Big hopes, bad times
Officials see better days ahead, but critics say it's the wrong time to be expanding overline 4.5/30/1 Convention center expansion is complete Ñ how soon till it pays off?
Officials of Portland's newly expanded Oregon Convention Center look at their future bookings calendar with some trepidation: 2003 looks good, better than last year; 2004 is flat but shaping up; 2005 could be one of Portland's best convention years ever; but 2006 is below expectations.
The $116 million expansion was planned in 1999, when Portland was riding the high of economic good times.
It opened last week, though, in grim, uncertain days marked by war, recession, terrorism, high unemployment and a drop in business travel, the lifeblood of the convention business.
'We probably have the worst economy in the nation,' said Joe D'Alessandro, president and chief executive officer of the Portland Oregon Visitors Association, which markets the convention center nationally. 'The unemployment rate has grown. Add on top of that the international issues of war, terrorism, SARS, you name it. These are bad times.'
Thirty percent of all job losses in the United States since the Sept. 11, 2001, terrorist attacks came from the travel and tourism industry, mostly at airlines, D'Alessandro said.
Nationally, he said, leisure travel is up slightly, about 1.6 percent. But business travel is down 6 percent Ñ quite a change from the 1990s, when double-digit growth became routine.
But then again, the convention business never deals in the present, only the future, said Mike Smith, the association's vice president for marketing.
'Business is changing,' he said. 'Groups are concerned about the war and economy and are holding off their decisions.'
That said, local officials are optimistic but careful in how they talk about the immediate future of the Northeast Portland convention center.
Some shows are on the books that wouldn't have come to Portland had it not been for the expansion. The list includes the American Association of Museums gathering next month, bringing 2,500 people; an AFL-CIO national convention and trade show in April 2004; and an Intel Corp. science and engineering fair in May 2004, expected to attract 4,500.
These groups will use all of the exhibit space, all 50 meeting rooms and both ballrooms.
The visitors' association recently added a sales representative in Chicago and a second sales manager in Washington, D.C., home to nearly half of all national associations.
Portland officials say the convention center hasn't been hit as hard as those in other cities, in part because it relies not on one sector of convention business but on a diverse clientele that includes religious groups, trade associations, high-tech companies and education concerns.
But offsetting that is increased competition from other cities because of the recession. Portland lost conventions to big cities that suddenly dropped their prices to attract more business, said Matt Pizzuti, the convention center's director of sales and marketing.
The expanded convention center, though, should provide a big lure, officials said. The project added 407,500 square feet of exhibition space to the original 500,000, making it larger than the Washington State Convention & Trade Center in Seattle.
The expansion also means that Portland kept some business it might have lost to larger facilities For example, an international quilting show, meeting at the convention center for four days later this month, is expected to attract upward of 5,000 people to 1,120 booths that will use all available exhibit space.
The group met in Portland in 1993 and 1999 but would have gone elsewhere this year without more space, Pizzuti said.
'They would have outgrown us had we not expanded the building,' he said. 'That was one of the reasons for building the building. We needed to grow with the customers we had, let alone the new ones we could get.'
The Metro regional government likes to tout the convention center's economic impact. On the average, the center has brought $443 million into the local economy each year since opening in 1990.
The expansion should mean as much as $130 million more annually Ñ and a new headquarters hotel nearby might generate another $25 million, according to a recent study by Dean Runyan Associates, a Portland economic research firm.
Room tax collections are up 3.5 percent over a year ago, D'Alessandro said. It's a small increase, but still an increase.
Not everyone agrees with the decision to expand the center. Voters turned down a 1998 proposal for a 25-year property tax that would have paid for it. So, officials put together a package using increases in lodging taxes levied in Multnomah County and car rental taxes to pay for the bonds that financed the expansion.
Joe Cortright, an economic analyst with consulting company Impresa Inc., said he's uncertain about the wisdom of spending $116 million on the convention center industry, which has its biggest impact on employment in the hotel and restaurant business.
'When you look at the potential ways to invest our limited public resources, this isn't one that pays big benefits in terms of high-wage jobs,' Cortright said.
'It's difficult to imagine how they could have picked a worse time in light of what happened,' he added. 'It's been a real tough time for the travel business.'
A measure of a convention center's impact, he said, is whether it attracts business from outside its own region and not just local visitors attending auto shows, garden shows and home shows, no matter where in town they're held.
Convention center officials say they have been going after nonlocal business. And the center has been making itself available to niche markets, including gay and lesbian groups and Hispanics.
'You make sure every marketing dollar counts,' Pizzuti said. 'Our marketing dollars weren't cut but are being more closely scrutinized. We made some educated decisions on what to do and how to do it better. You have to really look at market segments that are hot.'
The biggest need, officials said, is for a major hotel nearby. Metro has been shopping the area to hotel chains but hasn't yet landed a deal.
'There is hope,' D'Alessandro said. 'We believe travel and tourism will help bring our economy out of this stagnation.'