News for the Hospitality Executive
|By Thomas C. Palmer Jr., The Boston Globe
Knight Ridder/Tribune Business News
Nov. 26, 2003 - The possibility of closing the Hynes Veterans Memorial Convention Center in three years is hurting the city's tourist trade, with thousands of potential visitors already planning to take their business to other US cities, rather than move to the new $800 million convention center that is opening later next year.
"I was all ready to go ahead and get contracts ready for Boston, except all of a sudden they started talking about selling the Hynes," said Diane Saxe, director of meetings and conferences for the American Mathematical Society. "I had been to the new convention center. It's too big for a group like mine."
Saxe, booking for 2010, will take her 5,000 members to San Francisco instead. "This would have been the biggest meeting my group ever had, because of all the colleges and universities in the area."
The uncertainty over the future of the Hynes began last summer, when the Legislature turned it over to the treasurer as a payment to the state's pension fund. The move increased the chances that the medium-sized convention hall will be shuttered or sold as soon as 2007, even though the facility has many other tentative bookings well beyond then. It's not even clear when any decision about its future would be made.
James E. Rooney, director of development and construction of the Massachusetts Convention Center Authority, confirmed that the mathematicians won't be coming, but he said they were the only firm cancellation so far.
"We've been put in a difficult marketing situation," Rooney acknowledged yesterday. "But are we packaging it and trying to 'sell' it as aggressively as we can? Absolutely."
However, Donna R. Karl, director of convention and meeting services for the American Academy of Pediatrics, said her 11,000 doctors, nurses, and their families -- they would fill the Hynes for a week -- are in the same predicament as the mathematics group.
Traditionally, they have come to the Hynes, every three years.
"You're right downtown; you can walk everywhere," she said. "I just don't think the new center is good for us. It's out there in the middle of nowhere, without shops, without hotels, without restaurants."
The pediatricians are booked to come to Boston in 2008, but Karl says she'll cancel that if the Hynes isn't available. If she agreed instead to go to the three-times-larger new Boston Convention & Exhibition Center instead, she said, "I'll just hear nothing but complaints from my attendees."
Although the new facility is soliciting smaller groups, as well as large ones, the real issue with the new convention center is not size but location, potential conventioneers say. The area has few restaurants, little activity after business hours, is still undergoing lots of road and building construction, and is isolated from the city's main tourist attractions.
The Hynes's saga began last year when the state owed about $800 million to the state workers' Pension Reserves Investment Fund. Governor Mitt Romney, faced with a serious budget crisis, decided to transfer some state property to the fund instead of using all cash.
But, as a candidate for governor, Romney had suggested closing the Hynes, which operates on a subsidy of about $11 million a year. So the Legislature passed a law swapping the Hynes and the Boston Common parking garage for the less valuable property Romney had in mind.
The treasury ended up with both properties, the Hynes a money loser and the other -- the garage -- with net revenues of about $5 million a year.
However, no one knows what either facility is actually worth, so Treasurer Timothy P. Cahill, who oversees the pension fund, has asked an independent appraiser, Cushman & Wakefield of Massachusetts Inc., to determine what they would bring for "highest and best use" on the open market. That move strongly suggests that the Hynes would not continue to be operated as a convention center, in competition with the cavernous new facility. The actual transfer of the Hynes's ownership to the pension fund won't be completed until the appraisal in done in several months.
"We prefer the cash over a transfer of property" from the state, said Doug Rubin, first deputy state treasurer. "The intention was for us to find a private operator. If we can't find one, we can sell it."
In June, Cahill said there is a good chance the Hynes will be put up for sale in 2007. From 2007 on, the Hynes has 37 bookings and another 65 tentative meetings scheduled out to 2029.
Although legislators may have thought they were accomplishing a double purpose when they shuffled the Hynes into the treasurer's office -- protecting it from being sold, as well as providing the pension fund with valuable real estate -- the move backfired.
"It appears to me there's no aggressive forward marketing of the Hynes going on, which would imply its long-term viability may be in doubt," said Edward H. Linde, president and chief executive of Boston Properties, a real estate firm that owns the adjacent Prudential Center.
Close Hynes watchers -- and the Back Bay business community is full of them -- say the message being sent to possible visitors is they can't depend on the Hynes after 2006.
"My concern is I think the Hynes is a very valuable part of the economic life of the Back Bay," said Linde. "So I think it's an asset that we ought to be trying to take advantage of."
Meg Mainzer-Cohen, president of the Back Bay Association, a group of neighborhood businesses, said her members are desperately trying to come up with a solution that keeps open the doors of the granite-faced structure, which was renovated in 1986. She cited a 1999 study that concluded that $348 million is brought into the regional economy through spending by Hynes visitors.
"There is a market for the smaller conventioneer that wants to be in a facility like the Hynes," Mainzer-Cohen said. "If they can't be at the Hynes, they're going to other cities, and it's going to be a net loss of business, period."
The treasurer's office is sympathetic to Back Bay concerns but has state workers' retirements to worry about.
"We feel like we're in the middle," said deputy treasurer Rubin.
"Our hands are tied, realistically. We have a fiduciary responsibility to the pension fund."
Thomas R. Brennan, senior director for asset management for Host Marriott Corp., which owns the Boston Marriott Copley Place hotel, said that if the Hynes doesn't stay open as South Boston develops, a prospering neighborhood will suffer.
"All real estate owners will incur significant value hits in the long run," he said. "It may render the Back Bay a secondary option."
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(c) 2003, The Boston Globe. Distributed by Knight Ridder/Tribune Business News. BXP,