The Dallas convention center business is headed for catastrophe, thanks to a slow economy, an unmanaged center, a moralistic mayor, and a lap dance or two.
TAYLOR STANDS POISED ON THE MAIN STAGE. SHE’S an exotic dancer, but right now, at this exact moment, with music blaring and lights flashing, she’s not dancing. She’s crouching, bent at the knee, waiting eagerly and patiently at eye level for her customer to tuck under her G-string the $5 bill he’s neatly folded lengthwise.
Taylor and other dancers like her can make about $1,000 a night taking off their clothes and getting very familiar with men’s laps. To some Dallas citizens, particularly some on the City Council, such a sexually oriented business is distasteful and offensive. Others, however, see Taylor’s flirtations and gyrations as entertainment—risqué yet legal entertainment. Ask Taylor and she’ll say she’s just doing her job.
When Dick Martinez, a senior vice president of the Dallas Convention & Visitors Bureau, took a client to a gentlemen’s club, he was just doing his job, too. He was honoring the request of his guest. For employees at the CVB, the rule was, with prudence, you did whatever the client decided to do. Salespeople for the bureau are partly tour guides of the city. They are also obliging hosts for the meeting planners who book conventions for organizations that bring thousands of people to Dallas. A $1,000 dinner can lead to a $10 million convention. Sad but true: a five-minute lap dance might mean a three-year commitment. In the convention industry, such expenses are understood and expected, as are receipts for liquor and Mavs tickets and town-car services. They are all part of the system of selling Dallas.
Until recently, the system worked fine, generating billions of dollars of business in Dallas and making the city a leading convention destination, despite a dearth of unique tourist attractions. But a sluggish economy, skittish travelers, an anemic city budget, and a convention center under construction have led to a sharp decline in convention business for Dallas. And that was before the expense scandal that led to the resignation of CVB chairman Chris Luna and president Dave Whitney in January and before the City Council in March imposed the smoking ban on the city’s top convention venues. Add up all the factors—some outside the city’s control, some caused directly by the city’s actions—and you have what many in the convention business inside and outside Dallas are calling a Perfect Storm. The result might cost Dallas—us—billions in lost business.
The CVB is a largely misunderstood organization. It is part of Dallas government but it’s not, funded with tax dollars but not really. Nonprofit and independent, the CVB is a marketing firm for the city. Its budget comes from the occupancy tax, about 2 cents for every dollar spent on a hotel room, totaling about $11 million last year (down from $16 million pre-9/11). Unless you’re staying at a hotel in your hometown, that’s other people’s money. The bureau spends a large chunk of the money showing off Dallas to meeting planners and organization sponsors, convincing them that Dallas is the perfect venue for their convention, that our amenities are unrivaled, that our services are unmatched. If you bring, say, the Helicopter Association International’s annual North American event here, attendees will flock by the thousands.
For a conventioneer, the three- or four-day excursion can mean anything from a waste of time to an invaluable learning experience to an expense-account junket of good food and lascivious entertainment. For the city that hosts such a gathering, it means big money, a time when the hospitality industry and everyone else gets to cash in. Attendees spend a total of about $290 a day on hotels, food, shopping, transportation, and tourist attractions. The sponsoring organizations and exhibitors spend another $70 per day per delegate. With an average stay of 3.9 days per visitor, that means billions of dollars for the local economy. Over the past seven years, Dallas has averaged 3,600 meetings per year, with 3.8 million attendees and local expenditures of more than $4.2 billion.
With so much money at stake, competition among convention cities is fierce, now more than ever, as that Perfect Storm threatens to strike. That is, if it hasn’t struck already. Meeting planners schedule events years in advance, making it difficult to gauge how dramatically the elements have affected us. Here’s what we’re having to contend with:
A Rising Tide Lifts All Boats
“A DOWN ECONOMY” HAS REPLACED “THE dog ate my homework” as the most overused excuse of late—and with good reason. Everything from corporate bankruptcy to a missed sale can be blamed on a down economy, which includes the depleted coffers on the city, state, and national levels. In times of pinched pennies, the convention business and hospitality industry are the first and hardest hit. With companies struggling to meet their numbers, travel budgets vanish, and airlines and hotels consequently suffer. Suddenly, one of Dallas’ main moneymakers, DFW Airport, is not producing the inflow of cash we’re accustomed to. Dallas has always been an attractive city for conventions because of its accessibility and convenience. The city is no farther than four hours away from every major city in North America, and there are more nonstop flights to distinctly different destinations than anywhere else in the world. But no out-of-town passengers on those Dallas-bound planes means no out-of-town money, either.
Under Construction
AFTER THE AIRPORT, THE BIGGEST LURE DALLAS presents to potential conventions is the Dallas Convention Center. In 1998, city officials approved $128 million for the expansion of the facility, which re-opened September 28, 2002. Newer halls across the country were offering more room, and the larger conventions had outgrown Dallas. The renovated building now includes more than 1 million square feet of exhibit and meeting space. And Dallas now boasts “The World’s Largest Singular, Column-free Exhibit Hall.” That may not impress you, but unobstructed views are a big draw. With the new space, Dallas can now vie for the mammoth, expensive conventions that were too big to consider us.
“The Convention Center was a concrete barn,” says Greg Elam, senior vice president of communications at the Dallas Convention & Visitors Bureau. “Now it’s of equal quality to facilities everywhere else.”
There are only a couple of problems.
For one thing, Dallas isn’t the only city that’s updating its meeting space. Doug Ducate, president of the Chicago-based Center for Exhibition Industry Research (you knew there had to be one), notes that while the Dallas Convention Center is now competitive, the competition has never been keener. He says there are 21 new buildings under construction and 70 expansions that will open between now and 2006. That’s in addition to all of the new facilities that have opened in the last two years. After all that work, Dallas is the sixth-largest center in the country, which is where it was before the expansion began.
Plus, the convention center was under construction for years, a fallow period of hammers and drills during which bookings were understandably down. But future bookings also suffered. Imagine taking a tour of a fancy, amenity-filled house that’s already built compared to one still in the works. “It’s going to be great,” the salesman might say. “You just have to trust us.”
No One to Mind the Store
EVEN THOUGH THE EXPANSION IS COMPLETED, there’s still a problem with the convention center. Nobody is there to run it. “There’s no professional manager in the building,” Ducate says. “Shows are going away and saying, ’We aren’t coming back to Dallas because the service was so poor in the convention center. There’s frustration in dealing with these amateurs that you have in responsible positions in the building. I’m not saying these aren’t good people, I’m just saying, as compared to your competition, you’ve got to have a professional manager [helping to] sell the convention center.”
In November, the City Council shot down a proposal to privatize the operations of the convention center. Private authorities manage convention centers in Atlanta, Las Vegas, and New Orleans, but Dallas councilmembers still have confidence that the city can run the building.
Dallas City Manager Ted Benavides says he is conducting a nationwide search for a new building manager. If so, it must be a hard position to fill: the last permanent manager, Mina Boyd, resigned a year ago.
“We have a new convention center that, if we are not careful, will be the largest column-free bowling alley in America,” said Dallas CVB chairman Chris Luna before he resigned.
Room at the Inn— Lots and Lots of Room
THE ADAM’S MARK HOTEL HAS 1,842 ROOMS. Hyatt Regency Dallas has 1,122. The Wyndham Anatole has 1,640, not to mention all of the rooms at Fairmont, Adolphus, Le Meridien, and others. There’s no shortage of rooms for conventioneers, but there is a shortage of conventioneers to fill all of the rooms. The hotel occupancy rate in the city’s core has not crested 50 percent the past two years, which makes it counterintuitive to say that Dallas needs another hotel. But it does.
The CVB reports that 23 organizations have insisted they will not come back to Dallas until there’s a hotel next door to the convention center. Event sponsors and industry heavyweights want to be able to walk from the showroom floor to their private suites. They want to host special receptions across the street, without having to hop into a cab to get there. A new hotel would draw bigger clients, and the other hotels would benefit from the run-over.
“It seems to me an anchor convention-center hotel would provide undeniable synergy that would benefit all of the hotels and motels in Dallas,” says State Rep. Steve Wolens, who has authored a bill that would help finance a hotel in municipalities such as Dallas. The bill has been referred to committee, Wolens has asked for a hearing, and he is hopeful that it will pass next month.
Critics of a new hotel worry about taxpayers’ footing the bill for another private venture, but former CVB president Dave Whitney doesn’t see an alternative. “In the last 15 years, there hasn’t been a convention-center hotel built in America without public subsidy—maybe with one exception, and that would be Las Vegas,” he says. “That doesn’t mean writing a check. It could be a tax abatement. It could be shared revenues. It could be all kinds of different things.”
Hoteliers in particular aren’t swayed by the argument that a convention-center hotel is a cure-all. They feel that one more option for out-of-towners is going to dilute the already-bare market. “The hotel community’s position is ’downtown first, a hotel will follow,’” says Steve Vissotzky, general manager of the Hyatt Regency Dallas and chairman of the Hotel/Motel Association of Greater Dallas.
Or vice versa.
Downtown Turnaround
YES, DOWNTOWN IS UNDERGOING A FACE-LIFT, and great, fabulous, fun, wonderful things are in the works. But when a conventioneer looks out the window of the cab on the way from his hotel to the Convention Center, he doesn’t see intentions and blueprints for growth. He sees vacant buildings and half-empty sidewalks. Currently, downtown does not, as Elam says, give a visitor “a sense of success in Dallas.”
In more practical terms, it does not give a visitor much to do. Like every other major city, Dallas has plenty to offer in the way of culture, shopping, and entertainment, from the DMA to NorthPark to Six Flags to the aforementioned gentlemen’s clubs. But unlike our convention city competitors, our attractions are sprawled all over the area. There are pockets of nightlife near downtown, such as West End, Deep Ellum, and West Village, but nothing within convenient, stumbling-home distance. The Main Street revival (Jeroboam, Metropolitan, Stone Street) is a start, but Las Vegas it is not.
Don’t Smoke ’Em, Even If You Got ’Em
TALK TO PEOPLE IN THE HOSPITALITY INDUSTRY about convention business problems in Dallas and it won’t take long—maybe six seconds—for them to bring up the smoking ban. To hear them tell it, damage to convention business has already been done. The Hyatt Regency Dallas lost three-quarters of a million dollars when Cigar Aficionado and a major tobacco company canceled events. The Fairmont says they’ve already lost $250,000 from ban-related cancellations.
The meeting planners who pick cities and venues for their conventions want to be accommodating to all members of their party, even stigmatized smokers, especially cigar smokers. If one delegate out of every 10, even every 20, smokes, the meeting planner is going to find a place that’s smoker-friendly. Bye bye, Dallas.
Shocked! Shocked!
WHICH BRINGS US BACK TO TAYLOR. REMEMber the part about Taylor, the dancer? Of course you do, because everyone remembers the part about Taylor.
A story about convention business without mentioning gentlemen’s clubs would be like French fries without ketchup—it’s possible, but you’d know something was missing. Despite how often and how loudly some citizens protest them, gentlemen’s clubs are legal, tax-paying establishments that draw business. In Dallas, they happen to draw a lot of business. Dallas topless bars typically top the monthly alcohol sales totals in the state. The Lodge sells about $340,000 in booze a month; Baby Dolls is closer to half a million.
Don Waitt is publisher of the Exotic Dancer Directory, the trade magazine for adult nightclub operators from coast to coast (you knew there had to be one). “Dallas is one of the top three markets in the United States for the quantity and the quality of gentlemen’s clubs,” he says. He also points out that it’s no coincidence the top six markets for conventions are the top six markets for gentlemen’s clubs.
A visiting meeting planner, mindful of where his convention’s delegates might want to spend their free time, would surprise no one by wanting to check out what Dallas has to offer. And it should be no surprise that an accommodating salesman from the CVB would take him there if asked. In fact, if there were any shocking revelations about a recent exposé of the CVB’s receipts that found four such expenditures over the past two years, it would be the fact that there were only four such expenditures.
Thanks to an investigative report by WFAA-TV’s Brett Shipp, a variety of CVB expenses have been brought before the City Council and the court of public opinion. In addition to the handful of gentlemen’s club receipts that were reimbursed, expenses included $1,600 for a year’s worth of Dave Whitney’s airport car services, $4,500 in liquor over three years, and a $6,000 trip to the Ryder Cup in Scotland for a former bureau chairman.
But it was the trip to The Lodge that drew the most ire. As a result of the scrutiny, CVB chairman Chris Luna and president Dave Whitney were asked to resign, and the CVB was forced to change its policies. Now when employees are asked by clients to go to places like The Lodge, they have to pay for it out of their own pockets.
“[Luna and Whitney] were sitting there on television saying, ’If customers want to go to strip joints, we’re going to take them,’” Mayor Laura Miller says. “Well, no. I don’t think so. That’s not the way it ought to work.”
“It was not the perfect use of dollars, but a lot of spending isn’t understood by the general public,” says Steve Vissotzky of the Hotel/Motel Association. “We’re selling a destination.”
“It’s hard for people to really grasp what is or isn’t a legitimate expense and whether it seems to be excessive,” says new CVB chairman Pete Kline, who was appointed in February. “And we’re not the only city bureau that’s been criticized for its expenditures. We’re a marketing organization. The old saw in the advertising and marketing world in both public and private companies is you spend all of this money in advertising. You know that half of it’s wasted. You just don’t know which half.”
“Somebody is letting a moral issue on their part dictate whether or not your market makes money,” says Waitt of the Exotic Dancer Directory. “I guarantee you that the people in the convention and visitors bureaus in Atlanta and Miami and Orlando are jumping with glee that their counterparts in Dallas aren’t going to use what, I think, is probably one of the top two or three assets of your market to attract convention and tourism business.”
Miller anticipates another round of headlines and scandals when receipts from even longer ago come to light. She says she understands a $200 bottle of wine can make a difference in attracting convention business, but she believes CVB policies were violated.
“As far as I’m concerned, if the new revelations are like the other revelations, but this time it’s 1999 instead of 2001, I’m going to say, ’This has been fixed and this is not an issue,’” Miller says. “By bringing in a new chair and now looking for a new president, I really believe that the whole scandal stops in its tracks.”
But others, particularly those in the convention and hospitality business, feel the repercussions will last longer than she thinks. They feel Whitney was unfairly treated for doing what almost everyone in the industry believes was a superb job, and they think there was a better, less public, less destructive way to deal with the media blowup.
“Dave Whitney was, if not the premier convention and visitors bureau chief in the country, certainly in the top two or three,” exhibition expert Ducate says. “It’s a very, very competitive environment, and to lose one of the top salesmen in the industry that was representing the city is just a real tragedy, particularly at this time.
“We’re in the hospitality business,” he adds. “To complain about using hospitality environments for customers is nonsense. It’s just stupid, frankly.”
Dan Dobson, president of a Washington, D.C.-based convention and tradeshow management firm, says Whitney was one of the main reasons he brought business here. “Dallas is not an easy sell. I have booked business in Dallas in the past primarily out of respect for Dave,” he says. “The mayor doesn’t know a damn thing about the convention business. Her small, politically motivated attack on the bureau, I think, was one of the worst things she could have done as far as hamstringing the city.”
But more than upsetting Whitney’s colleagues and friends, the scandal has larger implications. Across the country, meeting planners have suddenly gotten the impression that Dallas doesn’t want their business. Bringing a convention to Dallas now has a political taint that some organizations would just as soon avoid, and—hey!—there are plenty of other convention cities eager to provide alternatives for them.
They’re as eager as Taylor, crouched on the main stage, waiting for that $5 tip.
