Public Spending On Convention Centers Soars As Convention Marketplace Declines
Plummeting demand for exhibition space has not deterred cities from spending $2.4 billion annually in the competition to lure conventions and tradeshows under the guise of promoting economic development.
A new portrait of the faltering convention and tradeshow industry was released in January by the Brookings Institution’s Metropolitan Policy Program.
The report, “Space Available: The Realities of Convention Centers as Economic Development Strategy,” finds that the overall convention marketplace is in serious decline, a downturn that began long before Sept. 11, 2001. Current attendance at the 200 largest tradeshow events, a key industry benchmark, languishes at 1993 levels. The report predicts that a major recovery or turnaround is unlikely, contrary to repeated industry projections.
At the same time, cities nationwide have doubled spending on convention center construction. A total of 53 cities have opened new or expanded centers since 2000, increasing available convention space by 50 percent over 1990 levels. Exhibition space, and competition for events, will continue to grow dramatically as 44 additional cities have planned or begun construction on new or expanded facilities.
“Convention centers incite an ‘arms race’ mentality among local leaders, and unfortunately this is an expensive competition with few winners,” said Bruce Katz, Brookings vice president and director of metropolitan policy. “Cities are taking on mountains of new debt hoping to grasp a brass ring, when the right focus is investing in core foundations of long-term, high-road economic growth. The transformative investments that revitalize cities and enhance revenue are those that build on existing assets and create amenities for educated workers and their families.”
Faced with increased competition, many cities continue to spend more funds post-construction on additional convention facilities, such as publicly-financed hotels to serve as convention “headquarters.” Another competitive response documented in several cities is offering deeply discounted or free exhibition space.
The report also finds that the major convention centers — located in Chicago, Atlanta, New Orleans, Orlando, Las Vegas and New York City — are continuing to build additional space to hold concurrent mid-sized events, a “downmarket” strategy that further dims the competitive prospects for dozens of smaller centers nationwide.
“Space Available: The Realities of Convention Centers as Economic Development Strategy” is available online at www.brookings.edu/metro. The report was prepared by Heywood Sanders of the University of Texas at San Antonio.
