His detractors call him "Chicken Little," "Totally loony," "The Dr. No of the industry." They accuse him of hand-picking data to suit his argument, of relying on anecdotal evidence, even of intellectual dishonesty.
"He's just irrelevantthat's about as kind as I can be," says Steven Hacker, president of the International Association for Exhibition Management in Dallas. "His theories are goofy. History has revealed that they don't hold water."
But has it? The man who inspires such harsh judgmentsHeywood Sanders, author of Space Available: The Realities of Convention Centers as Economic Development Strategy, a January 2005 Brookings Institution white paper that claims that the convention center industry is overbuiltdoesn't think so. Indeed, he's supremely confident, even arrogant, about the correctness of his argument. "I don't have much interest in providing you with an opinion about my work," are the first words out of his mouth when reached by this reporter. "We can look at the numbers. It's pretty clear how the trends have played out."
That's what Successful Meetings decided to do. We looked at the numbers, spoke to the experts, and got a sense of what Dr. Sanders' argument looks like today. Is it true, as his critics claim, that convention travel is coming back and his theories were too pessimistic? Or is Sanders correct in sticking to his views?
In the Brookings paper, Sanders presents a variety of data from the 1990s to 2004 on attendance and occupancy rates at convention centers across the country and finds that as the supply of space has been increasing, not only has demand been declining, but industry projections have been far more optimistic than results. In other words, he argues, these buildings are not generating anywhere near the economic impact that they were expected to, and in fact often lose money, yet cities continue to invest huge amounts of money in them.
With millions of dollars of convention center development at stake, Sanders' arguments against building or expanding facilities could potentially limit the future destination options of many meeting planners. On the other hand, if he is right, planners and show managers could find themselves with the upper hand as centers competing for their business are forced to discount space or even give it awayin fact, as he points out, this is already the case at convention centers in Dallas, Hawaii, and elsewhere.
As an outsider and an academiche is a professor of public administration at the University of Texas at San AntonioSanders may have the least vested interest of anyone involved in this debate. He has brought the clubby, glad-handing world of government-funded buildings and the city leaders who stand to gain or lose from them to the public at large. No doubt this is why he is so controversial: Since publishing the paper last year, Sanders has become a lightning-rod figure, inspiring a torrent of criticism, rebuttals in the form of industry-generated white papers, even personal attacks. Whenever convention center expansions or new builds are proposed, his name pops up in the media. He often attends public hearings, where he invariably argues against the proposed project. "I call him the Dr. No of the industry," says Hacker. "He's the only one who consistently says, 'Nodon't build it, don't expand it.' "
This controversy is important even to planners who don't plan citywides and have never used a convention center in their lives. Why? Because, as Steve Moore, president and CEO of the Greater Phoenix Convention & Visitors Bureau, which just unveiled the first of a multiphase expansion of its convention center, explains, a competitive convention center is key to sustaining the hospitality infrastructure of a destination. "First of all, if a city has a convention center, you can rest assured that its government is committed to meetings and hospitality," says Moore. "From the mayor to the city council to the police, they 'get it' more than the folks in cities without convention centers."
Cities with competitive centers usually offer better infrastructure and services that support all meetings, Moore adds. "When a city has a vibrant convention center, it typically offers better airlift as well as other amenities like dining, entertainment, and sports. Also, the marketing budget for its convention and visitors bureau is usually stronger, so its CVB can offer services like registration assistance, promotional brochures, and so on, that any planner can use."
A Numbers Game?
Sanders' critics attack his argument on a number of fronts, but their principal complaint is that he is negatively biasedthat he focused on a time when convention centers were underperforming because business travel in general wasn't doing well, that he deliberately selected data to make the scenario look worse than it actually was, and that ample evidence shows that the industry has subsequently picked up again, proving that Sanders' predictions were overly gloomy.
"Sanders looked at the years from 2001 to 2003, and it's true there was a decline from 2001 to 2002 in most metrics," says Tom Hazinski, managing director of the Chicago office of hospitality consultancy HVS International and the author of a 2005 paper that was highly critical of Sanders' research. "But 2002 to 2003 was a mixed bag, and in 2003 and 2004, all measures grew. We've now seen two years of growth in all measures of the exhibition industry." Adds Hazinski, "I can't imagine how Sanders can defend his argument. The data don't support it."
Sanders, however, has no difficulty finding recent data to corroborate his views. The 2006 Index released by the Center for Exhibition Industry Research (CEIR) in Dallas, he notes, shows that exhibition attendance increased by only one percent from 2004 to 2005. Meanwhile, the amount of exhibit space rose 24 percent over that same period, according to Tradeshow Week's Major Exhibit Hall Directory. Sanders dismisses more substantial increases in other CEIR metrics, such as the number of exhibiting companies or the amount of net square footage sold. "The issue cities face when talking about economic impact is attendance," he says. "It's about the interrelationship between supply and demand: Everyone is getting a smaller share of the pie. If Las Vegas succeeds [in getting convention business], it'll be at the expense of other cities."
Arguments about the numbers are literally endless, and often mind-numbing. For example, Sanders is routinely excoriated for relying heavily on data from the Tradeshow Week 200, an annual list of the largest exhibitions in the country. "That list isn't representative. It's only indicative of the biggest shows taking place in maybe a dozen facilities across the country," says Robert Canton, director of PricewaterhouseCoopers' convention and tourism practice in Tampa, FL, who also wrote a paper criticizing Sanders' work. "How can you base an analysis on the Tradeshow Week 200 when the events aren't the same from year to year?" Mary Power, president and CEO of the Convention Industry Council in Washington D.C., agrees: "It's like saying that if the top 200 companies in America aren't doing well, all of corporate America isn't doing well. A lot of the growth is in the up-and-coming shows." Hazinski of HVS International goes even further: "He used the Tradeshow Week 200 numbers because they suited his purposes best."
Sanders, however, admits at the beginning of his paper that there are legitimate questions about the numbers he cites. He devotes an entire page to a discussion of the lack of reliable data for conventions and trade shows, where he claims that while the "200" list "does not index the larger industry in any sense," it provides "a plausible starting point for examining trends in market demand." And the "200" list is hardly his only evidence, as he frequently cites data from convention and visitor bureaus, individual buildings, and other industry sources.
Lies, Damned Lies, and Statistics
Things get complicated when Sanders starts picking apart the very sources he uses as evidence. For instance, why does he cite the CEIR Index and its one- percent rise in attendance instead of the most recent data from the Tradeshow Week 200, which found a 3.5-percent increase? "If you actually compare total attendance figures year to year from the Tradeshow Week 200, they don't show an increase," he counters. "According to the '200,' the cumulative attendance increase from 2002 to 2005 was about 10 percent. But if you look at the total reported attendance numbers, they actually went down"from a little over 4.2 million in 2002 to 4.16 million last year. "Somehow, they've reported positive increases of almost 10 percent, yet the total attendance has gone down!"
How is this possible? Sanders hints that shows that underperform are simply left off the list. For instance, he notes, the BookExpo America saw professional attendance of almost 14,000 in 2005, according to this year's "200" list. But in the column where the previous year's attendance figures are supposed to appear, "It says, 'Comparison unavailable,' " he says. "Yet if you go back to the '200' list published for 2004 and look up the BookExpo, it says that professional attendance that year was almost 25,000!"
Why, then, use numbers from the Tradeshow Week 200 at all? "Because I use them in a responsible way," Sanders replies. "I use the total reported numbers for each year, and I use the audited attendance figures." He adds, "I was very surprised to reconstruct how this happensthey get regular positive attendance increases year to year, but the numbers aren't growing. If the '200' had grown at the rate they argued, total attendance would have been 4.62 million for 2005, and it isn't."
Sanders even challenges what many industry insiders consider to be an unimpeachable source: PricewaterhouseCoopers. Each year, the business research and analysis firm, in conjunction with the International Association of Assembly Managers, conducts a survey of managers of about 100 convention centers around the country. According to its 2005 survey, attendance at conventions and trade shows grew 14 percent overall from 2003 to 2004, with the largest centers experiencing a 17- percent rise, and midsized and smaller centers seeing increases of 13 percent and 38 percent, respectively.
"Contrary to Dr. Sanders' findings, our research shows that attendance, room-nights, and demand for space have all rebounded," says Robert Canton, who supervised the research for PwC. "We've conducted this survey every year for the past 21 years, and all of the major facilities are included," he adds. "There was a decline in the earlier period that Sanders looked at, but now people are traveling again and going to trade shows."
Sanders disagrees. "His numbers don't show anything of the sort," he retorts. "If you look at the actual numbers rather than the percentage change, you may come to a different conclusion. For example, if average attendance was one million two years ago, then drops to 500,000 the next year, even if it goes up by 14 percent the year after, it's still well below where it was."
The Nutty Professor?
Some of the most positive comments about Sanders' research come from trade show managers themselves. Perhaps this isn't surprisingunlike industry association leaders, they have less motivation for promoting the overall state of conventions and, if anything, they tend to benefit from an oversupply of exhibit space. Peter Nathan of Exhibicon International in Westport, CT, for example, calls Sanders "wrong about the major cities but right about the smaller cities. The third-tier destinations will have a tough time getting business to fill the facilities they've built."
Jim Bracken, chairman emeritus of VNU Expositions (a division of Successful Meetings' parent company, VNU Business Media), agrees. "A lot of these centers, especially in second- and third-tier cities, need help getting attendance because there are too many of them," he notes. "They end up hiring outside companies like SMG [a Philadelphia-based convention center management firm] to help them."
Even Steve Moore of Phoenixwhose convention center expansion is implicitly criticized in Sanders' paperoffers carefully worded praise for the professor. "It doesn't hurt to be cautious [in implementing a center expansion] and, if anything, Heywood Sanders has reinstituted more cautiousness in cities moving forward," he says. "Here's where I agree with him 100 percent: Should you use due diligence and benchmarking? Absolutely. Should you apply Sarbanes-Oxley? Absolutely. But he underestimated the resiliency of the meetings industry. We are cyclical, and he focused on a period when there hadn't been such a lull in the industry since 1972."
Several of the sources contacted for this article, however, were far less charitable. Without going on the record, some even suggested that Sanders is a libertarian opposed to government funding of convention centers or other municipal projects and that he deliberately seeks out data that will support his bias.
"That's patently absurd!" Sanders replies indignantly. "My politics aren't in the least libertarian, and the Brookings Institution certainly isn't a libertarian establishment. In fact, I'm saddened that folks would engage in that kind of personal characterization because it's beneath them.
"My politics have nothing to do with this analysis," he continues. "I try to deal in fact and substance, with material that can be documented and shared. My paper is fully documented and my work is subject to outside review. I'm not a libertarian and I try to be as careful as I can. If I make a mistake, lots of people are going to call me on it."
Nearly two years after publishing his Brookings Institution report, Heywood Sanders still generates high emotions. But whether you agree or disagree with his conclusions, the fact of the matter is that the need for competitive convention centers isn't going away. Then again, neither is Heywood Sanders.
"Unlikely to Recover"
Part of the difficulty in assessing Sanders' work is that many industry experts seem to have misread his argument, or not read it at all. For example, Doug Ducate, president of the Center for Exhibition Industry Research in Dallas, refers to "a quote on page three" of the Brookings paper, "where Woody says the industry is in a downward spiral and 'a recovery or turnaround is unlikely.' The irony is, by the time that was published, the industry had recovered!"
Ducate has cited this quote repeatedlyboth verbally and in writingin making the case that Sanders is incorrect. But he has distorted the professor's views by leaving off the rest of the sentence. On page three, Sanders writes, "The overall convention marketplace has shifted dramatically, in a manner that suggests that a recovery or turnaround is unlikely to yield much increased business for any given community" (emphasis added).
"I never said there wouldn't be a turnaround in the industryin fact, I assumed when I wrote the piece that there would be a turnaround," says Sanders. "Ducate has frequently misquoted me. What I said was that center development and expansions are likely to outpace a turnaround, such that an individual center competing for business in a competitive marketplace is unlikely to see its attendance grow." SJW
By the Numbers
Professor Heywood Sanders has his supporters in the meetings industry, and he definitely has his detractors, but he doesn't seem to put much stock in the opinions of either. By his own admission, he's all about the numbers. SM contacted 13 convention centers around the country, including some that were singled out in Sanders' report in January of 2005 as being overbuilt, to see how they've been faring up to now. Here are the numbers they've generated.
San Diego, CA: San Diego Convention Center
In the fiscal year closing June 30, 2006, the San Diego Convention Center Corporation (SDCCC) booked a record-breaking 88 future conventions representing 1,066,297 hotel room-nights. This is the highest number of future events booked in a single year since the expansion opened in 2001.
The conventions are booked through 2020 and will attract a record 632,160 out-of-town delegates. More importantly, the future business translates into a projected $1.9 billion in regional economic impact and $40.6 million in tax revenues for the city of San Diego. According to Denise Mosgrove, a spokesperson for the convention center, "In the fiscal year 2006, the center generated $23.2 million in tax revenues for the city of San Diego. Even after the city paid $13.5 million (including the annual bond payment for the expansion and annual investment), the city netted $9.6 million, or a 71-percent ROI."
Orlando, FL: Orange County Convention Center
According to the Orlando CVB, for events held at the convention center, the total number of room-nights requested for the period of January 2005 to July 27, 2006 was 1,984,201. This number only includes groups that requested housing location assistance from the Orlando CVB. It is an incomplete number for the entire destination as it would not include room-nights for those convention center groups that may have booked rooms directly with a property in lieu of asking the Orlando CVB for assistance. The true number is likely much larger.
Overall attendance for all of 2005 was 1,432,883. Attendance through July in 2006 was 895,462a 5.7-percent increase over the same period in 2005.
Chicago, IL: McCormick Place
In 2005, McCormick Place held 58 trade shows and meetings with 1,046,023 delegates. This is all the information the center would release.
Anaheim, CA: Anaheim Convention Center
The convention center was not able to provide the numbers requested. However, the bureau has supplied numbers for bureau bookings only. Room-nights booked in 2005 were 348,486. Attendance in 2005 was 1,208,965. The bureau projects five million room-nights through 2010 and six million attendees through 2010. The projected goal for 2005 was down by five percent.
San Francisco, CA: Moscone Center
There were 78 events held from 2004 to 2005 at the Moscone North/South buildings, with an attendance totaling 623,909. The new Moscone West structure had 37 events from 2004 to 2005, with an attendance totaling 195,934.
For the first six months of 2005, Moscone West booked 17 events and 162,301 room-nights. For the first six months of 2006, Moscone West booked 27 events that generated 222,692 room-nights, which indicates a 37-percent increase in booked room-nights from 2005 to 2006. Within the next four years, Moscone West estimates it will book 56 events and 661,984 room-nights.
For the first six months of 2005, other Moscone buildings, which include Moscone North and South, booked 34 events and 591,579 room-nights. And for the first six months of 2005, these buildings booked 41 events and 620,206 room-nights.
New Orleans, LA: Ernest N. Morial Convention Center
Since January 2005, the center has booked 1,252,022 room-nights and hosted 445,341 attendees. The convention center projects it will host 1.8 million attendees in the next four to five years.
New York, NY: Jacob K. Javits Convention Center
The center hosted 72 trade shows and conventions in 2005 with 1,831,900 delegates. According to PricewaterhouseCoopers' 2004 report on the Javits expansion an estimated 668,000 room-nights have been generated by the Javits each year since 2000.
Las Vegas, NV: Las Vegas Convention Center
According to Kevin Bagger, director of marketing and research for the Las Vegas CVA, the 1.6 million convention delegates hosted at the Las Vegas Convention Center (LVCC) in 2005 generated roughly 3.7 million room-nights.
From 2004 to 2005, convention center attendance increased by 7.7 percent. However, there was a 0.6-percent drop in the number of conventions held. And from 2004 to 2005, the total room-nights occupied for convention business had an 8.6-percent increase.
Comparing the first five months of 2005 to the first five months of 2006, convention center attendance decreased by 5.1 percent, number of conventions held decreased by 0.4 percent, and total room-nights occupied for convention center business decreased by 6.8 percent.
Dallas, TX: Dallas Convention Center
The Dallas CVB booked 370,785 room-nights for convention center events since January 2005 to the present. From January 2005 to the present, the center has hosted 1,019,721 attendees. The convention center projects to host 716,490 attendees by the end of 2006, and has confirmed bookings for 2007 that project 224,037 attendees.
Denver, CO: Colorado Convention Center
In 2005, the number of citywide conventions totaled 40 and generated 153,483 delegates.
Overland Park, KS: Overland Park Convention Center
According to Kelvin Moore, general manager, "We had 340,000 attendees in 2005, and we've had 163,000 attendees from January to the end of June in 2006. We anticipate that our attendance will range between 320,000 to 360,000 per year." Regarding the center's goals for booking room-nights and attendance for the past two years and for the next two, Moore states that the center is short, but close.
Schaumburg, IL: Renaissance Schaumburg Hotel & Convention Center
According to Randy Griffin, director of sales and marketing at Renaissance Hotels, "We anticipate the Renaissance Schaumburg Hotel & Convention Center will produce over 270,000 room-nights over the next three years. Of these room-nights we anticipate 60 percent will be group motivated with the remainder being business travel and weekend leisure guests. The expectation is that over the next three years we will realize over 150 trade shows/events exclusively in the convention center driving over 500,000 attendees for these events." (This is a private facility, but we include it because it was mentioned in the Brookings report.)
"The complex was built to be a new economic engine for the Schaumburg area, providing small to medium trade show planners with an affordable alternative to other midwestern venues," says Griffin. He adds, "We anticipate the hotel will have over 40,000 group rooms from July 3 to December 31, 2006 and around 85,000 in 2007."
Phoenix, AZ: Phoenix Convention Center
According to the convention center website, it plays host to an average of 540 events annually, including 45 conventions representing annual attendee expenditures of more than $160 million. April I. Torrisi