Conventionally speaking, North Texas is in growth mode. Irving, Frisco, and Allen are adding big convention center hotels, hoping to attract more dollars to their cities. Denton will open its first convention center and hotel this year, and Arlington plans to expand convention space as it adds a 300-room hotel at the Texas Live! entertainment complex next to the ballpark. Even tiny Roanoke, north of Fort Worth, is jumping into the fray.
Can these cities become meeting meccas? It’s far from certain—though a lot is riding on the outcome, since almost every project is backed with public money.
Grandiose thinking has produced a glut of convention center space across the country, prompting cities to regularly incentivize free rent and more to attract big groups, according to Heywood Sanders, a professor at the University of Texas at San Antonio and author of “Convention Center Follies.”
Sanders found that cities commonly rely on overly optimistic reports from consultants who typically recommend expanding a convention center or adding a hotel will lead to a big surge in trade show attendance. Often, he finds, those projections are never met. “Some cities have seen some increase in business. Most cities have not,” Sanders says. “They do not see a sustained significant increase in convention business, either with an expansion or with the addition of a headquarters hotel.”
Both Dallas and Fort Worth have used tax dollars to expand convention centers and add Omni Hotels, hoping to fill rooms and boost the local economy—åwith mixed success. In Dallas, revenue from convention center charges rose, increasing 16 percent last year. But the city still needs tax subsidies–more than $59 million in hotel occupancy taxes—to offset the center’s operating loss, according to the city’s latest annual financial report. At the end of the last fiscal year, Dallas was carrying about $300 million in convention center debt, and Moody’s and Standard & Poor’s downgraded its bonds.
Fort Worth reported a banner year in 2016, booking 12 “citywide” shows that brought at least 1,100 room nights to its hotels. The city is expanding further, replacing its current facility with modern exhibit space and adding a second hotel to “raise our status as a preferred meeting destination,” Fort Worth Mayor Betsy Price says.
But to fill growing spaces, cities will compete for business. According to the Center for Exhibition Industry Research in Dallas, the industry has been underperforming the overall economy, showing just moderate growth in the first quarter after stumbling through 2016. While business has bounced back, attendance is still not as strong as a decade ago, and convention center supply continues to outstrip demand.
To add allure, many cities are beefing up entertainment districts. Cathy Breden, the research group’s CEO, pointed to cities like Frisco and Arlington, which have pumped millions into sports complexes for the Dallas Cowboys and Texas Rangers and now hope to boost convention trade.
In older cities like Irving, expanded convention centers are seen as a catalyst for redevelopment, Sanders says. In 2011, Irving opened a new $133 million convention center off State Highway 114 in Las Colinas. It pumped another $80 million into the adjoining Music Factory, which boasts an amphitheater, a movie theater, and 25 restaurants. And construction has started on the final piece of the complex: a 13-story, 350-room Westin Hotel.
It wasn’t easy to get the project off the ground. A first deal fell apart when the developer couldn’t secure financing. Then the city turned to Provident Resources, a Louisiana nonprofit that used a Wisconsin public finance entity to issue about $75 million in bonds. Irving taxpayers are contributing $37 million for parking and meeting space.
Unconventional? Not when you’re betting tax dollars on conventions.
Steve Kaskovich is the Deputy Managing Editor of Business for the Fort Worth Star-Telegram.