Are Convention Center projections always wrong?

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I have a number of objections to expanding the Convention Center. I was skeptical even before a global pandemic upended the convention and hospitality industry, leading hotel tax revenue (the only funding source) to plummet and prompting a massive shift towards remote work that may very well lead to fewer conventions even after the pandemic. I also don’t accept the premise that the hotel tax should be used to subsidize a certain economic sector; there are plenty of other ways to use that money that would likely deliver greater economic benefits to the community and it’s time for cities to start demanding that the state allow them greater flexibility in the use of hotel taxes. 

But let’s set those arguments aside for a moment and just focus on the case for Convention Centers. Specifically the case that is made by HVS, the consulting group that cities pay to tell them why they need to expand their Convention Centers. 

At the very least, the picture that HVS paints very often does not match with reality. The attendance and economic impact that an HVS-recommended Convention Center ends up generating often falls far short of what the consultants project.

A few recent examples: 

1. In Nashville, HVS argued in favor of a 2013 expansion of the Convention Center, projecting that the facility would be generating over half-a-million hotel “room nights” by 2017. The actual performance in 2017 was 359,000. (This discrepancy was not noted in the UT report on the Convention Center expansion that held Nashville up as a role model (pg 118)

2. In Raleigh/Durham, HVS projected that the new Convention Center would be generating 140,000 room nights by 2011. A report by another consultant in 2018, hired to consider yet another expansion, reported that the Center was generating 72,448 room nights a year. 

3. In Albany, HVS projected that the new facility would induce 104k room nights in the first three years of operations (2017-19). At the end of last year the city proudly reported the facility had generated 67k hotel stays during that time. (Granted, the new center wasn’t open the first two months of 2017) 

In its recommendation to Austin, HVS projected a far greater economic impact than another study by UT, even though both studies claimed to have use the same software program to project job-creation.  

If anybody is aware of instances in which HVS projections were met or exceeded, please let me know and I will dutifully report them. 

In some of these cases the industry defenders will say that the economic impact was good even if it fell short of projections. Fine. But at the very least we deserve realistic numbers when we’re making multi-billion dollar decisions. City Council should ask somebody –– perhaps the city auditor –– to conduct an analysis of HVS’ projections. How far off are their projections on average? We should know.    

This is just a small sample of what you get EVERY weekday if you subscribe to the Austin Politics Newsletter

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