Heywood Sanders

[October 26th, 2005] The Portland Development Commission is scheduled to select a developer today for the long-discussed $140 million Convention Center headquarters hotel in inner Northeast.

But while PDC executive director Bruce Warner has recommended that Ashforth Pacific be that developer, the proposal faces skepticism from Mayor Tom Potter and some of his City Council brethren about the tens of millions of dollars in expected public subsidy. All that sounds very familiar to Heywood Sanders, a professor of public administration at the University of Texas at San Antonio and the nation's leading critic of publicly financed convention centers and related hotels.

In "Space Available," a report Sanders wrote for the Brookings Institution in January, Sanders argued that the supply of convention facilities far outstrips demand and that the "arms race" between desperate cities will worsen the problem. Sanders talked with WW before speaking last Friday at PSU's School of Urban Studies and Planning.

WW: What's the best argument for a convention center and convention-center hotel?

Heywood Sanders: Even though they represent a significant public investment and they lose money with some regularity, they create a far larger impact in the community by bringing in out-of-town visitors who stay overnight, spend money and create jobs.

And your report says that's not valid because the supply of convention centers and convention-center hotels exceeds demand?

Absolutely, we see the decline in business in Philadelphia, a significant decline in Atlanta and New Orleans and Chicago and Boston—almost all across the country.

Have you looked specifically at Portland in your research?

What's always been intriguing about Portland is that this is one of the cities where a convention-center project went on the ballot, was voted down, and went ahead anyway. That's an interesting commentary on the public's receptivity to convention-center investment.

What do you think of the study justifying the building of a convention-center hotel here?

It has some very serious analytical flaws.

Such as?

Like many studies, it tells the "Philadelphia Story." Downtown Philadelphia did not have an adjacent headquarters hotel. A Marriott that now boasts 1,400 rooms opened about two years after the Pennsylvania Convention Center's opening, and so the argument is that somehow magic elixir drove the performance of the PCC to new heights. But in reality, in its best year, 2002, it did about 573,000 hotel room nights. That number has declined to 270,000 in 2004 and about 290,000 this year. What does that tell us? They have a behemoth of a headquarters hotel next door to a center far larger than Portland's. And yet even with that, they can't draw what Portland expects to draw and their business is steadily declining. Having a headquarters hotel, even a large one next to a big center in a reasonable destination, is not a magic elixir.

What's wrong with the argument that without a hotel, we're defeating the purpose of the convention-center expansion.

In some cases, it could be argued it's simply pouring good money after bad. We have seen an increase of more than 50 percent in available convention-center exhibit space in the last 15 years. Lots of cities are building, and you can't stop them. So you face a situation where supply will increase inevitably based on situations elsewhere. If you compete, you have to realize that you compete against all comers. And some of those competitors, particularly places like Las Vegas, have huge numbers, 130,000-plus hotel rooms and capacity to invest an enormous amount of money in convention-center space.

Is there one statistic that that tells the story of your research?

New Orleans, in the wake of an expansion to 1.1 million square feet of exhibit-hall space in 1999, has seen its convention attendance drop year by year by year through 2004, from over a million to circa 567,000 despite a 1,600-room Hilton and a shopping mall right at the convention center.

What was it like the last time you actually attended a convention?

I found a very nice boutique hotel fairly close to the conference hotel in Salt Lake for $54 per night. That's a model of what happens if you decide you're going to subsidize hotels into existence.