As recently as 2002, council members shelved a proposal to look into privatizing the center.

"It's a completely unprofessional business -- this is how we lose money in this city," Ms. Miller said. "We need to look at privatizing the Convention Center very shortly."

--By Emily Ramshaw and Suzanne Marta

-----To see more of The Dallas Morning News, or to subscribe to the newspaper, go to http://www.dallasnews.com.

(c) 2004, The Dallas Morning News. Distributed by Knight Ridder/Tribune Business News. For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.

 
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