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Convention Center-related Room Nights in Milwaukee
 Not Projected to Return to the Heady Days
 of 2000 and 2001
By Tom Daykin, Milwaukee Journal Sentinel
Knight Ridder/Tribune Business News

Jul. 18, 2005 - Last week's NAACP convention was among the larger events ever hosted by the Midwest Airlines Center since the $184 million facility opened in two phases in 1998 and 2000. Delegates and other convention visitors accounted for an estimated 14,900 "room nights"- the number of area hotel rooms used multiplied by the number of nights each room was filled.

Thanks largely to the NAACP and two other big events, the number of convention center-related room nights used in Milwaukee will be around 150,000 this year, up from about 121,200 in 2004, according to Visit Milwaukee, the city's tourism promotion agency. That provides a major revenue source for area hotels, especially those in downtown Milwaukee.

That's a 17 percent decline from five years ago, when the number of room nights peaked at about 181,000. That was in 2000, when Milwaukee hosted such mega-events as the American Legion and Veterans of Foreign Wars conventions.

Since then, the convention business nationwide has dropped substantially, and with the exception of this year's bump, Milwaukee has mirrored that trend. With a decline in big events, Milwaukee's convention-related room nights in 2006 are expected to dip back to last year's level, according to Visit Milwaukee.

The national slump has coincided with a surge in new and expanded convention facilities, which one industry critic calls "an arms race" among convention-starved cities.

Given the depth of the slide, a turnaround is unlikely to bring much increased business for any community, despite repeated convention and hotel industry projections of an imminent upturn, according to a study released earlier this year by Heywood Sanders, a University of Texas at San Antonio professor of public administration.

With that gloomy picture, community officials throughout the country should be hesitant to spend more public dollars on expanding their convention centers, concluded Sanders, whose report was released by the Brookings Institution, a public policy research organization in Washington, D.C.

Even local convention official Franklyn Gimbel is questioning his long-held belief that Midwest Airlines Center should add more space to compete for bigger conventions. Gimbel, chairman of the Wisconsin Center District board, the agency that operates the Midwest Airlines Center, was asked recently if the center's expansion plans should be pursued.

"I don't know," Gimbel said. "If you had asked me two years ago, I would have said yes."

Gimbel and other convention industry officials, however, dispute Sanders' belief that the convention business will continue to sputter indefinitely.

"I have guarded optimism because this is a great destination city," Gimbel said. "We have to keep flying our flag high and proud."

Based on advanced bookings, Milwaukee's room nights are expected to increase in 2007 and 2008 over next year's projected decline, said Doug Neilson, Visit Milwaukee president and chief executive officer.

But the city's chances of returning to the heady days of 2000 and 2001, before demand for convention space began its slide, will depend on economic conditions, Neilson said. Much of the national decline in convention attendance is blamed on a tightening of corporate travel expenses since the 2001 recession, he said.

Corporate mergers also played a role, according to Sanders' study and convention industry officials. For example, consolidations among supermarket chains and food companies brought down attendance at the annual Food Marketing Institute convention at Chicago's McCormick Place.

As a result, large facilities like McCormick Place are competing more aggressively for smaller conventions that are a staple for the Midwest Airlines Center and other regional centers, Gimbel said. In some cases, Chicago is offering meeting planners discounted blocks of hotel rooms for as little as $99 a night.

"It's hard to compete with that," Gimbel said. In Milwaukee, the average downtown hotel rate in 2004 was $104.50 a night, according to Smith Travel Research, a Henderson, Tenn., firm.

Finally, newer convention centers in smaller communities are competing with the Midwest Airlines Center, said Richard Geyer, Wisconsin Center District president. He cited Monona Terrace, which opened in Madison in 1997, and the Kalahari Resort's privately owned convention center, which opened in the Wisconsin Dells area in 2001.

"Every city wants to build a convention center," Geyer said.

That's a big part of the problem, according to Sanders.

Demand for convention center space isn't keeping pace with its growing supply, Sanders wrote in his report. That limits the economic benefits of the taxpayer-subsidized centers, and calls into question the value of building them in the first place.

Neilson and other convention industry officials say Sanders' conclusions are too pessimistic.

The Sanders report, citing a lack of available data on the convention business, focuses on a relatively small number of events: the nation's 200 largest annual conventions and trade shows. That base is too narrow to draw any meaningful conclusions about the nation's convention business beyond such major destinations as Chicago and New Orleans, Neilson said.

Also, Sanders focused on some of the worst years in the history of the convention business, Nielson said. That period, from 2002 through 2004, was when "it all came crashing down," he said.

Finally, publicly funded convention centers, while typically running at a loss, provide economic benefits by attracting visitors who spend money at hotels, restaurants and other businesses, Geyer said.

Still, no one contends convention business in Milwaukee is booming.

According to Visit Milwaukee's figures, Milwaukee's 24 percent jump in room nights this year is tied to just three conventions: the NAACP, the Gospel Music Workshop of America (Aug. 13-19) and the U.S. Hispanic Chamber of Commerce (Sept. 14-17). Those three events will account for an estimated 33,475 room nights, with the Gospel Music Workshop the biggest event, at 15,510 room nights.

The slowdown in recent years led Gimbel to form a task force that is exploring ways to improve Milwaukee's ability to draw conventions.

Milwaukee has adequate facilities and hotel rooms to compete for most of the conventions that would consider the Midwest Airlines Center, Neilson said. The city is gaining additional attractions, such as the planned Harley-Davidson motorcycle museum, which help draw conventions.

Meeting planners, who help decide where conventions will be staged, tell Nielson and his staff that Milwaukee's nightlife is lacking. That gap, he said, could be filled by the proposed PabstCity development, which would convert the old Pabst brewery into an entertainment center featuring a theater, House of Blues restaurant and concert venue and other restaurants, clubs and specialty shops.

The Common Council will vote July 26 on whether to provide $41 million in city financial assistance to help develop the $317 million project.

Even without PabstCity, Milwaukee has the advantage of being an affordable travel destination, with reasonably priced hotels and a clean, attractive downtown, Gimbel said. Those features will help the city land its share of conventions.

"Milwaukee is a safe call for a meeting," Gimbel said.

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To see more of the Milwaukee Journal Sentinel, or to subscribe to the newspaper, go to http://www.jsonline.com.

Copyright (c) 2005, Milwaukee Journal Sentinel

Distributed by Knight Ridder/Tribune Business News. For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.

 
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