Apr. 20, 2003 - The Oregon Convention Center sales director halts his entourage -- as he often does now -- near the southwestern edge of the center's expansion. 

"This," says Matt Pizzuti, looking out the wall of gleaming windows at the sweeping view of downtown Portland's skyline, "is the place to close the deal." 

Convention center executives are hoping for handshakes that mean another business or trade group will gather in Portland. They project their new digs, feted this weekend with live bands and clowns for the kids, will pump as much as $575 million into the Portland area as early as next year and reverse the center's declining economic impact. 

But the expansion's honeymoon -- which includes an extra ballroom, 70 percent more exhibit space, nearly double the number of meeting rooms and an eco-friendly rain garden -- may not last long. The problem? Portland is one of dozens of cities nationwide chasing tourism as an economic painkiller, and there aren't enough meds to go around. 

A multiyear economic slump worsened by terrorism fears has depressed demand for exhibition space at a time when huge volumes of new floor space are entering the market. Plus, the Oregon Convention Center won't reap long-term returns if developers don't drop a headquarters hotel with hundreds of new rooms nearby, center officials say. 

"Portland's expansion is the proverbial drop in the bucket," says Heywood Sanders, a professor who studies the effects of convention centers and who is chairman of the University of Texas at San Antonio's public administration department. "Portland is a lovely city and perfectly pleasant destination, but it faces an enormously difficult, cutthroat, competitive marketplace." 

The convention building boom is producing a plethora of price cutting on renting floor space. Some of the biggest concessions appear to be coming from new or expanding second-tier venues, sites in the same category as the Oregon Convention Center that increasingly must compete with top-echelon facilities trying to lure more midsize functions to fill their ever-expanding halls. 

For example, the center in Louisville, Ky., is offering $10,000 cash back to associations that book conventions with at least 5,000 room nights. To snare the Macworld convention, the Boston Convention and Exhibition Center proposed free rent for the first two years of a three-year lease. And the operators of San Diego's bayfront convention center, which doubled in size two years ago, have reduced some rates and are increasingly asking local hoteliers to offer discounts. 

"This is what it takes to compete today," Sanders says. 

For its part, the Oregon Convention Center is promoting a "first-time" offer, giving away a choice of VIP parking passes, discounts on room rentals or other options to new customers. 

The struggles faced by the industry are a far cry from the flush days, when plans for most new convention centers or expansions were penned. 

The Oregon Convention Center, in Portland's Lloyd District, reached full capacity for some shows within four years after its 1990 grand opening, says Jeffrey Blosser, its executive director. 

"We started turning business away," he says. 

Hence, expansion planning began in the late 1990s as the stock market surged and the economy roared forward. In fall 1998, voters soundly rejected a property-tax plan to expand the center. But the Multnomah County hospitality industry later agreed to a 2.5 percent lodging and car-rental tax increase to fund most of the expansion. 

As a national and state recession percolated, ground broke on the project in early 2001. Blosser expected business to slow some that year because of construction. He didn't expect the Sept. 11 terrorist attacks and the resulting hiatus in travel. 

"Last year wasn't a whole lot of fun," he says. 

Sales staff didn't see mass cancellations, but attendance was "way off" for conventions and trade shows, falling 11 percent in fiscal 2002, Blosser says. 

Groups were "sending two people instead of three," he says. Revenues fell short of budget by "a couple hundred thousand dollars" last year. 

Last fall, Blosser postponed new hires and froze big expenditures. Revenue is running 5 percent behind budget this year. 

But leaders of Metro, the Portland area's regional government, don't expect the convention center to produce profits. Rather, it's meant to generate community investment -- in the form of tourist dollars -- and live off subsidies -- in the form of hospitality taxes. 

Those economic benefits have fallen for three consecutive years, though. Convention center officials are confident the expansion will help reverse that trend. 

Quilt-makers and square dancers -- not auto or boat shows -- make the Portland tourism industry click, Blosser says. They're also the catalyst behind the expanded center. 

When groups such as the International Quilt Market or the National Square Dance Convention come to town, Blosser says, so do thousands of out-of-town tourists dropping hundreds of dollars on hotel rooms, restaurants and trinkets. 

An auto or boat show, on the other hand, may generate more attendance, he says, but most are locals who may spend $20 on lunch, Blosser says. That's why about 95 percent of the convention center's economic impact to the Portland area comes from conventions and trade shows, even though the exhibits represent a third of the center's revenue, he says. The other two-thirds, from smaller meetings and consumer events such as the auto show, primarily help pay the center's bills. 

With an expanded convention center, Portland can lure more quilt-makers and keep pace nationally, Blosser says. 

The new facility puts it on par with those in Austin, Texas; Denver; Pittsburgh; and Baltimore -- cities that either have expanded their venues or are doing so, Blosser says. 

"The expansion allows us to get in a little bigger game," he says. "We'll never be a Vegas or L.A." 

International Quilt Market, which arrives in early May with as many as 6,000 visitors, would have headed elsewhere if the Oregon Convention Center hadn't grown larger, he says. 

"We were wall to wall in 1999," the last time the quilters came to town, says Wilma Hart, the show's director of operations. 

So far, the center has booked seven trade shows through the next six years. That represents as many as 48,000 visitors that officials say would not have come to Portland otherwise. 

But it continually will get tougher for the Oregon Convention Center as millions more square feet of floor space comes online nationwide, experts say. 

Exhibit space available in the United States and Canada increased 7.1 percent last year, to 72.4 million square feet, according to Tradeshow Week magazine estimates. Meanwhile, use of space was expected to fall 5 percent and attendance 6 percent. The figures come on top of a 3.1 percent decline in use of space in 2001 and a drop of about 10 percent in attendance. 

The declines the past two years represent the first negative trend in 30 years, according to the Center for Exhibition Industry Research. 

"If all the cities do the same thing, then everyone is running faster and faster to stay where they were," says Robert Baade, an economics professor at Lake Forest College near Chicago who has studied convention centers nationwide. "The market is really stressed at this point." 

And it appears as if it can only get worse, he said. 

Blosser is happy to have the bigger facility but admits that the Oregon Convention Center's expansion "only goes so far." 

He expects a 10 percent to 15 percent increase in convention and trade show business during the next few years as a result of the expansion. 

But those figures, he says, can turn into gains of as much as 50 percent if city planners and developers agree to build a headquarters hotel with at least 800 rooms or expand existing lodging properties. 

"It's critical to our long-term success," he says, attributing 75 percent of the convention's lost business to the absence of such a hotel. 

Without one, Blosser says, most large groups such as the American Medical Association won't even bother to "come look and kick the tires." 

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(c) 2003, The Oregonian, Portland, Ore. Distributed by Knight Ridder/Tribune Business News.