Drunk on Optimism

Beth Garrett and Blake Elliott spent a recent Monday evening at the Blue Koi on West 39th Street. They ordered appetizers, drank Merlot and left happy. “We love it,” Garrett says, standing on the sidewalk outside the restaurant. “It’s one of our favorites.”

Garrett, a speech pathologist, lives near 58th Street and Wyandotte. Elliott, an architect, lives near 65th Street and Holmes. She’s a little gray. He’s a little bald. They describe themselves as “longtime friends.”

According to the state of Missouri, they’re something else.

Tourists.

The state will record the couple’s $30.26 bill (not including tip) as tourism spending, even though Garrett and Elliott live within a few miles of the restaurant. Missouri counts all of the money locals fork over at bars and restaurants as tourism spending.

The breakfast crowd at Niecie’s on Prospect Avenue? Tourists.

Khaki-clad office workers lunching at a Northland Subway? Tourists.

Drunk girl vomiting outside a Westport bar? Tourist with matted hair.

At some establishments, out-of-town visitors do make up a portion of the clientele — bars and restaurants on the Plaza, for instance, or an authentic and centrally located meatery like the Hereford House.

But these places are the exceptions. Without locals, most bars and restaurants would die a quick death. Daniel Stynes, a Michigan State University professor who studies recreation and tourism, says that on average, only 18 percent of restaurant diners arrive at their seats having traveled 50 miles or more.

Yet Missouri pretends that 100 percent of the hungry hail from afar, grossly distorting the importance of tourism to the state’s economy. The Missouri Division of Tourism claims that tourism sales were $7.74 billion in 2003, but restaurant and bar tabs — the bulk of which were resident-driven — made up $5.97 billion of that total.

Treating barflies like jet-setters is more than a bureaucratic goof. There are consequences to believing in tourism’s magical ability to create jobs and tax revenue. Convention centers expand. Public subsidies prop up hotels and attractions. Redevelopment efforts cater to the tastes of Arkansans.

Kay Barnes, the mayor of Kansas City, Missouri, is a big tourism believer. The city will spend $250 million on a new arena in large part to keep Kansas City in the rotation of Big 12 and NCAA basketball tournament sites. Bartle Hall, the city’s convention center, is undergoing its second major renovation in less than 15 years. Between the arena and Bartle Hall, an East Coast developer is plotting an entertainment district that Barnes has said will be “a multistate destination center.”

In a few weeks, holiday lights will twinkle on the Plaza, a beacon to shoppers in Wichita and Des Moines. Those places have malls, but none like the Plaza.

Still, Kansas City would be wise to heed the warnings of other middle-American cities that began to define themselves by their visitors’ guides. Cleveland, for example, became known as the comeback city after it gave rise to glittering attractions such as the Rock and Roll Hall of Fame; Jacobs Field; and the Flats, a riverbank bar-and-restaurant district.

The comeback was short-lived. Today Cleveland has a drawer full of costume jewelry but no pants to wear. The U.S. Census Bureau recently declared it the poorest city in America.

Kansas City was a hot convention town back when suit lapels flapped in the breeze. The 1976 Republican National Convention met at Kemper Arena. By 1981, Kansas City ranked 12th among U.S. cities for meetings hosted. Our city was more popular than Houston, St. Louis and San Diego.

KC lost its edge, though, as other cities that were confronting declines in manufacturing began working harder to attract conventions. After all, the convention dollar is prized for its foreign origin — having earned their money elsewhere, visitors bring it to town and leave it behind at hotels, restaurants and stores.

An arms race ensued. Convention-hall exhibit space in the United States more than doubled between 1980 and 2001. In 1989, only three U.S. cities had a convention facility larger than 500,000 square feet. By 1998, there were 23.

Kansas City tried to keep pace. In 1990, builders, developers and the hospitality industry spent $300,000 warning voters that Bartle Hall, built in 1972, was fast becoming inadequate. A Price Waterhouse study that year — there’s always a study — said that more than 40 percent of cities in the top 34 markets were expanding, constructing or opening convention halls.

Not wanting to fall behind, Kansas City voters approved new taxes on restaurants and hotels to finance Bartle Hall’s expansion and to increase the budget of the Convention and Visitors Bureau. Anyone who’s dined out in Kansas City, Missouri, and puzzled over the bill is probably feeling the grip of the convention and tourism tax — now at 2 percent.

The 1990 vote allowed Bartle Hall to stretch across Interstate 670, boasting a football field’s worth of exhibition space. Such an engineering stunt did not come cheap. The city spends about $14 million a year servicing the debt on Bartle Hall.

Yet even with those dedicated taxes, since 1998 the Conventions and Entertainment Centers (a city department that operates independently of the city-funded, nonprofit Convention and Visitors Bureau of Greater Kansas City) has incurred an $18.8 million deficit. To make up the difference, the city has to dip into its general fund, reducing the money available to pay for other items, such as cops and sewers.

Convention officials consider Bartle Hall a loss leader. It’s impossible to truly appreciate the cost, they say, without considering how it showers money on hotels, restaurants and attractions. Rick Hughes, the convention bureau’s president, quotes a tourism industry study that says convention delegates spend almost $1,000 when they visit a city. “They take their luggage with them, but they leave behind $974,” Hughes says.

“Beyond the dollars,” Hughes adds, “there are a lot of facilities here that, if not for some of the tourism dollars, we might not be enjoying. There are theaters that are put up. Some of the restaurants would just absolutely go away, certainly in this district, were it not for tourism. We as citizens enjoy some of those facilities.”

Hughes’ argument is diminished, though, by the lack of activity around the convention center. There’s a Denny’s. There are restaurants in the big hotels. There are a couple of sports bars on Broadway, along with the Majestic Steakhouse and the Savoy Grill.

But that’s about it.

Hang around Bartle Hall for a bit, and it’s obvious why. Conventioneers are pretty lame.

Sysco Food Services of Kansas City held its fall trade show at Bartle Hall in September. The exhibition floor was filled with bright colors and kitchen aromas as Del Monte, Hershey, Sara Lee and Tyson presented their latest innovations.

Most of the restaurant owners, caterers and dietitians who attended the two-day show were from Kansas or Missouri. Aubrey Foster traveled from Stockton, Missouri, where he owns a restaurant that specializes in French and Italian dishes. Or at least it did. Foster is rebuilding after a tornado blew away his business a year and a half ago.

Kansas City built Bartle Hall to lure Foster to town, but his visit did not bring much return on the investment. He and his adult daughter, who is also named Aubrey, checked into the Embassy Suites in Overland Park.

Foster and daughter left the exhibition hall at around 5 p.m. Their plans for the evening? “Drink beer and go to bed,” the father said.

Where did they plan to do their drinking? “Just in the room,” he answered. “We’re not big-timers.”

Other food-show attendees had more energy than the Fosters did, but their impact on the local economy was nearly as insignificant.

While the Fosters slinked to Overland Park, hundreds of delegates moved from Bartle’s exhibition hall to the nearby Marriott for happy hour. They cashed their drink coupons at a makeshift bar in the second-floor lobby. The space is beige and bland, typical of a large B-grade hotel. But with Sysco buying, ambience didn’t matter. In addition to a drink coupon, this captive audience would be treated to dinner in an adjoining ballroom.

Before dinner, trays of fried cheese sticks made their way through the happy-hour crowd. Stephanie Scettrini drank a light beer and chatted with the friends she had made on the Sysco-chartered bus that morning. Scettrini, 31, works at a new restaurant in Hanover, Kansas. She had left her house at 3:30 a.m. to make the charter.

Scettrini enjoyed her day at the food show. She attended a seminar about motivating employees and wandered through the exhibition hall, where free samples of food were available. “The desserts were great,” she said to the women in her klatch. “Weren’t the desserts great? Did you try the chocolate mint pie?”

Hanover is a small town (population 653), so Scettrini was excited to have a night in the big city. “This is like a vacation for us,” she said.

Her mini-vacation plans included a visit to a casino. Scettrini’s new friends, who had been to previous food shows, wanted to take her to the Ameristar. Every hour, a bus to the boats stops in front of the hotel.

Because the Ameristar is owned by a publicly traded corporation and pays nonunion wages, Scettrini’s trip to the casino was of questionable lasting value to the local economy. But she at least had plans to leave the hotel. After the meal was served, several dozen delegates resumed drinking in the lobby, disregarding the uninspired atmosphere and the outrageous prices ($4.50 for a bottle of domestic beer).

The lobby dwellers whose rooms were in the hotel’s Muehlebach tower, which sits catty-cornered from the Marriott, were able to reach their beds without touching pavement. A skywalk links the two hotels.

The three hotels near the convention center — the Marriott, the Doubletree and the Phillips — are all city-subsidized through tax-increment financing. The Marriott received the most generous package of all: In 1995, the city issued $34 million in bonds to help pay for its renovation and the construction of the Muehlebach tower and the skywalk. The way TIF is supposed to work, the city pays the bonds with new taxes generated by all of those tourists. But the Marriott has not met expectations, so the city must pull $2.3 million from the general budget to pay the bonds.

Despite this grim event, the city has approved a TIF deal for a fourth hotel near the convention center. The old President is being renovated with the help of $18 million in bonds that were issued in May.

City Councilman Charles Eddy has just learned that 475 contestants entered the American Royal barbecue contest.

“That’s fantastic,” Eddy says.

Eddy is a chiropractor by trade and a Shriner by disposition. It is fitting that Eddy, the most cheerful member of the Kansas City, Missouri, City Council, chairs the city’s Convention Management Advisory Authority. The convention and tourism trade isn’t plied by skeptics.

Eddy receives word of the barbecue contest at an October 14 meeting of the convention authority. (The authority formed in the mid-1990s amid complaints that Bartle Hall was dirty and understaffed.) The meeting concludes with a hard-hat tour of Bartle Hall, which is undergoing yet another renovation, one voters approved in 2002.

Convention facilities age quickly. The city is spending $20 million to modernize Bartle Hall meeting rooms that haven’t been updated since the ’70s and ’80s. Crews are working in double shifts to finish the job in time for the Wal-Mart convention in January, the convention center’s big event of 2005.

That’s only the beginning. A 40,000-square-foot ballroom will be added by 2007. Meeting planners tell Rick Hughes and other officials that the existing 28,000-square-foot ballroom, which was built as part of the ’90s expansion, is too small for their needs. As a result, the city is losing business. “We’re hemorrhaging conventions,” Hughes says.

The architects at HNTB, which designed the original Bartle Hall, will also try to undo past sins by making the building’s exterior less stark and imposing. The pylons supporting the roof strike a signature pose, but at street level, the convention center resembles a giant sarcophagus. Streetscaping, land acquisition, architecture fees and a few buckets of paint for neighboring Municipal Auditorium bring the total cost of the project to $135 million, adding yet more debt to the city’s Bartle tab.

“Yeah, it’s a lot of money,” Eddy says. “But you have to spend money to stay competitive.”

One expert, though, believes that Kansas City is expanding Bartle Hall at a time when the bottom has fallen out of the convention industry.

“We’re talking about a number of cities that have seen their business drop by 40 and 50 percent,” says Heywood Sanders, chairman of the Department of Public Administration at the University of Texas at San Antonio.

Kansas City’s own data back up the professor. Attendance at Bartle Hall conventions and trade shows fell from 265,000 in 2002 to below 180,000 in 2003 and 2004. Kansas City, Sanders says, should be in a range between 300,000 and 400,000. “Those are miserable numbers,” he says.

Oscar McGaskey Jr., who runs the city’s convention facilities, blames the nationwide economic downturn. “Post-9/11, everything kind of fell off,” McGaskey says. Sanders, however, contends that convention and trade-show business showed signs of decline even before the terrorist attacks.

Yet even as convention business slumps, convention space increases. This is partly because, as Sanders has found, feasibility studies consistently overestimate demand. In a 2001 study that recommended Kansas City expand Bartle’s ballroom and redo its meeting rooms, the Minneapolis-based consulting firm CSL International acknowledged “an overall slowing of demand” but suggested that it was a short-term phenomenon, listing trends “that will shape the industry and fuel its growth into the foreseeable future.”

Also, cities fear they will lose their existing business if they don’t keep up with the Joneses. Kansas City was mortified when it lost the Future Farmers of America convention to Louisville, Kentucky, in the late ’90s. (The fickle FFA will leave Louisville for Indianapolis in 2006.)

“The result,” Sanders says, “is a glut of convention facilities, all desperately trying to attract a limited … pool of meetings.”

Cities all but dangle a bare leg at convention business. The convention and visitors bureau in Dallas, for instance, doesn’t just offer discounts on hotel rooms and shuttle buses. Its staffers also enter meeting planners in prize drawings for $1,000 shopping sprees

For Chuck Eddy, though, the site of scaffolding promises better days. He wonders aloud how exciting it would be to attend an event in a ballroom that hovers above the freeway.

“This is going to be the economic engine,” Eddy declares, seemingly oblivious to the fact that the previous expansion worked no such wonder.

Kansas City restaurant owners might be horrified by some of the advice CSL gave City Hall.

In recommending the Bartle Hall expansion, CSL explained that “traditional ballroom space is desirable in that it tends to keep event delegates in the convention center during the food function periods.”

The ballroom comment hints at a seldom-mentioned aspect of the convention business: Many of the organizations that hold conventions rely on them for a major source of income. These organizations, then, have an incentive to capture their delegates’ dollars instead of letting them seep out into the host city’s economy.

One way organizations do this is by turning the exhibition hall into a bazaar. The Gospel Music Workshop of America convention, which visited Bartle Hall in August, charged vendors $650 for booths in the exhibition hall. The 210 vendors who set up shop hawked all kinds of stuff: church organs, hair-care products, classy choir robes, “I Gospel Music” T-shirts.

Purchases made at the convention center are subject to state and local sales taxes, but most of the money spent on the exhibition floor during gospel week never made it into the pockets of Kansas City’s business owners. The vendors hailed from cities across the country. Their temporary landlord, the Gospel Music Workshop of America Inc., is based in Detroit.

And a delegate kept inside the convention center at meal times is not spending money in local bars and restaurants, which is sort of the whole point of a convention center.

To make matters worse, Kansas City eating and drinking establishments are paying for the cocoonlike ballroom with the 2 percent tax they levy on their customers. Jimmy Frantze, the owner of J.J.’s and Frondizi’s, says the tax is “not an unsubstantial sum.”

Frantze supports efforts to bring tourists to Kansas City, but he is unsure how effective they are. “None of the restaurants I know of are doing well,” he says.

The CVB’s Hughes does not see a convention facility that is designed to insulate delegates as a contradiction. “All ships will rise,” he says, if the ballroom is able to bring new convention business to town. “When you’ve got twice the trade, no one’s going to care that you used the facility to feed lunch, because they might not have been there were it not for the proper facility.”
The gospel music workshop will descend on Milwaukee in 2005, and officials there are already predicting an economic impact of $9.2 million. The convention and tourism industry loves to quote economic-impact data, which the media dutifully report.

Such estimations are usually worthless, however. The recent campaign for a new bistate tax for sports and arts, for example, used old and unreliable information to make the case that the public should provide $360 million to fix up Royals and Arrowhead stadiums.

The campaign claimed that the Chiefs and the Royals generate $300 million a year and support more than 4,000 jobs. When the Pitch first reported on Bistate II, the Greater Kansas City Chamber of Commerce declined to provide the source of that information (“Season of Greed,” August 3). Why was the chamber reluctant? Perhaps because the source was most likely a 15-year-old study that would give most serious economists a good chuckle.

In 1989, the accounting firm Mayer Hoffman McCann studied the teams’ economic impact at the request of the Mid-America Regional Council. The bean counters concluded that the Chiefs and Royals created $238 million in sales (which would be well over $300 million in today’s dollars) and supported 4,418 jobs.

Yet the numbers weren’t to be trusted. “An economist would look at them and say they have made some assumptions that aren’t reasonable,” says John Crompton, a Texas A&M University professor who studies recreation and tourism.

Here are two reasons.

First, in estimating the teams’ “tourist impact,” the accountants concluded that 32.6 percent of the people attending Chiefs and Royals games came from outside the metropolitan area, bringing paychecks earned in Omaha and Topeka. It is highly unlikely, though, that up to a third of the spectators at the sports complex are out-of-towners. The percentage is more likely between 5 and 20, according to May the Best Team Win, a book by sports economist Andrew Zimbalist.

Second, the authors of the study assumed that all of the people who attended games had come to Kansas City specifically for that purpose. This assumption neglects the idea that someone attending a Royals game might have traveled here on business or to visit a relative. (A survey used by the Tourism Economics Research Initiative at the University of Missouri-Columbia reveals that 45 percent of the state’s visitors come to see friends or family.) Without a baseball game as an option, the business traveler might have spent the night throwing bills at strippers, and the relative might have gone to a movie theater. (Ph.D.s call this “the substitution effect.”) The point is, the Royals didn’t bring the visitor to town, yet the team received full credit for the hotel stay and the ancillary spending.

Bogus economic-impact studies and overly optimistic attendance projections have led Kansas City’s cultural attractions to disappoint. One consultant predicted that Science City would draw more than 800,000 visitors in its third year, many of them from out of town. In reality, fewer than 215,000 people visited Science City in its third year.

Vacant windows in the 18th and Vine Jazz District tell a similar story. In 2000, after the sagging corner had received $28 million in government support, attendance dropped by 100,000 from the year before. In a recently issued status report, the Jazz District Redevelopment Corporation said the district had created 49 jobs — 311 jobs short of projections.

John O’Brien, a gallery owner in the Crossroads District, dreads the fast-approaching day when his property tax bill will arrive. “I don’t mind paying my taxes,” he says. “Just make them fair.”

O’Brien owns the Dolphin Gallery, one of the first exhibitors to move into the Crossroads and mingle among the auto body shops. Now, with First Fridays flooding the streets, O’Brien has begun to feel the sting of his own success. He says his property taxes have more than doubled.

O’Brien and other gallery owners have asked the city for help in keeping their tax increases to a minimum, which would allow them to stay in the neighborhood. Bureaucrats have listened, but nothing has been solved, O’Brien says. When he complained to a county assessor, O’Brien says the assessor told him, “If you don’t like it, just fucking move.”

The Crossroads offers an authentic experience that residents enjoy and visitors remember. But while O’Brien and other pioneers struggle, just a few blocks north of them the city is condemning buildings and acquiring land for Kansas City Live!, a prepackaged entertainment district designed with tourists in mind. After all, meeting planners have been griping to the CVB’s Hughes about a lack of things to do in the area immediately surrounding the convention center. “It’s sort of our scar, if you will,” he says. “It’s very visible to these people.”

Kansas City Live! will surely be an improvement over the surface parking lots that dominate the South Loop. But at what cost? Through tax-increment financing, the city has all but signed over the project’s economic benefits to its out-of-town developer, the Cordish Company. And if history is a guide — Cordish developed a similar project, Fourth Street Live!, in Louisville, Kentucky — national chains like Barnes & Noble and the Hard Rock Café will be the ones invited to share the wealth.

Beena Brandsgard, who owns Jardine’s, a jazz club near the Plaza, wishes the city would spend more time worrying about existing establishments. “I hate the fact the city would subsidize the bigger guys,” she says. “They don’t really need it.”

Scholars call places like Kansas City Live! “tourist bubbles” and mayors’ “trophy collections.” In the words of University of Chicago urban specialist Dennis Judd, they are designed to “cosset the affluent visitor while simultaneously warding off the threatening native.”

Bartle Hall is a tourist bubble. So is Crown Center. The Sprint Center will be, too.

Tourist bubbles aren’t inherently bad. They just have limitations. “The model that there is some enormous economic benefit that spills broadly downtown and across the city is just not a reasonable portrayal of reality,” University of Texas professor Sanders says.

One day this past summer brought Sanders’ comment to life. The Gospel Music Workshop of America convention had broken for lunch. The temperature was 67 degrees, the sky a vivid blue.

At 12:30 p.m., Yellow Cab driver Aaron Edwards idled his chariot at the corner of 13th Street and Central. The sidewalks were crowded, but no riders jumped into Edwards’ back seat. To pass the time, he worked on a crossword puzzle and chatted with other cabbies, who had lined their cars behind his in the hopes of grabbing a lunchtime fare.

An hour passed, and Edwards still hadn’t moved off the front of the line. Like frustrated fishermen, three drivers who had pulled in behind Edwards eventually gave up on the spot and pulled away.

Edwards nearly had a fare when he came to the aid of a gospel workshop delegate from Los Angeles who couldn’t remember the name of a soul-food restaurant someone had recommended. Edwards named possibilities and even made a few calls on his cell phone for her. Alas, the confused woman decided to forgo her exploration of the city until dinnertime.

And while Edwards was answering questions for another wayward conventioneer, he missed an assignment from his dispatcher.

At 1:50 p.m., he lost his patience.

“I’m going home,” he said, putting the cab in drive.