Revisiting the great Convention Center black hole
Published: August 15, 2012
There we go again. Or rather, there they go again. Local leaders keep spending hundreds of millions on our Henry B. Gonzalez Convention Center, and on its next-door Grand Hyatt hotel, in the hopes that the local convention business will boom.
We're about to do it again. More than $325 million is going toward the expansion of the convention center, demolition of the old San Antonio Water System headquarters building, and rerouting of Market Street. And we're doing it with real money, not just with hotel tax dollars. More to the point, we're doing it for almost no reason. The city's own consultant promises a mere 43,640 new hotel room nights a year — at best a 10 percent increase in the center's business, or fully one-half of 1 percent of citywide hotel demand.
The story starts back to 1990 when consultant Arthur Andersen told city officials we needed to expand the Henry B. Gonzalez Convention Center. The center was at "absolute full capacity" during high traffic months, and the national convention market was growing, at 7 percent a year. Build an expansion that will roughly double the center's space, they argued, and the HBG Center will see between 586,000 and 660,000 annual convention delegates by 2000 — a far cry from the 262,961 the center saw in 1998 or the 336,966 in 1999.
In 1995, an "expert" panel from the Urban Land Institute joined the chorus. The ULI group said we "must expand and renovate its existing convention center." We ended up adding less new space that the citizens group or ULI recommended, bringing the center to a total of 440,000 square feet of exhibit hall area. But there was still the promise that our number two industry was going to boom with a flood of new convention delegates.
There were arguments from the same city officials who had promoted the expansion that we needed a big new "headquarters" hotel next door to the center. After a series of failures, and with a financial commitment from the citywide hotel tax, the new Grand Hyatt finally opened in 2008. The city's consultant on the Hyatt hotel project, HVS, neatly predicted that the hotel too would boost the city's hotel business, adding a total of 150,000 new hotel room stays every year, to the 340,000 the convention center produced in 2003. Even without the Hyatt, the convention center produced an average of 440,000 hotel room nights from convention attendees in 2005 and 2006.
So how did we do with a $215 million expansion in 2001 and Grand Hyatt next door in 2008? We did the same convention business we were doing in 1998 and 1999 when Arthur Andersen made the case for expansion. The city's latest consultant report, once again from HVS, the folks who made the case for spending on the Grand Hyatt, showed attendance at the HBG Center at 341,392 in 2010 and 273,284 for 2011. Twenty years ago attendance averaged 300,000. Now it's almost exactly the same — not the 600,000 promised in 1990.
Our investment in a bigger convention center and a new hotel failed to pay off. So the lesson the city appears to have learned is that you just spend again, for remarkably little in return. Rather than just spend $325 million on a center expansion that isn't likely to get us any more convention business, why don't we think about ways we could spend that money on that really would boost tourism or improve SA? Perhaps on boosting local arts and cultural activities, which brings real promise of drawing visitors and improving the community. Perhaps on improving historic buildings and sites. Perhaps on something really imaginative and innovative. Or we can just keep believing in the same old promises.