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CONVENTION CENTERS:


Convention Centers View of Success


   - pressed properly, as you may see it in a public corporation’s annual report. Sometimes it is expressed where revenues include unearned income (such as a government contribution, normally a hotel tax). To avoid confusion this article uses EBITDA (acknowledging that conven- tion centers pay no T – tax). EBITDA is described as a way to eval-  and accounting decisions or tax environments. Non-cash expenses of depreciation and amortization are left out. Also, unearned revenue like hotel tax subsidies and interest earned on surplus subsidies and/ or expensed for debt service are left out. EBITDA as an earnings mea- sure is particularly useful for organizations like convention centers that   depreciation charges. What you are left with is a performance statistic showing whether earned revenues can cover and exceed operating ex- penses and if not, what amount and percentage (in total revenues) of subsidy is necessary.


How Do Most U.S. Convention Centers View Success? The primary measure of success is to attribute convention and trade- show annual attendance to a healthy hospitality industry where hotel occupancy is high, and out of town dollars spent at hotels, restaurants,  regular basis. These facts are reported as “economic impact” – a result of event attendee and event organizer spending. Attendee spending re-  such as exhibitors and attendees. For events, attendee spending forms the major component of economic impact. Collectively, attendee and organizer spending in the host city are directly attributable to event production and is termed direct economic impact. To make the economic impacts easier to track, cities have deter- mined through independent research the average spend per event visi- tor. You will see economic impact explained in various press releases as  spending. As an example, San Diego Convention Center’s marketing literature shows an annual event attendance of 824,376 with average spending of $1,179. The impact calculation is close to $1 billion.


Should Economic Impact Be the Only Measure of Success? Achieving favorable and growing economic impact is the primary


convention center goal. Those of us in the business appreciate and can parse the sometime overwhelming impact that’s reported. Many of us know that the impact estimates are heightened and often overplayed. We all know that: • There are show managers (typically tradeshows and consumer shows) who exaggerate attendance. • There are show managers (typically tradeshows and consumer shows) that present inaccuracies regarding the percent of total atten- dance from out of town. • Event attendee spending does not apply to the city or metropolitan  - lations actually occur. The basic problem is with retail purchases of goods that are produced outside of the region. Only the retail margin,


44 Facility Manager Magazine


Sample Con ention Center Operating Cash Flows – 14/’15 TES: * WSCC carriies all or part of t the city’s convention mar- keting xpense of $10.4M. Th s expense is nor


ample Convention Center Operating Cash Flows – ‘ ‘14/’15 NOTES: * WSCC carr es all or part of he city’ convention mar keting e


g expense of $10.4M. Thiis expense is normally


  substantially.. WSCC’s F&B is self op. ** DC Convention Center’s rev from DC Auditor’


evenue and expenses w port 2015.


usiness, rar ly gives rent concessions and has a full range of value services including contractor


ue and expenses were derive ally carr ed by he derived wn y carriied by t the


 substantially WSCC’s F&B is self op ** DC Convention Center’ from DC Auditor’s report 2015.


 comparison. Center has a high client demand, books all icomparison. Center has a high client demand, books all its ots own business, rarely gives rent concessions and has a full range of high g labor provider to General and Exhibit





The contrary viewthat they are not designed tomake a profit. By MylesMcGrane


and maybe some portion of wholesale and transportation margins,  For the most part, taxpayers understand direct economic impact.


Indirect and induced economic impact is not so easy to follow. If the impacts are substantial, the evidence unfolds before them as market forces drive private investment in new hotels, upscale restaurants, and entertainment and shopping districts, all in proximity to the conven- tion center. Adding indirect and induced economic impact without a truly convincing explanation can sometimes be a tough sell. So, in   -     members, and political supporters as a large economic impact is. Fa-           competence. • They resonate well with most segments of the population who may be naturally skeptical of unusually large economic impact statistics. • They add a legitimacy, believability, and clarity to economic impact reporting. Ultimately clarity matters. Clarity leads to public support       cash related expenses and accumulating a capital reserve, that fact will provide a reputation lift to the convention center and city and will be regularly reported and indeed celebrated with pride.


Conclusions and Recommendations First let me commit a bit of heresy and say that I disagree with the oft repeated phrase “convention centers are not designed to make a prof- it.” I consider it one of the more ill-advised management declarations in the convention center business. My view as a former GM is that talk like that will discourage creativity and any entrepreneurial spirit your 





alue services including labor pr vider to General and Exhibit Appt’d contractors


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