About The Dallas Convention Center Hotel Idea…


Trouble,
Oh we got trouble,
Oh, we got trouble
Right here in Big D
With a capital “T”
That rhymes with “C”
And that stands for Convention Center Hotel

Tell me if any of this sounds familiar.

Today, the cavernous [convention center] is only partially utilized.

“You can’t look at the hotel by itself,” says [the mayor]. “We’ve got a tremendous investment in the convention center. The hotel will help us get a better return on that investment and help it reach its potential.”

“I’d say — not even reluctantly — that this is an investment that we ought to be making. There’s going to be risk involved, but we’re willing to take the risk. We’ve made a decision that we’re going to get into the convention business. We should make sure that we make that convention business the best it can be. We can’t do that without a first-class convention- center hotel,” [the mayor says.]

Yes, it does sound familiar doesn’t it? Come along with me, dear reader, a little deeper down the rabbit hole.

The biggest argument for the hotel is that it will allow [the city] to draw additional convention business — an expectation that’s supported, in part, by anticipated bookings compiled by the … Convention and Visitors Commission. “That hotel is going to allow [the city] to host more major conventions during the course of any year…,” says the CVC president.

And then the convention and visitors boss predicts this:

[He] estimates the number of major conventions will climb from 33 to more than 50 a year after the new hotel goes on line. A corresponding increase in smaller meetings should help boost convention-related hotel business from 413,676 room nights [now] to 800,000 a year, according to CVC projections.

So is this Mayor Tom Leppert and Convention & Visitors President Philip Jones?

Close. It’s the now mayor of St. Louis and the president of their equivalent of Dallas’ CVB, back when they sold the city of St. Louis on the need for a city-owned convention center hotel in the late 1990s, putting St. Louis taxpayers on the hook for hundreds of millions of dollars, all based on rosy projections. Read the full story here.

So the obvious question is, how did that work out for them? I’m glad you asked.

In September 2000, a division of HVS International…said the St. Louis convention center accounted for 460,000 room nights in the city annually. “It is expected that with the addition of the subject properties, the city will be able to accommodate over 800,000 room nights in future years,” HVS reported.

And what was the reality?

Instead, from a peak of 500,000 convention room nights in 2000, the total fell to 400,000 in 2003. It is now projected to be 470,000 in 2007.

Source.

So their total gain in room nights — city wide — was 10,000. Almost no change at all. Despite hundreds of millions sunk into the St. Louis convention center hotel. Which, by the way, is a four-star hotel that if you use priceline.com, you can get a room in for about $55. Guess what that does to the market for private hotels that aren’t subsidized on the taxpayer dime?

So wait, you ask, who was that who made those rosy projections about St. Louis’ convention center hotel?

Why, it’s HVS, which seems to travel from city to city like Professor Harold Hill selling city after city on this really bad idea of owning a hotel when no private developer would build them. The very same HVS who, after a 2004 study that said Dallas shouldn’t bother with a convention center hotel, came back in 2007 with another study that said Dallas should.

Funny that. Looks like we’re traveling down a well-trod road.

PS – The Dallas Morning News on Sunday endorsed the notion of putting the city owned convention center hotel to referendum. Good work.

Update: Good info on the bond situation in financing the convention center hotel here from Sam Merten.

Comments

  1. So maybe St. Louis was a terrible failure, but don’t forget HVS sold city-owned hotels to Brockway, North Haverbrook and Ogendenville, and by gum, it put them on the map!

  2. David Robison says:

    Inept. Incomplete. Irresponsible. Your report may sell newspapers, but your journalism professors would be appalled. Your use of the St. Louis convention center hotel is a great hook. However, any member of a high school debate team would quickly dismiss it as a fallacy of ARGUMENT FROM ANALOGY: a statement that uses an analogy as the basis for conclusion. This is an unsound form of inductive reasoning because, though two things may share a number of common properties, this does not mean that they are identical in every way.

    Sadly, you commit this fallacy a second time by suggesting that HVS’s reports are analogous to Prof. Harold Hill’s shyster salesmanship in “The Music Man.” The worst part of your argument is that it’s not even a good analogy! Painting HVS as “Hill-esque” like the character in the Simpson’s “Music Man” spoof ignores the fact that HVS isn’t trying to sell the city of Dallas on a boondoggle project. HVS doesn’t profit from the construction of a convention center hotel. As a consulting firm, they get paid regardless of the outcome of their report. P.S. If you had done your research, you would have found that they are a highly respected and successful company utilized by cities all over the world for this kind of work. That doesn’t make them infallible, but close scrutiny of their work demonstrates a track record that makes them credible.

    Sadly, you really dropped the ball with your strongest argument by failing to provide the “knockout punch.” You stated that “…HVS who, after a 2004 study that said Dallas shouldn’t bother with a convention center hotel, came back in 2007 with another study that said Dallas should.” Okay… but WHY? What makes that change of opinion significant? Then again… maybe you didn’t drop the ball. Maybe you did do your homework and actually read the two reports and discovered that, over a period of three years, a change in one or more conditions actually provide support for a change in the recommendation. Unfortunately, this did not advance your effort to plant suspicion that HVS’s actions might be “questionable,” so you simply chose to leave these inconvenient truths out of your report?

    I’m beginning to suspect that journalists’ greatest fear of the Internet is not that newspapers will become financial victims as much as the concern that readers will start holding them more accountable for their poor journalism!