Take The Vital Steps To Keep Convention Revenues Flowing In
Written by Michael Lewis on April 19, 2007
By Michael Lewis
A vital upgrade to the Miami Beach Convention Center seems near. It’s well past time.
When economically desirable groups choose meeting sites, more and more demand a state-of-the-art multipurpose ballroom.
We haven’t got one, while 18 competitive cities have just added one or are about to. They’re selling aggressively against us for meetings three to five years into the future. We cannot answer back.
That’s costing us money. How much can be debated, but there’s no debating the impact of conventions. Last year, 1.34 million visitors came to Miami-Dade for meetings, conventions and business. The Greater Miami Convention & Visitors Bureau gauges the impact of conventions and meetings here at almost $1 billion.
Before the Miami Beach City Commission voted 7-0 last week in its first endorsement of a ballroom expansion to the city’s convention center, the Greater Miami & the Beaches Hotel Association offered support. So did the Miami Beach Chamber of Commerce. The convention bureau has been spearheading expansion for six years.
"That facility is an embarrassment," said Maria Sastre, a Royal Caribbean Cruises vice president and convention bureau chairwoman. "We’re way behind the 8-ball."
You’d think the city’s own endorsement would be a slam-dunk. After all, the county’s General Obligation Bond plan approved in 2004 provides $55 million for expansion. That means the entire county would pay to help the city pocket profits — up to almost $1 million a year even without upgrades. The industry wants the city to keep center catering profits. The county has been pushing for the expansion, but city government keeps suggesting other uses for the money.
The center fuels the hotel and restaurant industries that help make Miami Beach sparkle and supercharge the city’s tax base. While the visitor industry benefits the whole county, Miami Beach, with 40% of all hotel rooms, rakes in the lion’s share.
If Hialeah or Homestead or Miami Gardens were to object to giving $55 million to Miami Beach, it could be expected — not compelling, but expected.
But imagine: Until last week’s meeting, it was unsure whether Miami Beach would accept the bonanza all county taxpayers are handing over. Even then, commissioners erected barriers.
They told the county to find $20 million more because the upgrade’s cost has risen. And, they said, if the price rises further, the county must pay. Then, they told the county to oversee construction.
Why ask Miami-Dade County to oversee construction on a building the city owns? Think of Miami International Airport’s billions in overruns. Think of the tripled price of the Carnival Center for the Performing Arts. The county’s track record is, to be very kind, spotty.
More logical — as Stuart Blumberg, head of the hotel association, told the city commission — would be joint construction oversight by the city and the county, as was used in the last convention center expansion in 1989. That $100 million job, he said, came in on time and under budget.
Miami Beach would reap operating profits from a well-built ballroom and a convention center with audiovisual connectivity. Underutilized lobby areas could yield more revenue as exhibition or meeting space. The city would be wise to exert some control over that construction rather than wash its hands of its own goldmine.
And where’s the equity in piling all added costs onto the county’s back? County voters handed over $55 million. County Manager George Burgess has indicated willingness to add $25 million more from Convention Development Taxes, Mr. Blumberg told the city. You’d think Miami Beach would willingly chip in anything above $80 million to get the job done fast because we’re losing conventions, and that’s costing city taxpayers millions.
"It’s not your money," Mr. Blumberg told commissioners. "Someone is offering you upwards of $80 million to improve your asset."
The convention bureau’s CEO, Bill Talbert, produces a bulging file of letters from meeting planners reluctant to bring lucrative groups to the center without a ballroom and technological upgrades.
Microsoft, which brought 11,500 persons in 2001 with huge fanfare and local profit, is one. It had considered a return in 2004 with 10,000 visitors who would have filled 43,000 hotel-room nights and had a $143 million impact on our economy — but it didn’t happen.
"For larger conferences, Miami should really consider increasing the ballroom space," Jeff Singsaas, Microsoft’s events manager, wrote to the bureau. Sites with such ballroom space "are the places where we will be holding our key branded events going forward."
The ballroom would include new kitchen facilities. "The status of the kitchen facilities within the center have prompted us to re-review how we site and select facilities throughout the country," wrote Keegan Rodriguez of SAP Global Marketing, which said its meetings bring more than 36,000 room nights and $22 million impact annually. SAP, he wrote, "had major challenges with the food and beverage service for our meetings and breaks" at the Beach center.
While it’s possible to temporarily refit the center’s existing halls for a corporate meeting of 2,500 to 4,000 attendees, wrote Sara Cant of Talking Point Inc., "it is with more expense than if an existing ballroom could be used." Expense drives meeting site decisions.
The city’s biggest hotel, the 1,400-room Fontainebleau, also wants the ballroom, General Manager David Feder told the city commission last week.
So how do we get from a general city agreement to upgrade the center to construction and operation?
Ms. Sastre says she plans to collaborate with Beach Manager Jorge Gonzalez, County Manager Burgess and County Mayor Carlos Alvarez to get their support.
Mr. Gonzalez, surprisingly, has been a barrier. Though his city would be the biggest beneficiary of an expansion mostly funded by the county and though he chaired several meetings on the project over the years, he has never been a supporter.
Mayor Alvarez and Mr. Burgess should be easier sales. They’ll look at overall economic impact and the relatively small funding gap that must be closed to give the industry a vital boost as booms evaporate in construction and condo development.
As for construction oversight, the city has nothing to lose and everything to gain by joining in control. Do the job right and the money flows in. Do it wrong and money flows out.
Ms. Sastre’s well-chosen aim is to have the city and the county agree quickly on an action plan with a responsible timeline geared to meet budget. As the industry’s lead representative, she’s already called Mr. Burgess to get the ball rolling.
This project is too important — and now, finally, too near — to let slip away. While the visible beneficiaries are Miami Beach and its business community, an enhanced center would benefit every segment of this county and every individual.
We just lost a meeting of 4,300 partners and directors for Big Four auditor Deloitte that was looking to come here in September 2010 with an $8 million economic impact because the convention center isn’t quite big enough, Ms. Sastre told city commissioners. We now have the quality hotel rooms — a gap we faced a decade ago — but the community still cannot commit the required multipurpose space.
We’ve got too much to lose and too much to gain for city and county leaders not to get on the bandwagon before we forfeit multimillions more in economic impact that would ripple throughout this county.