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January 21, 2005

Convention Centers as Economic Development

It was more than fifty years ago that suburban growth began to explode, and central cities have never been the same since.  Businesses have gradually followed new housing and population growth out to the fringes of one urban area after another over the decades, to the detriment of many a downtown.  The trend continues unabated to this day, and the central business districts in some medium and large sized cities have yet to recover.  Their vibrant, dominant role in economic activity is just a memory, and the vacant lots and blighted buildings that dot their downtowns bear witness to their decay.

Those empty buildings are testimony to what can happen when patterns of growth change in ways we don’t anticipate, and old investments lose their value.

It’s a lesson that we should be mindful of today, as we contemplate new investments in our downtown infrastructures across the state of Indiana, in the form of new or expanded convention centers.  Does the growth in business justify the new commitment of public money?  Or will new and/or enlarged facilities fall short of their optimistic projections?

That’s a question posed by a new study published by the Brookings Institution.  Rather than analyze any one city or convention center in particular, they take a national perspective.  And what they see is surprising.

There’s been something like an arms race happening in the convention center business over the last ten years.  Big players, like New Orleans and Chicago, are getting bigger.  Medium-sized players, like Indianapolis and Denver, are striving to be big.  And new cities, from Sarasota to Pittsburgh, are jumping into the game.

Since 2000, 19 cities have built new convention facilities, and 34 have expanded existing ones.  And there’s more on the way.  According to Brookings, 44 cities, including Indianapolis and Fort Wayne, have plans underway for new or expanded convention centers.  Since 1990, the square footage made available for the nation’s top 200 trade shows has increased by as much as 40 percent.

Yet over that same time period, overall attendance has actually been declining.  How serious is the decline?  It turns out to be quite hard to say.  One of the frustrating aspects of the convention industry reported by Brookings is the paucity of quality data on such things.  But evidence from the 200 largest trade shows indicates a slow decline in attendance that has become more rapid since September 11.

The performance of individual centers in the wake of expensive new investments, as reported by Brookings, has been disappointing as well.

Despite expansion in hotel capacity, frequently as a result of public subsidy, steady expansion in facilities in Indianapolis have not increased overall attendance, which is now down 33 percent from  its high water mark of 1999.

The proper response to this decline, some have argued, is more investment.  Without competitive facilities, the logic goes, market share will erode and further declines are assured.  And the lack of reliable data to document the size of the overall market makes the rosy predictions of new business, that regularly appear in feasibility studies of new expansions, hard to dispute.

But at what point do the demands for new investment become too much?  It certainly is not an easy question to answer.  For there is no arguing that the benefits of a vibrant, healthy downtown are substantial, and the spending by those who travel from other regions to attend events here add to the local economic pie.

But if the findings of the Brookings study are any guide, then perhaps we should put away the blueprints and the earthmovers for a moment and start asking if there is some other way we can make that happen.

Link to this commentary: https://commentaries.cberdata.org/284/convention-centers-as-economic-development

Tags: economic development


About the Author

Pat Barkey none@example.com

Patrick Barkey is director of the University of Montana Bureau of Business and Economic Research. He served previously as Director of the Bureau of Business Research (now the Center for Business and Economic Research) at Ball State University, overseeing and participating in a wide variety of projects in labor market research and state and regional economic policy issues. Note: The views expressed here are solely those of the author, and do not represent those of funders, associations, any entity of Ball State University, or its governing body.

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