|By Richard Rubin, The Charlotte Observer, N.C.|
Knight Ridder/Tribune Business News
May 1, 2005 - Charlotte's half-booked Convention Center loses money every year. Teleconferencing and tighter corporate travel spending keep hammering the convention business. Nationally, there's too much meeting space.
So why does the city want to spend $37.5 million on a new Convention Center ballroom?
One big reason, organizers contend, is the potential synergy with the proposed NASCAR hall of fame, which would be attached to the ballroom and provide a steady source of big events.
But two other reasons leading to the sudden push for a new ballroom were caused by the city itself.
Charlotte built competition for its ballroom by partly financing the Westin Charlotte hotel across the street. And in 2007, when light-rail trains start running through the building, the meeting rooms on the western side of the Convention Center will become tough to use for big events, said Tim Newman, CEO of the Charlotte Regional Visitors Authority, which runs the center.
The answer: a new ballroom, built only if Charlotte gets the NASCAR hall of fame.
At 55,000 square feet, the ballroom would be 57 percent bigger than the current one and would cost about as much as the ImaginOn children's library/theater opening this fall.
The ballroom would sit on city-owned land across Brevard Street from the Convention Center. Perched above an existing parking lot that would serve the hall of fame, the ballroom would be reachable via an overstreet walkway.
The expansion money would come from existing taxes on hotel rooms and restaurant meals, all designated for the Convention Center. The $100 million hall of fame would be paid by state grants, private money and a hotel tax hike.
Charlotte's Convention Center history reflects a national pattern of overpromises and failures, said Heywood Sanders, a professor of public administration at the University of Texas at San Antonio and author of a recent Brookings Institution study on convention centers.
"The city has now invested in a Convention Center, a hotel, a stop on the light-rail line and the light-rail itself and now this," he said, adding that expectations are often too high. "And every one of them's supposed to work, and not a one of them has to date, which would lead a normal, thoughtful person to begin to ask: Is there not a larger problem here?"
NASCAR was catalyst
Until the ballroom idea surfaced last week as part of Charlotte's bid for the hall of fame, city leaders had barely discussed expanding the Convention Center.
But NASCAR, with its race teams, sponsors and fan club, would bring a huge opportunity and a ready-made audience for the new ballroom, Newman said.
"We would not see a need for an expansion of the Convention Center unless the NASCAR hall of fame was coming, at least within the next four or five years," said Mayor Pat McCrory.
The Charlotte Convention Center opened in 1995, just before national convention business peaked, according to Sanders' study. Attendance at large annual trade show events has dropped to 1993 levels, according to the study.
In addition to competition from other cities, the Sept. 11, 2001, terrorist attacks dampened business travel. In fiscal year 2001, before the attacks, the Convention Center ran a $584,000 operating deficit and attracted more than 305,000 people to conventions and trade shows. Exhibit hall occupancy was 44 percent.
But in 2003-04, that deficit was $1.8 million, and about 234,000 people came to conventions and trade shows. The exhibit hall occupancy that year was 52 percent. Tax revenue covers deficits when room rents and sales do not generate enough money to pay for operations.
In his ballroom pitch to the City Council on Monday, Newman warned that the Convention Center was losing business to the smaller, newer and nicer ballroom across the street in the Westin hotel.
But the Westin, which opened in 2003, was partially financed by the city to provide hotel rooms and parking for Convention Center business. It has helped bookings, Newman said, but it has also hurt.
"The Westin ballroom has become the premier desired facility and we want the Westin ballroom to continue to succeed," he said. "That was an important project for the city."
Additionally, Newman told the Observer, the Convention Center must face a problem created by the light-rail trains that will start passing through the building in 2007. The trains, seven minutes apart during rush hour, will make it difficult to use the smaller meeting rooms on the west side of the Convention Center.
One solution would turn the current ballroom into meeting space and use the west side for offices. That project would replace a proposed escalator system to take people over the tracks, from one side of the Convention Center to the other.
In 2001, when the city was preparing to build the tracks, Convention Center officials worried that the rail line would scare off some conventions and they suggested a viaduct to bring the train above the floor. But that was too expensive and complicated, said city engineer Jim Schumacher.
"It was an absolute mistake (and) now we have to suffer the consequences," said ballroom plan supporter Mohammad Jenatian, president of the Greater Charlotte Hospitality and Tourism Alliance.
The City Council unanimously endorsed the ballroom concept Monday as part of the NASCAR package.
The idea makes sense, if it's necessary to land the NASCAR project, a tourism plum that five other cities are fighting for, said Republican council member Don Lochman.
But Convention Center expansion logic still troubles him.
"If you don't have it, they say we can't bring people here," Lochman said. "If you build it, then you say it's no different than anybody else. We've had this problem. No matter what you do, it's never enough."
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