2nd thoughts about center
December 14, 2004
knew I had to write about the Vail conference center some day. I just needed a
push. And it came in the form of the Denver Post four-part series (Dec. 1, 3, 4
in the business section; Dec. 7 in Denver & West) on the new facility down
While I don't believe everything I read in the newspaper, they have done a lot of research. But mainly, Denver now has a new and expanded convention center and already there are issues - issues that maybe they can overcome because of the size of that community. Yet the very same issues, if unresolved here, could bring us to our knees.
So before that happens, we need to have a real come-to-Jesus meeting with ourselves. I for one do not believe that just because we have voter approval for this project, we need to proceed if it doesn't make economic sense.
I've attended most of the conference center meetings over the last year even though I'm not on the committee. Unfortunately, there has only been a very small group of interested citizens, perhaps three, who have attended with me. But be that as it may, the process has been open, even if few have taken advantage of the opportunity to participate.
The committee has been diligent in its accumulation of information. I'm just not sure it's been enough or the right information from the right sources. Most importantly, the critical moment has not yet arrived, the moment when all information is analyzed and the final go/no-go decision is made.
That's why we need to look at how others are faring and see if any of their warnings apply to us. Prudence should tell us to at least look at the issues with unbiased eyes before the final vote. I expect this will take several columns. So settle in and let's begin with a few of the highlights about Denver.
Denver just completed a $310.7 million expansion, bringing their total square footage to 2.2 million. Not to be overlooked is the fact that it was approved by the voters at $261.5 million. The city was forced to make up the 16 percent additional cost of $49.2 million with "leftover seat tax revenue from the long-gone McNichols arena and by mortgaging the nearby Denver fire station." But anyone who has ever built anything knows how that goes. "Best laid plans of mice and men," and so forth. No one ever intends to go over budget. It just seems to happen.
Then there's scheduling. Denver convention officials are pretty clear about one thing. Industry standards show that it will be five-six years before schedules are full and the Denver conference center is no exception. As one official said, "It's hard to believe we've known about this for five years and we're still not full."
Why? Because contrary to what I have heard up until now, no matter what you do, groups are not willing to commit until the facility is completed! While we have certainly anticipated a breaking-in period and have built some of that into the expected start-up deficits, I don't recall that six years is anticipated. That's a pretty long time to cover costs without offsetting revenues.
Here's the one that grabbed my attention: The biggest challenge Denver faces right now is getting the word out. City convention promoters already are saying that they don't have enough money to market the new facility. When I spoke with Richard Scharf, president of the Denver Metro Convention and Visitors Bureau, he said that in hindsight they should have built a steady revenue stream for marketing into the budget. Probably it should have been included into the original question that was posed to the voters for approval in 1999.
But it wasn't, so now a crisis of sorts exists. They have the building, but no way for getting the message out. Want to guess what they're proposing as a solution? The DMCVB is in the planning stages of asking voters to increase the lodging tax by an additional 1 percent for a total 14.45 percent.
So what's our plan for marketing? Well I've searched high and low through stacks of reports about a foot thick, and here's what I can find: There are two line items. The first is for "marketing salaries and benefits" at $277,000. That includes a director at $118,000; sales manager, $92,000; sales assistant, $67,000. Then there's $285,000 for "marketing - other." I'm not sure what "other" means, but in the marketing world not much. Maybe a few trade shows?
In a paragraph in the HVS feasibility study, there was a reference to the Vail Local Marketing Board providing some of that support. I'd be amazed if they have the funds to do it, since they approach Town Council every year to ask for supplemental funding, as well as still owing the town for some advance funding they received for start-up. They seem to have their hands full marketing Dallas and Denver.
Does that mean we'll be in the same situation as Denver? A building in place but no way of getting the word out? Or will we also require new taxes? Very serious food for thought.
In a nutshell, that's the situation in Denver. Rich Scharf doesn't think the picture is as bleak as the Denver Post paints it. But then there's Heywood Sanders. He is a professor of public policy at the University of Texas in San Antonio (search google-heywood sanders for 44,000 references) and a leading authority of the convention center business. He's also one of the harshest critics of using convention centers as economic development tools. I talked to him twice. He thinks it's even worse. Wait until next week to hear what he has to say. Because it's not pretty.
To contact the Town Council, call 479-1860, ext. 8, or e-mail firstname.lastname@example.org. To contact Vail Resorts, call 476-5601 or e-mail email@example.com. For past columns, vaildaily.com-columnists or search:ferry.
Kaye Ferry is a longtime observer of Vail government. She writes a weekly column for the Daily.