May 8--The Convention Center is facing several major obstacles in its proposed expansion, a high-stakes venture designed to increase hotel bookings in the city and tourism throughout the region. 

Backers of a bigger Convention Center say it must expand to stay competitive nationally as well as to infuse struggling Center City hotels with overnight guests. An enlarged facility could hold a larger convention or two conventions simultaneously, increasing the number of out-of-towners who would need hotel rooms. 

But expansion is far from a given. Among the issues that confront city tourism leaders as they aggressively promote a bigger Convention Center: 

In spite of lobbying efforts, neither the city nor state has promised to fund the $464 million expansion. 

The larger Philadelphia venue is just one of 94 new or expanded centers planned to open by the middle of the decade. Thirteen of these would be about the same size or bigger. 

Two of those competitors -- Boston and Washington -- have begun expansions, and could start snatching business from Philadelphia. 

Attendance at conventions nationwide, including here, is stagnant or declining, reflecting changes in the convention industry. 

The mayor has acknowledged the need for a bigger Convention Center. But he has yet to publicly back the financing or boost the project in Harrisburg. 

Meanwhile, Gov. Ridge's spokesman, Tim Reeves, said it was unlikely that the governor would support the expansion for the duration of his term, which ends in 2002. 

Even if funding were to materialize, the earliest unveiling of a bigger center most likely would be in 2005. 

"We have to grow with our competition," said Tim Herrmann, vice president of convention sales for the Philadelphia Convention and Visitors Bureau. "The minute you stop, you wind up going from first or second [ranking] to third or fourth." 

With no expansion, the Convention Center would no longer compete with major cities. Rather, its competitors would become Richmond, Va.; Baltimore; and Hartford, Conn., Herrmann said. 

The number of national conventions and trade shows has changed little since 1994, bottoming out at 4,295 in 1998 and reaching 4,637 in 2000, according to Tradeshow Week, a convention industry publication. 

But individual shows are requiring more space because of an increase in the number of exhibitor booths. 

That is one of the reasons for the space race that is consuming the country from West Palm Beach, Fla., to Grand Forks, N.D. If all 94 planned facilities open, there would be a 25 percent increase in the space available today to hold conventions in the United States and Canada. 

The space race is "not a one-way street," Kapila Anand, national director of the hospitality division of KPMG L.L.P., warned. "What goes up has to moderate." 

Boston has already got that message. After recent criticism that they overestimated the demand for convention space, Boston tourism officials are reassessing their analysis of the national marketplace -- even though the foundation for the new center is being poured. 

Boston expects to open its new center -- one that is 17 percent bigger than the Philadelphia center's current size -- in 2004. And Washington plans to open a new center in 2003 that will be 64 percent bigger. 

Combined with a softening economy, the current convention center building boom presents a "bit of a paradox," said Edward Nielsen, former president of the International Association of Convention and Visitor Bureaus. 

National attendance at convention and trade shows has varied little in the last six years, according to Tradeshow Week. 

In Philadelphia, attendance at national conventions and trade shows has slipped dramatically in the last four years. In 1997, 354,300 people came to 45 major events, according to data provided by the Philadelphia Convention and Visitors Bureau. By the end of 2001, 198,000 people will have attended 46 events. These figures exclude public events such as the Philadelphia Flower Show. 

What's more, roughly half of the convention-goers attending major shows here between 1997 and 2001 were from the Philadelphia region. That decreases the likelihood that they would stay in a hotel. 

Hotel occupancy levels are more important than attendance, the Philadelphia Convention and Visitors Bureau said. The hotel room tax is what pays most of the debt service on the Convention Center. 

Since at least 1997, there has been little change in the number of Center City hotel rooms occupied by delegates from national conventions and trade shows. 

The reason is that the convention business is cyclical, Herrmann said. "It has to do with the available universe of associations that move their meetings from the West to the East Coast," he said. He said he expected the center to have its best year next year, generating a record number of occupied hotel rooms. 

The city turns down 360,000 potential room nights a year because the related conventions, such as the American Society of Heating, Refrigerating and Air Conditioning Engineers, are too big in terms of space, or the Convention Center is already booked, Herrmann said. 

However, studies by one expert, professor Heywood Sanders at the University of Texas in San Antonio, conclude that the only substantial growth in the convention industry is among the trade shows that require up to 1 million square feet of exhibition space. Only a few cities -- Chicago; Orlando, Fla.; Las Vegas; Atlanta; and New Orleans -- can offer anywhere near that space. Philadelphia's exhibit space contains 440,000 square feet, and would grow to 685,000 under expansion plans. 

"You can keep throwing money at it indefinitely, but you will always be behind the Las Vegases," Sanders said. "So what's the return on constantly having to get bigger?" 

In Philadelphia, hoteliers and tourism officials say the return would be 3,000 additional permanent jobs and millions more in tax revenues, and higher hotel occupancies. 

Philadelphia hotels rely more on convention center business than other cities. For example, Boston's convention-related business accounts for 21 percent of the city's hotel occupancies, whereas, in Philadelphia, it accounts for 40 percent of Center City hotel bookings. 

Because demand for hotel rooms did not keep pace with the supply, hotel occupancy rates in most cases are barely reaching their "break-even" level of 65 percent. In 1998, there were about 6,700 rooms available. That number rose to 10,000 in 2000, and is expected to reach 11,600 next year. 

That has led Sanders, the Texas professor, to ask whether the Convention Center, which opened in 1993, is achieving its mission of filling hotel rooms. "It played a role in getting hotels built, but look at those occupancy numbers," he said. "Did it create a kind of economic mirage?" 

City tourism officials, however, are focusing on a different question: What will happen if the hotel rooms remain at 62 percent occupancy in the next four years? 

"If they don't expand, does occupancy at hotels stay static at an unacceptable level, or does it go up to the 2002 level, which is marginally acceptable?" Tom Muldoon, president of the convention and visitors bureau, asked. 

"What if it goes down," losing business to especially hungry tourism officials in Boston and Washington? 

Those questions, and how much new debt the city can afford, are some of the ones being posed by the Street administration. 

Muldoon intends to complete a report evaluating Philadelphia's market share of the convention industry. He said it would be a plan "that will go to whoever is running for governor . . . so that they can see this has to be done, and here's why." 

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(c) 2001, The Philadelphia Inquirer. Distributed by Knight Ridder/Tribune Business News.