Donald Fry: Report makes strong case for convention center project

By Donald C. Fry

The recently-released feasibility study of the concept of a combined arena-convention center expansion project near Baltimore’s Inner Harbor deals head-on with key issues raised and debated in the wake of the Greater Baltimore Committee’s announcement last May to champion the project.

The project’s concept includes the construction of a privately-financed 18,500-seat arena and 500-room hotel on the corner of Charles and Conway streets, connected to an expanded Baltimore Convention Center that would essentially double the center’s size to more than 600,000 square feet.

The study, conducted by Crossroads Consulting Services for the Maryland Stadium Authority, Baltimore City and the state, includes a comprehensive analysis primarily of the economics of expanding the convention center. It also offers a compelling look at the city and state’s stake in the highly competitive travel, tourism and hospitality business sectors, as well as the potential synergy created by the project.

Compelling evidence
Consider the following key findings relating to issues and questions raised during the last 10 months about the project.

• The value of the Hilton Baltimore
Early critics of the project questioned the value and viability of the Hilton Baltimore, the city-owned hotel connected to the convention center. Event planners surveyed and interviewed during the study indicated the opening of the 750-room Hilton Baltimore “was one of the primary reasons” for bringing their events to the city. The Hilton Baltimore has created $250 million in business from large citywide convention and meetings that could not have met in Baltimore without the hotel’s presence, according to Visit Baltimore estimates cited in the report.

• Competitive pressure
The report cites the expansion activities of a half-dozen of the Baltimore Convention Center’s direct competitors, including significant completed expansions of convention centers in Boston, Pittsburgh, Indianapolis, Nashville and Philadelphia, as well as the expansion of convention facilities in Washington, D.C., that is currently underway.

• Market demand
Baltimore’s existing convention center is maxed out, when it comes to meeting market demand, which has “equaled and potentially exceeded” the Baltimore Convention Center’s supply of space. The report notes that 243 potential meetings and trade shows were lost because the convention center was either too small to accommodate them or space was not available on the dates needed. This is business Baltimore is losing to its competitors.

• Effect of expansion in Baltimore
If the Baltimore Convention Center offered at least 500,000 square feet of exhibit space, the market for events at the center would expand by 368 events. Attracting between 3 to 5 percent of this expanded market would equate to as many as 13 additional conventions or trade shows, the report forecasts. Just one such show of 3.5 days generates $6.5 million in direct spending that supports 100 jobs and nearly $900,000 in combined tax revenues to the city and state, the report estimates.

• Effect of doing nothing
“Market research suggests that remaining static will likely result in a decline of event activity over time,” the report states. How much of a decline? A 15 percent decline, for instance, would result in an estimated loss of $78.4 million in annual spending, most of which would occur in the city. Such a decline would result in estimated lost tax revenues of $2.1 million and $4.3 million in the city and state respectively.

• Estimated economic impact of combined project
The combined convention center-arena-hotel project would spawn as much as $308 million in increased annual direct and indirect spending, of which the expanded convention center would generate $284 million. The new hotel and arena would generate up to $8.7 million and $14.4 million in new annual spending respectively, the report estimates. The entire project would yield the city and state between $19 million and $25 million in new tax revenues annually, of which the convention center would generate between $17.1 million and $22.8 million.

A dramatic contrast
Among other things, the report belies the core argument from critics that it would be futile for Baltimore to engage in an “arms race” with competitors for convention business. Event planners and travel industry customers who participated in the Crossroads study are telling us otherwise.

Clearly, convention and meeting market demand exists for Baltimore if we can only achieve the necessary facility capacity.

For Baltimore, the contrast between what is and what could be is dramatic.

More than half of meeting planners told researchers that Baltimore currently ranks below their top 10 sites for conventions. But if the proposed expansion takes place, Baltimore would move into the top 10 sites for 81 percent of meeting planners, 18 percent of whom said an attached new arena would positively impact their decision to hold an event at the Baltimore Convention Center.

Meanwhile, researchers also noted that Baltimore’s location near 3,500 associations headquartered in the mid-Atlantic region – 21 percent of all associations headquartered in the United States – is a valuable advantage as a convention site.

Meetings, travel and tourism already constitute a major sector of the economy in Baltimore and Maryland. The state and city have made significant investments in the convention/tourism industry. We must ensure we build on this business sector, not abandon it.

The combination of its location and the substantial opportunities that exist for the city as a convention and meeting location would be a terrible thing for Baltimore to waste.

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