Jan. 24, 2005 - Don't count Heywood Sanders among those bullish about the need for another Downtown hotel to help attract conventioneers to Pittsburgh.

If recent experiences in other cities are any indication, the new $104 million hotel to be built next to the David L. Lawrence Convention Center may not be the tourism magnet its boosters proclaim it to be.

"I can find no real empirical evidence that the new bunch of hotels has made any difference in the convention center business that we can document," said Sanders, who has made a career of challenging cherished assumptions of those in the tourism industry.

Rather than boost business, such hotels, particularly in less than robust markets, have the potential to drive down occupancy and room rates citywide, said Sanders, a professor of public administration at the University of Texas at San Antonio.

His latest findings come as the city-county Sports & Exhibition Authority tries to finalize an agreement with Cleveland developer Forest City Enterprises to build a 500-room "headquarters" hotel next to the convention center.

The Greater Pittsburgh Convention & Visitors Bureau sees the lack of such a hotel as an impediment in its efforts to attract business to the architecturally acclaimed convention center.

Several groups, including the National Rifle Association and the American Association of Museums, have raised concerns about the need for more hotel space near the convention center.

But Sanders found that new hotels in St. Louis; Sacramento, Calif.; and Myrtle Beach, S.C., all of which opened in recent years amid promises of increasing tourism, have not lived up to expectations.

In St. Louis, convention and visitors commission officials predicted that a new $265 million, 1,081-room headquarters hotel would boost convention center bookings from 30 a year to 50 or more and would nearly double the number of annual room nights to about 800,000.

But in the two years the new hotel has been opened, that has not happened, according to Sanders.

Twenty-five events were booked for 2003 and 23 were expected in 2004. Convention attendance was 155,700 in 2003, only slightly higher than the 154,800 the previous year. For 2004, it was estimated at 115,300.

Furthermore, the occupancy rate for the hotel in 2003 averaged less than 50 percent and the room rate averaged $110, far below a feasibility study's estimates of a 63 percent occupancy rate and a $131 a night room charge.

In Myrtle Beach, a 404-room hotel adjacent to the convention center opened in January 2003. In its first year of operation, hotel officials were looking at a 46.6 percent occupancy rate, far lower than the 65 percent predicted by a consultant, and struggling with a $1.2 million operating deficit. The overall occupancy rate for Myrtle Beach hotels was 59.3 percent in 2003.

A new 500-room hotel in Sacramento has done better, increasing room bookings by nearly 20,000 a year in 2002 and 2003. But the average daily rate charged by the hotel -- at $119.82 in 2003 -- was lower than the predicted $140. It has forced other hotels to drop their rates, Sanders said.

Nonetheless, Joseph McGrath, president of the Greater Pittsburgh Convention and Visitors Bureau, said he was confident that the proposed hotel next to the convention center would have the desired impact, not only in retaining business but in adding a bit more.

The demand for the new hotel space is not coming from consultants, he said, but from customers who have said there is a need for more rooms near the convention center.

He said the bureau estimates the new hotel will generate another six events each year at the convention center and another eight meetings a year that will take place in the hotel.

And while new hotels may not have lived up to expectations in some cities, they are doing quite well in others, such as Minneapolis, Denver, and Charlotte, N.C., McGrath said.

The bureau's goal this year is to generate 300,000 room nights for local hotels through conventions and meetings. That's 60,000 more than the 240,000 produced last year, the highest ever. Local officials would like to see that grow to 400,000 room nights with the new hotel.

Members of the Greater Pittsburgh Hotel Association have been divided over the need for the new lodging Downtown, with some believing it will boost business, while others feel it will drive down occupancy and room rates.

Sanders' St. Louis findings were included in a broader study released through the Brookings Institution's Metropolitan Policy Program, which found that convention center business has been declining for some time, even before the Sept. 11, 2001, terrorist attacks.

Sanders found that overall attendance at the 200 largest trade show events currently languishes at 1993 levels, even as cities continue to build new or expand existing convention centers to compete, or add amenities, such as convention center hotels.

He has likened such building to an arms race.

Over the last decade, public capital spending on convention centers has doubled to $2.4 billion a year, increasing available space by more than 50 percent since 1990. Overall, 44 new or expanded convention centers are being planned or built nationwide, his study found.

The International Association of Exhibition Management, whose membership includes show managers and exhibition suppliers, has disputed the findings.

It claimed that the report reflected only the results of the last three to four years and did not take into account the industry's "multi-decade record of consistent growth." It also said the report ignored recent upswings in business after the Sept. 11 attacks and a subsequent economic recession.

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