Another Convention Center Report

We had a nice little last minute meeting on the convention center yesterday. This was meant to hear from the "independent" analyst, HVS consulting. The meeting was not as productive as it could have been because the power point was presented in hard copy form just before the meeting. So, all questions had to be developed on the fly. Not a great way to serve the interests of the public but I did my best to wing it.

Here are a few fun facts presented.

1. Nashville is wonderful.
2. A new convention center will improve the level of visitation.
3. On an operating basis, the convention center will lose money.
4. A hotel is critical for the success of the funding streams. Without it we would have to review everything.

We already knew Nashville was a great place. We live here and probably know that better than Mr. Hazinski from HVS.

The convention center will improve visitation but not a lot. In 2003, KPMG did an audit of our existing center. At that time, we had about 170,000 convention and trade show visitors. Mr. Hazinski estimates that after spending $1 billion we will raise that number from 170,000 to 209,000 AFTER 5 YEARS. That is right folks. We will spend $25,000 for each new conventioneer. At least we aren't claiming there will be 1,000,000 new visitors.

No one ever expects a convention center to make money so in some ways, this study is a very modest improvement. The Charles Johnson study indicated that we would make money. That was too much of a stretch so they now say there will be a modest loss AFTER 5 YEARS. Well, Mr. Hazinski was quick to point out that without a parking revenue number provided to him from another consultant whose math he did not verify, the loss would be about $5 million a year AFTER 5 YEARS.

Not in his presentation but part of the Q & A, HVS told us that the new center will generate about 370,000 new room nights AFTER 5 YEARS. That breaks down into about 125,000 to 185,000 new visitors. Mr Hazinski said we currently sell about 8 million room nights in Davidson Co. So, his estimates are that we will improve our visitation numbers by about 4%.

But the magic of convention center consultants never ceases. In the face of this modest 4% increase in room nights attested to by HVS, they are nonetheless suggesting that the $2 convention center fee (a great measure of demand) will increase 20% in the first 5 years. The HOT taxes (a measure of demand and room rates) will increase 45%.

Also of interest is the fact that all forcasting is done after 5 years. Given that the next decade (Gov Bredesen's estimate not mine) will be some of the toughest years for state and local government in a pretty long time, if those 5 years don't go well, we could find that this project makes a bad situation worse.