Pushing for a new hotel, KC’s convention officials try to seduce us with the same old lines
Rick Hughes, the city’s richly compensated tourism chief, tends to repeat himself.
Hughes is the president of the Kansas City Convention & Visitors Association. On May 19, he made a presentation to the Kansas City, Missouri, City Council. His mission: Get the council excited about building a big, new convention hotel.
One of his PowerPoint slides said Kansas City is “hemorrhaging” convention business.
Interesting word choice. It took me back to an interview I conducted with Hughes five years ago.
“We’ve been hemorrhaging conventions,” Hughes told me as we sat in his office in the fall of 2004.
Of course, back then, Kansas City was losing convention business for reasons other than the lack of a “convention headquarters” hotel. Hughes said at the time that convention planners had two main complaints about Kansas City: Bartle Hall was becoming obsolete, and downtown offered too little to do.
At great cost to taxpayers, those problems were corrected.
Alas, Kansas City’s convention business is in worse shape today than it was in 2004.
Convention planners, it seems, can’t get away from Kansas City fast enough. Two weeks ago, word came of the latest loss: Sam’s Club store managers’ twice-a-year meetings.
Sam’s Clubbers are following their Wal-Mart counterparts out of town. A Wal-Mart store managers’ convention that used to take place in Kansas City each January now meets in Orlando.
The SkillsUSA national conference, a gathering of vocational-education students, announced last year that it’s leaving Kansas City for Louisville in 2015.
Sam’s Club, Wal-Mart and SkillsUSA just happened to be the city’s three largest conventions. Oops.
The departures look especially bad because they follow a period in which city officials wore out their scissors cutting ribbons.
A bigger and better Bartle Hall opened in 2007, as did the Sprint Center. Substantial portions of the Power & Light District became operational in 2008.
Yet the response heard among those in the convention industry regarding the recent losses is to demand more stuff. Bill Lucas, the chairman of the Kansas City Convention & Visitors Association, told The Kansas City Star that the Sam’s Club decision “reinforces the argument for a new hotel.”
A headquarters hotel might be the final piece of the puzzle — or just another brick for taxpayers to carry until Hughes and Lucas find the next deficiency. Given the history of convention-asset building in Kansas City, the burden should be on Hughes to come up with something better than an operating-room metaphor.
Because we’ve been here before.
“This is going to be the economic engine,” said Chuck Eddy, then a city councilman, dreaming of the possibilities in 2004. I jotted the quote down on a day that city officials ambled about Bartle Hall wearing hard hats. Former Mayor Kay Barnes took a hammer to a wall, celebrating Bartle’s second expansion in 15 years.
Voters passed new taxes on restaurants and hotels to pay for the renovation, amid warnings that Kansas City was becoming a third-tier convention site. The final cost: $150 million.
What did taxpayers get? Very little.
This year, Kansas City will host 32 conventions, virtually the same number of conventions it hosted in 2005 and 2006.
“Some conventions just didn’t go our way,” Alan Carr, a spokesman for the visitors bureau, told me last week.
Carr’s breezy response is at odds with the size of the city’s commitment to being a convention-and-tourism player. Debt payments on the Power & Light District will cost $20 million this year. Bartle Hall’s debt service is $30 million.
I asked Carr why Kansas City seemed to be getting such a poor return on its recent investments. Give it time, he said. Conventions are planned years in advance.
Carr mentioned that Kansas City experienced a “heyday” of convention business from 1996 to 2001, suggesting that a $144 million expansion of Bartle Hall, completed in 1994, had made a difference.
I’ve looked at the city’s hotel and motel tax receipts over the years. Carr is right: The late 1990s were pretty good — but only relative to today.
In fact, newspaper stories from these supposedly golden years indicate that people were feeling pretty gloomy about Kansas City’s performance as a convention site. “The bottom line for downtown hotels is that convention business has been off,” Kevin Pistilli, the general manager of the downtown Marriott, told The Star in 2000.
The Marriott, incidentally, expanded in 1997. The city backed the bonds that paid for the expansion. The transaction has cost taxpayers millions because demand for the hotel rooms has fallen short of expectations.
Yet we’re still thinking about adding more hotel rooms. A convention-headquarters hotel will require an estimated $100 million in public subsidies. The city may even end up owning the dang thing.
City officials decide to move forward with these projects because people like Hughes convince them that they’re necessary. (Hughes’ salary for making such arguments: $252,724 in 2007, according to tax filings for the city-funded visitors bureau.)
On May 19, as he talked through his “hemorrhaging” slide, Hughes told the City Council that insufficient hotel space was sending convention planners into the arms of other cities.
Then he dropped this doozy: “It’s really all about what we’re losing now, and just in recent studies, $4 billion in tentative bookings as well as some pretty enormous losses of existing customers.”
Really — 4 billion?
Whenever Hughes and convention-industry consultants want something, they survey convention planners. They ask questions like “Would you think about having a convention in City X if City X built a really big, fancy hotel, with free pay-per-view and a Starbucks on each floor, four steps from the convention site?”
And if the convention planners say “yes,” the consultants count that as “demand” that’s going unmet.
I asked Carr about Hughes’ PowerPoint presentation indicating that Kansas City is “losing” 6.25 million room nights from 2004 to 2014. Carr says this number is based on sales leads that the visitors bureau receives. It reflects “potential” demand.
“We’re not saying, ‘Oh, gosh, we would have landed all these conventions,'” Carr says.
No, because that would be impossible.
If it were possible, cities that built new stuff would see all these wonderful gains in their convention trade.
But it didn’t happen in Kansas City. And it’s not happening in other cities.
A 757-room convention hotel opened in Baltimore last year; the Hilton owned by the city of Baltimore posted a $17.1 million loss.
A convention hotel opened in St. Louis in 2003; the debt-ridden hotel sold on the courthouse steps earlier this year.
There’s also damage to existing hotels when cities determine that a convention hotel is the missing piece. In Houston, a 977-room Hyatt went into foreclosure the year after a new 1,200-room headquarters hotel started taking reservations.
Hughes’ PowerPoint slides went into some detail about how the city of Baltimore financed its convention hotel.
It said nothing about the Hilton’s empty rooms.
