Texas consultant claims convention centre dreams are a far cry from economic reality. Industry insiders beg to differ
It’s a story Heywood Sanders has heard repeatedly from boosters and consultants in countless cities across North America. Each story involves the construction (or expansion) of a convention centre, along with visions of attracting a flood of visitors, boosting the local economy, and rejuvenating the city’s downtown.
“We’re a great city and we can compete with anyone,” Sanders, an American academic and author of the 500-page Convention Center Follies says, mimicking the boosters’ claims. “The rhetoric is remarkably similar from Austin to Seattle to Vancouver to Halifax and St. John’s. Everyone says that.”
Such claims currently abound in Atlantic Canada, with boosters of new and upgraded convention centres boasting of their ability to lure visitors with improved facilities, and with what they believe is a unique city setting.
“Everyone is always bullish. There are very few folks who aren’t bullish, which is one reason why there has been such an enormous increase both in the supply of space and in the competitiveness for a relatively fixed market,” Sanders says.
In other words, he’s saying that Atlantic Canadian cities aren’t alone — and are likely to fail — in their pursuit of convention delegates. So why is so much effort being put into the region’s convention landscape? Can it possibly pay off?
The biggest and most expensive East Coast convention centre project is connected to Halifax’s Nova Centre, a one-million-square-foot development in the city’s downtown. Roughly 30 per cent of the Nova Centre’s space will be dedicated to the new Halifax Convention Centre.
Scott Ferguson, the CEO of Trade Centre Limited, which operates Halifax’s existing convention centre and will oversee the new one, says the two sites are not comparable. “It is absolutely going to be night and day,” he says.
The existing site, built in 1985, has what are now “second rate facilities.” The grand ballroom is less than 20,000 square feet and has low ceilings. Low ceilings, pillars, and a lack of sunlight, Ferguson says, compromise all the other rooms. “So we’re slowly putting ourselves out of business.”
The new convention centre will contain 120,000 square feet of space (up from 50,000). “But most importantly, it is all quality triple-A space,” Ferguson adds.
The new and improved space will allow Ferguson to book multiple conferences at once, as well as individual conferences in the 2,000-delegate range.
Ferguson refers to claims that Halifax will struggle to attract conferences as “malarkey”. He notes that 30 conferences, involving 24,500 delegates, have been booked for the new site in its first three years.
According to Ferguson, much of the centre’s convention business will be drawn from hosting international congresses and annual national association meetings, which rotate around the country and involve groups from doctors to teachers.
The centre is scheduled to welcome delegates in April 2017, far off the original timeline. As a result, 17 bookings for the new site, scheduled for 2016, had to be cancelled. Fourteen of those were either moved to later dates or relocated to the old site.
Ferguson insists the cancellations will not impact his ability to attract conferences.
According to Ferguson, Halifax is “a favourite destination” and its downtown is “second to none”. “It can be an easy sell,” he says. “I think we’re the top destination in the country, frankly.”
As for local competitors such as Fredericton and St. John’s, Ferguson says Halifax is “better known” and a “stronger destination”. And Halifax can host multiple conferences. “I think we’re in this unique place where we are big and little at the same time,” Ferguson concludes.
The Nova Centre’s builder, Argyle Developments president Joe Ramia, says the Halifax Convention Centre will additionally benefit from being part of a building with a hotel, office space, and retail businesses. Other convention centres, he argues, are either “bustling” or “dead”, depending on whether a conference is in town. The $500-million Nova Centre, by contrast, will have thousands of people shuffling in and out each day.
“This will be unique. You’re sitting in the heart of the city. People love Halifax,” he says. “Halifax has something special.”
Michelle Eagles, operations manager at the St. John’s Convention Centre, says she isn’t concerned about the rise of a new East Coast convention centre, even one bigger than hers. “I think they will be going after the much larger (events),” she says. “And I don’t think we’re viewed as the same type of destination… We’re different enough that we do stand alone.”
Eagles insists St. John’s is a destination in itself, one that travelers seek out despite the higher cost of getting there. “People look for reasons to come, as opposed to reasons to not come.”
Still, Eagles admits the St. John’s Convention Centre, in its current form, is too small to pursue larger conferences. Last October, the centre closed for a $64-million upgrade that will double its space to 45,000 square feet. The expanded building will have two ballrooms and 10 meeting rooms, and a much larger lobby. Conventions in the renovated space are expected to start in May 2016. The upgrades will allow for self-contained conventions of 800 people.
“Obviously, any other convention centre in the vicinity is competition to some degree,” she admits, before adding: “While St. John’s is similar to Halifax it is very, very different.”
The Fredericton Convention Centre opened in January 2011 and, according to general manager Cathy Pugh, has averaged 225 events a year, from 10-person meetings up to conventions of 700 people. In 2014, the Centre hosted 23,200 delegates.
The Fredericton Convention Centre has 36,000 square feet of meeting and gathering space, including a 13,000-square foot ballroom.
Pugh says Fredericton is competing for events with Halifax and St. John’s, but also with the 24,000-square-foot Saint John Trade and Convention Centre (which was spruced up in the summer of 2013), the Prince Edward Island Convention Centre in Charlottetown, and Moncton’s Delta Beausejour, which, while not a convention centre, does host many large events.
“We’re optimistic that the new convention centres and renovated ones will attract even more business to our region,” Pugh says. “It’s more space in the marketplace but we’ll be able to attract more business to our entire region.”
Heywood Sanders’ extensive research of the convention centre industry doesn’t allow him to share such optimism. Sanders, a professor of public administration at the University of Texas at San Antonio, notes that Canadian cities from Ottawa to Niagara Falls to Winnipeg and Calgary have either expanded or built new convention centres in recent years, or are planning upgrades. And then there’s the U.S. market, where between 2000 and 2013, the supply of convention centre exhibit hall space grew by about 37 per cent.
Despite a steady and persistent increase in supply, demand for convention space is stagnant: in 2000, American convention attendance was 66 million. Last year it was up only slightly to 68.9 million.
Meanwhile, convention centre boosters seem to have adopted the Field of Dreams mantra that if they build it, visitors will come. To debunk that myth, Sanders points to McCormick Place in Chicago, the largest convention centre in the U.S. In 1996, McCormick Place recorded 1.28 million convention and tradeshow attendees. In 2000, it attracted 1.44 million attendees. Then, in 2007, a major expansion was launched to allow for more visitors. A half million square feet were added — a space larger than most American convention centres. Yet in 2014, McCormick Place attendance was way down, to 881,919 attendees.
“That’s the competition phenomenon,” Sanders says.
Sanders provides numbers to show that it’s a trend repeated from Las Vegas to Vancouver to Toronto.
“I see it happening over and over and over again,” he says. “If these things keep not working the way they’re supposed to — the way the consultants forecast — then why do people keep doing them?”
In Canada, he notes, the ability to secure funding from all levels of government helps lower the development cost of convention centre projects.
In the case of the Halifax Convention Centre, government funding is significant and controversial. The municipality and the province are each contributing $56.4 million to the project, while the federal government is putting in $51.4 million. Thus the three levels of government are putting up $164.2 million.
Also at play in the convention centre boom is the attempt by boosters to sell each centre as the key piece of downtown development and rejuvenation.
“That seems to be a particularly significant piece of the Halifax (situation),” Sanders says. “The new Halifax centre is in many ways the physical foundation for Joe Ramia’s large-scale mixed-use development. And we know that Nova Scotia Business Inc. (a government agency) has been seeking for some time to lure a major Wall Street financial firm from New York to Halifax to fill the office tower of that mixed-use development.”
(Ramia argues the Nova Centre has helped boost downtown development. “It’s been quite an impetus on what’s happening in construction and development in downtown.”)
In 2010, Sanders was brought to Halifax by a heritage group to help dispel the inflated rhetoric of the convention centre proponents. He spoke at a public meeting and was later invited to speak before city council. The project went forward, despite his warnings about the experiences of other cities.
On his return flight from Halifax to New York City, Sanders was seated across the aisle from an NSBI staffer who was headed to New York, with a rendering of the Nova Centre in hand, to lure a big city financial firm to Halifax. (It seems that effort has yet to produce a Wall Street tenant; Ramia won’t comment on tenant signings.)
“Can I say absolutely that a Halifax convention centre won’t do as well as promised? No, I can’t say that,” Sanders concludes. “But I can say that we know supply is increasing and demand, if it is (growing) at all, is doing so at a far, far slower rate. “We have an extraordinarily competitive market.”