Built It and They Will Come…or NOT

Should Portland build a bigger Convention Center to attract more convention business? In 2003 Metro did just that, and the larger Oregon Convention Center (OCC) had little effect on boosting convention business. In fact, the OCC still struggles to book its new space to capacity. The total revenue from OCC operations actually decreased from $13.8 million in 2002 to $12.8 million in 2006.

What is Metro’s next idea? Build a new hotel to attract business to the Convention Center and use taxpayer money to do it. The cost of this proposed 597-room facility was estimated at $181 million in 2006. A new estimate released in June 2008 put the expense at $247 million.

After expensive research and numerous hearings, Metro still has not made a decision about building a Convention Center hotel. The Metro studies are disturbing in that each report is nothing more than assumptions. There is even a section entitled “Summary of Assumptions.” One example: Matt Springer, who works on the project for Metro, says they are hopeful that Westin, who will operate the hotel, will bring in convention business on their own. But there is no guarantee that Westin will do so.

If Metro follows their elusive dream and builds the hotel, it is unknown how much of the cost will be paid for purely by the public. As a matter of fact, no financing plan even exists. (Metro hoped to have one by late August, and the Metro Council is set to vote on the proposed hotel in early October.) All that is certain is that it will take hundreds of millions of dollars to build it.

By comparison, last month a new publicly financed hotel opened next to the Baltimore Convention Center. Baltimore is about the size of Portland. The Hilton Baltimore Convention Center Hotel has 757 rooms and cost over $300 million to build. Published reports show the number of room nights booked in all Baltimore hotels for convention conferences from 2005 to 2008 dropped by more than 70%, from 254,126 to 72,231. This drop occurred despite a valiant marketing campaign.

Major conventions are booked years in advance, so Baltimore knows their future new hotel was not a draw. The debate process in Baltimore in many ways foreshadowed the debate here in Portland. Many who testified painted a rosy picture for Baltimore’s future, using the “build it and they will come” argument.

The convention business is very competitive, with many cities offering major incentives to attract business. From free major league sports tickets to attendees to airport transportation and even free gifts, getting conventions is big business. Many cities are more centrally located than Portland. Others like Las Vegas offer 24/7 major entertainment. Portland International Airport is at the end of the line for most airlines; and with escalating airfares and gas prices, many organizations will ask themselves if it is worth holding a meeting “way out in Oregon.”

If the Convention Center hotel project is approved, a shortfall between actual income and public funding is likely, and that is once the hotel is open for business. With the new construction estimates, this shortfall is bound to occur even if the hotel meets or exceeds the booking estimates. Why did Marriott decide to build three new hotels near the Expo Center? Simply because Marriott knew there would be enough business in that area to make building new hotels a fiscally sound business decision.

It should be a clue to Metro when no hotel chain has been willing to build a hotel near the Convention Center that the market for one may not exist. The federal government has just stepped in to bail out four mismanaged financial institutions, establishing a disastrous precedent that has no logical endpoint. Local officials should not repeat the mistake by publicly funding a project like this one.


Jeff Alan is Chief Investigator at Cascade Policy Institute, Oregon’s free market research center.

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Posted by at 03:00 | Posted in Measure 37 | 29 Comments |Email This Post Email This Post |Print This Post Print This Post
  • John Fairplay

    I’m surprised they don’t lie about Convention numbers the same way they do with Tri-Met ridership.

    Given the increasing popularity of “stay-cations” and all the disincentives to travel, I expect Convention business in Portland to dry up considerably in the coming 12-18 months.

  • Jerry

    I am thinking they could fill this town up if they had a convention on how to trick poor people into buying lottery tickets. This state is really good at that. Also, we could have nude lap-dance session on how that is freedom of expression. And maybe a suicide seminar. And maybe some light rail conferences – that is working so well.

    But, to house all these people we must have a new, big hotel and by gosh, if the private sector doesn’t see the need then by all means let’s build it with taxpayer money. Why not? We need it, don’t we?

    • Reper

      Our politics are like a lottery. You always hope for something better than what you you get.

      • 8v4icnmpaf

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  • Rupert in Springfield

    Great.

    And now I really cant wait for more government involvement in the next great business idea, especially on a national scale. Based upon this performance, what could be better than the government picking winners and losers in new technologies in the energy sector. Electric cars resembling the Soviet Trabant spring to mind. Imagine the backyard chats at the barbeque.

    Wow Joe, did you see what Jack got himself that’s sitting in the driveway?

    Yeah, Jack must be doing really well. How does he do it?

    I don’t know, but Id kill to be able to junk my crappy Goremobile and be driving that beauty.

    I guess, but boy those Vespa scooters are really pricy since they were banned.

    Driving a killer always is Joe, it always is, sure would be nice to be in Jacks shoes though. You know, every now and then I have to go more than ten miles.

    How about being in Gores shoes Jack?

    Oh now you are really dreaming, an SUV? Are you kidding me?

    Yeah, well, Marge is really mad about it, she drove one ten years ago before they were banned.

    I guess, except for Al Gore.

    Well, as we all know, he really needs one, better not question it.

    Oh, that’s right, woops, forgot about hate speech for a minute there.

    Thats right, watch your mouth, President Pelosi hears all.

    I’m JacklordGOD, and I approved this message.

  • Anonymous

    Make it a Casino Hotel and it could be built for free and indeed increase convention biz, tourism and tax revenue for other regional liberal programs and boondoggles.

    A co-op of Oregon tribes could easily be organized to bring this about.

    But since it’s a good idea that will make a public profit not a single elected official in sight will advocate for it.

    Instead they are busy looking for millions to play with and waste.

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