Is It Time to Stop Building Convention Centers?

Over the last 20 years, convention space in the United States has increased by 50 percent; since 2005, 44 new convention spaces have been planned or constructed in this country alone.  That boom hasn’t come cheap.  In the last 10 years, spending on convention centers has doubled to $2.4 billion annually, much of it from public coffers, says Amanda Erickson, associate editor at The Atlantic Cities.

The resultant glut of convention centers, however, has undermined the financial strength of these notable investments.  The annual number of conventions is down, as are the number of attendees, and convention centers are struggling to meet projected revenues.

• The actual number of conventions hosted in the United States has fallen over the last decade.
• Attendance at the 200 largest conventions peaked at about 5 million in the mid-1990s and has fallen steadily since then.
• Christopher Leinberger, president of LOCUS, a national coalition of “responsible real estate developers and investors,” emphasizes that while capturing only 1 percent of the national market for conventions would likely be profitable, 300 cities bought that same logic.

Consequently, numerous cities across the country invest in multimillion-dollar convention halls that fail to pay themselves off.  The experience of Washington D.C.’s Walter E. Washington Convention Center, which opened in 2003, demonstrates this fact.

• The center has won numerous awards for its outstanding amenities and grand ambition, with 68 public restrooms, 38 escalators and 31 elevators.
• It also has more than 4 acres of glass walls, 160 types of lights and 30,293 light bulbs.
• However, the cost of the center was still a staggering $833.9 million.
• Between 2006 and 2008, it missed its booking goals by 13 percent, 24 percent and 29 percent, respectively, and it runs at a loss of about $22 million a year.

Chicago’s McCormick Place, the single largest convention center in the country (2.2 million square feet), faces a similar issue: between 2001 and 2011, the number of delegates attending trade shows and meetings at McCormick place fell about 37 percent, from 1,333,906 to 828,013.  This is not because of increased competition; nearly all major convention destinations are facing similar declines.

Source: Amanda Erickson, “Is It Time to Stop Building Convention Centers?” The Atlantic Cities, June 11, 2012.

For text click here.