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Lessons from Phoenix for SA's Gonzalez Convention Center?

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The new downtown Sheraton hotel opened in October 2008, followed by the tripled-in-size Phoenix Convention Center in December 2008. The promise was the combination of a bigger center and hotel "opens the door for Phoenix to vie for large conventions and events, which can bring tens of thousands of business tourists into the city at once."

Things haven't worked out quite the way the consultants forecast, or the city staff promised. The recession and struggling economy have played a role in the performance of the center and hotel, but the city never really recognized that there was risk and uncertainty. Phoenix had built a house of cards.

The grand new convention center did see 284,586 convention attendees in fiscal year 2009. But for 2010 that dropped to 229,097. Fiscal 2011 hit only 156,126. The current fiscal year, 2012, is on path to reach about 185,000.

Not 375,000 attendees. Not 350,000. Not 325,000. Just about the same convention business the old Civic Plaza had seen in 1996 and 1997. And with fewer convention visitors, the new Sheraton struggled. Its debt has been consistently downgraded by Moody's and Standard and Poor's; its average revenue per room in 2010 just $83.10 — not $115.00.

What are the lessons from Phoenix? First, consultant studies aren't all they're purported to be. PriceWaterhouseCoopers was telling a host of other cities they too would see more convention business at the same time they were making a case for Phoenix. They too would expand their convention centers, flooding the market. Second, the conclusions of the studies matter far less than the analysis. The real job of the consultants should have been to explain what might go right for Phoenix, and what could go wrong. They needed to explain under what conditions the city would succeed, and how it could fail. But the consultant studies didn't indicate uncertainty and risk. Instead city staff, elected officials, and local business leaders were told what they wanted to hear. Feel familiar? •

Heywood Sanders teaches public administration and public policy at UTSA. His column appears monthly.

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