It's not just Houston

We know, as Ginger among others has noted, that the national political conventions don't bring in that much money to the host cities. It happened in Boston, and it's expected to happen in New York (if Zoe's research is any indication, it could be even worse for NYC). That surely doesn't seem to have dampened any city's efforts to lure conventions or to build bigger and more expensive convention centers. The San Antonio Current has a two-part look at the history of the Henry B. Gonzalez Convention Center and the related efforts to add on a convention hotel for some disputedly large amount of money. If even tourist-oriented cities like San Antone can't turn a profit here, which cities should?

I must say, this bit has me curious:

According to the City's adopted annual budgets, the Convention Center's operating costs have consistently outstripped revenues. In 1993-94, operating costs for the center were $14 million, versus $2 million in revenue. The years 1994 through 2001 saw operating costs climb from $8.5 million to $10.7 million, and revenues increased from $2.5 million to $4.8 million. Last year, operating costs had climbed to $18.3 million, versus revenue of $6.2 million.

[...]

The City's five-year financial forecast for 2005-2009 predicts tourism will inject $7.2 billion into the local economy. Tourism ranks as San Antonio's second largest industry, employing more than 86,000 people, with an annual payroll of $1.37 billion. In 2003, more than 425,000 convention delegates booked by the Convention and Visitor's Bureau brought an estimated $383.5 million in direct expenditures in San Antonio.

Now, obviously, the cash from those 425K delegates mostly comes from things like hotels, rent cars, food, and entertainment (putting any qualms I may have about how they arrived at those numbers aside). It seems to me, though, that if you're only taking in $6.2 million in convention center revenue from 425,000 convention delegates, then maybe the problem isn't entirely one of a shrinking convention business. Maybe San Antonio needs to look at its cost model and see if they need to boost their fees a little.

Anyway. There's lots of good stuff in those two Current articles, so check them out.

UPDATE: Jesse points out why conventions, at least national political conventions, are bad for business. For what it's worth, in my experience a lot of this is also true for big technical conventions like Microsoft's MEC. On the plus side, if it's in the right city, one can meet some cool people.

Posted by Charles Kuffner on August 17, 2004 to The great state of Texas | TrackBack