The Anaheim Convention Center, just five years after its last major expansion, needs a remodel. This time it may not be done with public funds.

The big challenge for the convention center: boosting space that suits smaller educational sessions rather than general sessions or exhibits. The convention center is in danger of losing market share unless officials can find a way to meet the growing demand for these type of events.

�We need more classroom space,� said Charles Ahlers, president of the Anaheim/Orange County Visitor & Convention Bureau.

The additional classroom space would allow the convention center to host two large events simultaneously without running out of smaller meeting�or breakout�rooms.

But with a $179 million makeover just a few years behind it�and city budgets squeezed by state cutbacks�Anaheim isn�t interested in funding another remodel.

�The city is looking for the beneficiaries of the (last) expansion to contribute,� said Greg Smith, executive director of the conventions, sports and entertainment department for the city of Anaheim.

A Business Improvement District may be the answer.

The Anaheim/Orange County Visitor & Convention Bureau is talking to convention hoteliers in the area to see if a district, which requires hotels or companies to kick in funding, is feasible.

It likely would include hotels in Anaheim, Garden Grove and Orange, Ahlers said.

California alone has about 200 Business Improvement Districts; there are more than 1,500 nationwide. Loss or potential loss of market share is one of the most common reasons Business Improvement Districts are formed.

If it moves forward, the renovation likely would include converting one exhibit hall to meeting space and building more space on an existing pad on the third floor. The reconfiguration would add 100,000 to 150,000 square feet of meeting space to the center.

The existing pad was intended as a ballroom when the convention center was expanded in the late 1990s. But it was a victim of budget cuts that also shaved back plans for Exhibit Hall E and eliminated landscaping changes on the Katella Avenue side of the center.

�The plans exceeded what was possible to do at the time. We did as much as we could,� Anaheim�s Smith said.

The convention and visitors bureau has paid for studies to see how Anaheim stacks up against other markets.

The feasibility study was completed in August. The cost study is due out late this month. Smith said it�s likely to be about $20 million to $30 million.

The feasibility study, by Minneapolis-based Conventions, Sports & Leisure International, found that Anaheim has the lowest ratio of meeting space to exhibit space among 14 competitive markets. That means its ability to attract some large groups is hurt, the study found.

While the average ratio of meeting space to exhibit space is about 3-to-1, Anaheim�s is 10-to-1.

Competitive markets include San Diego, Los Angeles, Phoenix and San Francisco.

The national average ratio is 4-to-1, according to data from Trade Show Executive, an industry publication.

�Ours is the worst ratio in the Western region,� Ahlers said.

In the Conventions, Sports survey of 250 meeting planners, meeting and ballroom space was the No. 2 reason for choosing a destination.

The study found the convention center can accommodate only 80% to 85% of those interested in booking the facility for meeting space, compared to 95% of those interested in exhibit space.

�It�s likely the Anaheim Convention Center event levels are not reaching their full potential due to a lack of meeting space,� the report said.

By doubling the meeting space, the study claimed the convention center could generate 50 more days of use from seven additional tradeshows. Delegates would spend $77 million more.

Biggest on the West Coast

The Anaheim Convention Center is the largest in total space on the West Coast and remains an attractive choice for group business, according to the study. But when the last expansion was under way, the meetings and convention business was booming and it seemed there was no end to the potential growth of the big trade shows.

�Anaheim is known for big trade shows,� Ahlers said.

Now market conditions have changed.

Since 2001, many groups have focused on having more training and education sessions to justify the expense and travel. The sessions require more breakout space.

And a few large shows previously held in Anaheim no longer exist, notably the National Electronic Packaging Convention and Telecomm West, which together brought about 50,000 attendees to the area at their peak.

While the convention center easily accommodates two simultaneous tradeshow groups, the increasing number of smaller educational sessions is stretching it thin.

A medical convention two years ago required space for 1,400 small sessions in three days, Ahlers said.

�Associations are hanging their hats on education,� he said.

About 75% of Anaheim�s convention business comes from associations.

The focus of the business district talks is on the major convention hotels.

If a district is created, an additional fee would be tacked on to the cost of hotel rooms to finance the remodel. The amount of the fee needed hasn�t been determined. There are no plans to involve other types of businesses at this time, Ahlers said.

Russ Cox, general manager of Coast Anaheim Hotel, just half a block from the convention center, said he�s in favor of the concept. "It�s a competitive market,� he said. �Every time some (other city) adds space, it becomes more competitive.�

There are roughly 30 new facilities or expansions under way nationwide. A handful debuted last year, including one in Denver. Palm Springs will open its expansion in the fall.

Nevertheless, not every hotelier here is excited.

�I can�t imagine that hotels would accept a significant assessment from the visitor and convention bureau to reconfigure the convention center,� said Dan Fitzgerald, director of sales at the Crowne Plaza Resort. �Maybe we should go after the business that does fit its profile.�

Other hoteliers are waiting to see what the costs would be before backing a business district.

�We like the concept and believe it would be a positive for the resort district,� said Edd Karlan, director of sales at the Hilton Anaheim. �But I�m not sure how the funding would work. We have some concerns.

Ahlers said the business district might need an overall investment of about $2 million per year to make it work.

That could prove to be a thorn in Anaheim�s side.

The city�s transient occupancy tax sits at 15%�among the highest in the county. A small Anaheim Resort District fee is tacked on to that at some hotels.

And there has been some resistance from meeting planners nationwide to so-called resort fees that in some locations add as much as 25% to the hotel bill.

�They have to ask themselves if it will result in diminished demand,� said Doug Traub, president of the Huntington Beach Conference & Visitors Bureau.

But Coast Anaheim�s Cox said Anaheim�s hotel rates are lower than other convention markets.

�This is a destination market,� he said. �An extra 1% to 2% tax probably isn�t a deal breaker.�

Huntington Beach, Laguna Beach, Santa Ana and Costa Mesa are among those Orange County cities that have used business districts to fund marketing campaigns, arts programs and convention and visitor bureau budgets.

For Huntington Beach, the Business Improvement District meant tripling the conference and visitor bureau�s marketing budget.

�If we hadn�t done it, we wouldn�t be on anyone�s radar,� Traub said

Sandi Cain is a freelance writer and contributor to the Orange County Business Journal and meetings industry publications. She specializes in hospitality, tourism and travel. Cain holds bachelor�s and master�s degrees in education from Kent State University in Ohio, where she majored in social studies. A former high school teacher, she has written for niche-market sports publications in the U.S., England and Australia and formerly worked in both the printing and high-tech industries. A Cleveland, Ohio native, Cain hasbeen a resident of Laguna Beach since the late �70s. She enjoys travel, gardening, reading and spoiling her three cats.