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Convention Center finds bright spot despite business downturn

Thursday, August 27, 2009 by Kimberly Reeves

If bad can be good, then the city’s convention business is probably as good as can be expected during an economic downturn that has hit the city and the nation.

Council heard budget presentations on Wednesday morning from the Convention Center and the Austin Visitors and Convention Bureau, which have interlocking purposes. The bottom line of the message appeared to be that the tourism and convention picture in the city could be much worse than the upcoming year’s revenues, although no one was particularly thrilled with the downturn.

For instance, city hotel occupancy tax is down only 7 percent this year. It’s a $3 million dollar loss in revenue. But it’s not so bad that the Convention Center and Visitors Bureau could not function.

In fact, AVCB President Bob Lander made a pitch to re-start the convention hotel at 2nd Street and Congress during the presentation, noting that a key hotel executive had noted a lot of cities want additional convention hotels, but that Austin was the only city that actually needed one.

Austin aims at conventions with 1,500 room nights. But the next level – and there always is a next level – would be 2,500 room night events. It is, in essence, the jump from the largest Texas conventions to ones on a national scale, like the one landed in 2014 for a specialized physician group that focuses on the chest cavity.

One reason why current revenue for the convention center is somewhat steady is because about half of the revenue comes from Texas associations, many of which lobby the Legislature and most of which have located in Austin. That portion of the convention center’s revenue has been flat, but steady, in the last year.

In fact, the prediction is that prior work will allow Austin to declare 2012 a likely profitable year for the city. Part of that comes from the ability to begin to land larger conventions, although cities like San Antonio have much larger marketing budgets.

That doesn’t mean everything is rosy. As Landers explained, 100 percent of the 15 markets comparable to Austin were posting at least 60 percent hotel occupancy for 2007. Two years later the number of cities with at least 60 percent hotel occupancy is down to 13 percent. In the light of that, Austin does look fairly good, Landers said.

A number of points came up during the discussion:

·       While it wasn’t fully vetted, Council Member Randi Shade noted the difference in revenue models for convention centers, which convention center administrator Mark Tester acknowledged. Austin devotes more of its hotel occupancy tax to its convention center and outsources fewer of its services. In short, the privatization of the center’s services is out. That approach is intended to give a more personalized fit to the Convention Center and has led to repeat booking;

·       Mayor Pro Tem Mike Martinez floated a proposal of putting an expanded downtown fire station into the Convention Center garage. That would free up Brush Park to concentrate on the O Henry House and a museum on the site of one of the city’s earliest first stations. Right now, the Convention Center garage contains about 10,000 feet of unused ground floor space that is being utilized for storage. Activity on that front has been limited by the ongoing legal battle between the city and Harry Whittington. Martinez noted it was too bad Vice Pres. Dick Cheney failed to use a rifle. That was a joke but his point – one of frustration – was noted; and

·       Capital projects are still underway to improve the facility. In fact, the two sections of the Convention Center might soon be connected. A $2 million walkway could connect the third-floor facilities of one portion of the convention center to the fourth-floor facilities of the extension, ending confusion for many convention attendees.

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