For some reason, politicians are infatuated with building stuff. They’re objectophiles, aroused by, even obsessed with, things rather than people
In Portland, politicians have fallen head over heels in love with the idea of building a Convention Center hotel. The object of their desire is a subsidized $212 million 600-room Hyatt Hotel.
But the fact is, it was a bad idea right out of the gate and it’s an even worse idea now.
On the one hand, given Portland’s vigorous emergence from the Great Recession and a skyline brimming with construction cranes, the assumption that government-mandated subsidies are critical to building a convention center hotel is outdated if Metro believes the hotel’s success is a slam dunk. On the other hand, if the growing competition in the convention market will make adding a subsidized hotel a foolish gamble, then why do it at all?
“Faced with convention centers that are routinely failing to deliver on the promises of their proponents and the forecasts of their feasibility study consultants, many cities wind up, as they say, “throwing good money after bad,” said a Brookings report. “Indeed, weak performance—an underutilized center, falling attendance, an absence of promised private investment nearby—is often the justification for further public investment. A new center is thus often followed by a subsidized or fully publicly-owned hotel…”
So here we are.
The Portland project would be funded with $60 million in Metro-issued revenue bonds, backed by taxes the hotel would generate, plus $18 million in grants and loans from Metro, the Portland Development Commission and the state lottery.
But there are problems with Portland’s hotel proposal, as well as with the arms race of convention center-related construction going on around the country. According to CityLab, there simply aren’t enough big conventions to justify all the convention center expansions. Since 1995, convention space in the United States has increased by 50 percent, but convention growth hasn’t kept pace. “So many were saying, ‘all you have to do is get one percent of the national market and you’ll do just fine,'” he says. “Three hundred cities bought the same logic.”
In fact, the number of conventions in the United States has fallen over the past decade, as has attendance at the largest conventions.
The optimistic predictions for the Oregon Convention Center and an associated hotel neglect to consider that lots of other cities are expanding, too.
Boston is considering a $1 billion expansion of its convention center with a massive 1,200 room $800 million hotel. A Marriott Marquis Hotel is expected to open in 2016 across from the George R. Brown Convention Center in Houston. Hotel operators Omni, Hyatt, Starwood, Peabody and Marcus have shown interest in a request issued by Oklahoma City to develop a 500- to 800-room downtown convention hotel to go with a $287 million convention center scheduled to open in 2019.
Even Des Moines, Iowa is in the game. In Feb. 2015, city and county officials approved a $101 million 10-story 330-room convention hotel project attached to the Iowa Events Center. Officials said they expected the project would draw many more national events to Des Moines and add considerable revenue to the property tax base.
And the list goes on and on.
But not to worry. Portland has advantages because it’s a happening city – food, culture, livability, young professionals – enthused the Oregon Convention Center’s ebullient 2013-2014 Annual Report. That year, the Center hosted 343 events attended by 549,762 people, many of them first time visitors to Portland, the report proclaimed.
But dig deeper into the dry numbers at the end of the report and you’ll find a less glowing story.
The number of events at the Oregon Convention Center actually shrank from 469 in FY2011 to 392 in FY2012, 377 in FY2013 and 343 in FY2014. Meanwhile, net operating results showed losses growing from $10 million in FY2011 to $11.6 million in FY2014.
Despite these numbers, and continuing controversy over the planned subsidized hotel, Metro president Tom Hughes calls critics “short-sighted and selfish” for wanting a public vote on the hotel project.
The hotel plan “promises generous returns for many years to come,” Hughes has said.
So we slog along.