Environment and Sports Business

Convention, Colts issues in play: Hospitality: Hospitality officials say delays may scare off potential clients

March 14, 2005
Hospitality officials say delays may scare off potential clients

Patience is one thing. Imprudence is quite another.

The Indiana Convention Center's largest customers are keeping a keen eye trained on Indianapolis these days, hoping for a sign that state lawmakers will find a way to fund a $275 million expansion that would give them room to grow.

But the lack of progress more than halfway into the legislative session has some reevaluating their options.

"I'm very disappointed at how this is going," said Billilynne Keller, executive director of the Indianapolis-based Custom Electronic Design & Installation Association, the center's third-largest event. "To be honest, if the funding doesn't go through this year, I don't know if we'll be back."

CEDIA's annual trade show is leaving for roomier digs in 2006, taking an estimated $27.4 million in direct visitor spending with it; organizers have agreed to return in 2010 if the expansion is complete.

That's a big if, Keller said, considering a House bill that would have authorized funding for the project went nowhere as legislators focused on a higher-profile plan to replace the RCA Dome.

Indeed, a stadium financing measure-which tapped some of the funding sources originally intended for the convention center-made it out of committee before a Democratic walkout killed that and about 130 other bills.

House Republicans have identified stadium funding as one of the 40 issues they want to resurrect by the end of the session, but the convention center expansion didn't make the list.

It's all a matter of priorities, House Ways and Means Chairman Jeff Espich told IBJ.

"The stadium has to come first," the Uniondale Republican said, since the RCA Dome must be demolished to make way for a larger convention center. If need be, he added, funding for the expansion project could wait. "We've got two or three years."

Not really, Keller and others insisted.

Major conventions generally book sites five years in advance, and the promise of an expansion may not be enough to keep space-crunched customers coming back. Their mantra: Show us the money.

"We need to see that funding has been approved," said Tracy Harris, vice president of powersports trade at Californiabased Advanstar Communications. Its annual Dealer Expo here generates $11.2 million in visitor spending each February, according to industry estimates.

Advanstar is committed to Indianapolis through 2006, she said, but organizers are involved in "active dialogues" with Houston and New Orleans for future years.

"It comes down to a business decision," Harris said, citing a space crunch that has existed since 1998.

She expects the organization to make a decision in May or June, after the General Assembly adjourns-ideally with an answer to the funding question.

"Almost every city has some [expansion] project they're talking about," concurred Scott Lindley, vice president at Arlington, Va.-based meeting-management firm IMN Solutions. "Tell us when it's done. Tell us when it's voted on, when financing is in place, when the environmental study is complete. We've had situations where facilities have been promised and then something happens. We're very cautious about that."

Folks at the Indianapolis Convention & Visitors Association know that well, which is why they're ramping up efforts to make sure lawmakers understand what's at stake: an estimated $129 million a year in visitor spending just from the five large groups most in danger of leaving.

"It became very clear to me that we hadn't done a very good job of explaining to legislators how our business works," said ICVA President Bob Bedell. "It's important to get that message out. We're selling [space for] 2010-2014 now. ... If the funding doesn't get approved this year, it ties our hands."

ICVA has identified 3,000 groups planning meetings in that time frame that would fit into an expanded convention center, Communications Director Bob Schultz said, but 2,000 or so likely will make arrangements in the next year. The pool of potential customers drops to about 100 by 2007.

So the longer it takes to finalize financing, the harder it will be to fill the space.

"The building could sit empty for the first couple [of] years," Schultz said. "This needs to be funded now."

The local hospitality industry also is getting involved. Workers are turning out en masse to greet legislators each day, and a rally is planned for March 14-complete with a drum line and vehicular caravan circling the Statehouse-to demonstrate the scope of support for the project.

Proponents have their work cut out for them.

Senate Appropriations Chairman Robert Meeks told IBJ he hasn't heard much about the convention center expansion.

"I'm not sure whether it's paramount right now," the LaGrange Republican said.

The threat of major conventions leaving would give the situation some urgency, he admitted, but said he didn't know whether that was the case.

"I've gotta know who they're talking about, what kind of revenue those groups bring in," Meeks said. "Nobody has laid that stuff on the table for me to look at."

They will.

The city's Capital Improvement Board took its time making the case for the convention center expansion, factoring in a new stadium only when it became clear the dome site was ideal for extra exhibit space.

The process made headlines in Indianapolis, but the information didn't get much further.

"I'm not sure it ever was delivered elsewhere," hospitality lobbyist John Livengood said. "The industry has to take responsibility for delivering that message, and we are."

"Until the halfway point, we honestly thought the convention center was a slam dunk and the stadium was the tough sell," said Bedell, who pitched the two-part project to about three dozen groups last fall. "Now it's apparent the stadium sale has been made, and the convention center has not."

Still, the battle may not be entirely uphill.

Sen. Luke Kenley, the Noblesville Republican who is leading the charge on stadium financing, expects lawmakers eventually will address the expansion project as well.

"I think the stadium aspect is dominating discussions now because it is more controversial. ... I do think the convention center part of this will get done," he said.
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