Editor’s note: The following commentary appeared on CenterMaryland.org on March 18, 2016.
By Donald C. Fry
Maryland Commerce Secretary Michael Gill was quoted in news reports recently saying that his department will seek $3 million to fund a new study looking at options for an expanded Baltimore Convention Center and that he’s confident an expansion project will move forward “at some point.”
That is good news indeed as the need for an expanded Baltimore Convention Center has been seriously discussed over the last five years. In 2011, the Greater Baltimore Committee advanced a proposal, in collaboration with the late Willard Hackerman, for a combined convention center, a new and larger arena to replace Baltimore’s aging one, and a hotel. This plan would have substantially increased the size of the convention center.
Our failure to address the need for an expanded convention center has placed our tourism and convention entities, Visit Baltimore and the Baltimore Convention Center, at a competitive disadvantage for convention and tradeshow business. Destinations like Washington, D.C., Nashville, Philadelphia and Indianapolis have recently completed major convention center expansion projects. For example, Philadelphia, now has a 670,000 square foot exhibit hall, and Washington, D.C. built a 703,000 square foot exhibit hall. Baltimore lags behind with a 300,000 square foot exhibit hall.
Hopefully state legislators will support Secretary Gill and approve funding for a fresh consultant’s study to look at options and the economic impact of an expanded or new center. Originally built in 1979, the Baltimore Convention Center was last expanded in 1996.
A sense of urgency to fund and build an expanded Baltimore Convention Center must be forged between the governor and his administration, state legislative leaders, Baltimore City elected leaders, and the entire regional business community.
The Baltimore Convention Center is the largest convention center in the State of Maryland and is a key component of one of its economic engines – the hospitality and tourism industry.
Simply put, an expanded convention center is long overdue.
Staying with the status quo runs the risk of the convention center becoming a less attractive venue to convention and meeting planners, who have many locations to consider and select from when booking major events.
An analysis done in 2012 by a consultant hired by the Maryland Stadium Authority determined that if the Baltimore Convention Center was not expanded that the facility would likely see a decline in convention, tradeshow and meeting bookings at some point in the future.
A 15 percent decline in bookings would lead to a loss of $78 million in spending, and lost tax revenue of $2.1 million and $4.3 million to the city and state, respectively, according to the study by Crossroads Consulting Services.
The study further confirmed that two-thirds of the tax revenue generated from the convention center benefitted the State of Maryland with the remaining one-third going to the City of Baltimore. That ratio is consistent with the initial funding of the convention center and its 1996 expansion – a two-third contribution from the state and one-third from the city.
On the plus side, an expanded Baltimore Convention Center would result in an increase in direct and indirect spending, primarily in Baltimore City, of $214 million a year, the study found.
An estimated 6,500 jobs are tied to the convention center, a majority of which are in Baltimore City, according to the 2012 Crossroads Consulting study.
These jobs range from positions at the Baltimore Convention Center to others at hotels and restaurants that provide a range of services for convention and exhibit attendee as well as the vendors who supply the convention center with goods and services. The Crossroads Consulting study projected that an expanded Baltimore Convention Center would produce an additional 2,100 jobs statewide, again many in the city.
In many ways a convention center expansion project can be seen as a jobs project. It would serve to protect those jobs that currently exist while driving job growth in the hospitality and tourism sector that is tied to convention and tradeshow business. That industry is already one of the top three players in the local economy.
A new study would demonstrate the economic benefits that would result from an expanded Baltimore Convention Center and foretell the challenges or losses that might occur should no action be taken toward an expansion.
It is interesting to note that the 2012 Crossroads Consulting study surveyed meeting planners nationwide, and found that of those who responded, 57 percent ranked Baltimore below their top 10 sites when considering its current available convention space, hotel rooms, affordability and amenities.
But 81 percent said that Baltimore would move into the top 10 of destinations if a proposed major expansion – similar to the one advanced by the GBC – were to come online. Further, 30 percent said the size of their group and the length of the group’s stay would likely increase if Baltimore had such a facility.
It doesn’t take an economist to tell you that this additional activity would mean more dollars for paychecks, taxes, and the state’s economy.
Pending the positive economic outcomes anticipated from a new convention center expansion feasibility and economic impact study, it would seem prudent for state and local leaders, in cooperation with the business community, to designate the funding of an expanded convention center as a top priority to ensure that the Baltimore Convention Center improves its place in the competitive world of hospitality, conventions, and tourism.
Recognizing that there are many demands on government and taxpayer dollars, it is always difficult to find the perfect time for such an investment. However, the reality is that the failure to act and make the investment when the need is demonstrated will not only jeopardize the convention center’s current competitive position but also fail to protect the significant state and city investment that has been made to date toward the development of a hospitality and tourism economic engine.
Let’s hope that our elected officials recognize the importance of this issue and take the first step by funding a feasibility study to assess and confirm the benefits of such a state investment. The time is now for such a step forward.
Donald C. Fry is President and CEO of the Greater Baltimore Committee. He is a regular contributor to Center Maryland.