Friday, July 18, 2014

When Cultural Facilities Become Means Not Ends

In the mid-1970s as a newly minted community marketing exec for Spokane, Washington, one of the first people to drop by my office was an ad rep named John Kelly.

We couldn’t afford what John was offering, but in the process he gave me a peek at his parent company’s new research: one of the first, if not the very first, in-depth breakdown of the entire marketplace of conventions and meetings.

The next year John joined Alaska Airlines but our paths would cross several more times.  He was head of marketing there when I was running Anchorage, my second DMO.  Shortly after I was recruited to Durham he became head of Horizon Airline and then head of Alaska Airlines.

But the day of our first meeting sticks in my mind because the sixteen subsequent reports commissioned by M & C Magazine that I utilized before I retired from that profession, were something for which I found an alternative use.

Even more important than rationalizing how to reach convention decision makers,  I somehow saw them as a way to zero in on metrics that would help us calibrate market share not only for Spokane, but for the two other community DMOs I ran during my career.

Market share is a way to set realistic goals and allocation of resources based not only on generating demand but calibrated to changes in supply.  It is also a means by which a community can assist developers and avoid the churn that comes with overbuilding.

It also helps a community avoid over-reliance on any one market segment of visitors.

As John and I talked that day, Spokane was spending $2 million to convert what had been the state pavilion during the just-concluded World’s Fair into its intended after-use as a convention center, for which it had been carefully designed.

It was also from these reports and warnings from the sentinel heads of a few major hotel chains, that a few DMO execs began to detect in the early 1980’s that the meetings market was losing steam.

But for fits and starts, it has declined now to about 10% of overall visitors potential.

A consultant isn’t needed to compute a community’s fair market share or potential. Roughly it goes as follows:

Take the gross number of meetings and attendees nationwide.  Separate corporate and small association/government meetings from the 1% that are major conventions.  Separate the groups that rotate across the nation from groups that stay within a region or state.

Take size breakdowns and calibrate them for the roughly half or more that are day trippers from those who use hotels e.g., 57% market-wide and match it against overall community capacity.

Discount for the proportion that meet in a community’s peak season for transient business or leisure leaving the percentage that meet in a given community’s “needs” seasons.

Narrow down potential by those rotating to any given region during a given year, e.g. 23% in the South Atlantic.  Separate the proportion that use convention centers e.g. 30%, from those that use hotels, broken down by downtown, suburban and airport etc.

The result will help calibrate reliable goals for that segment of visitors as well as inform any discussion about facility needs.

In the 1890s when destination marketing organizations first evolved to shape community identities as a means to leverage visitors, conventions were not only a purpose for which people traveled but the easiest to pursue.

Back then few hotels had meeting space and most meeting facilities were privately owned.  In the 1910s, cities began building public civic centers and auditoriums.

They were first a qualify of life amenity for residents and second a way to potentially appeal to conventions as value added.

Thus they were called civic centers.  That may be the last era in which convention centers truly made sense.

By the 1920s and 1930s mass leisure travel gave cities far greater and broader potential for visitation but many communities and their DMOs remained fixated on conventions, as many do today.

They imagined that segment as an ever expanding lake of potential, never making adjustments for the fact that even when and if that were true, the number of cities competing was growing far faster.

They also failed to account for the explosive growth and popularity of major convention hotels as an alternative or that improvements in transportation meant that attendance at conventions gradually began to skew based on the region and state in which they were meeting.

Failing to grasp that the genius of visitor-related economic development is that it is meant to be “demand-driven,” ironically, many cities and their DMOs have fixated on the supply side of facilities instead, emulating old-school, Industrial smoke-stack chasers.

The unfortunate result has been erosion of the sense of place and community distinctiveness that DMO’s are sworn to defend, making their communities less and less differentiating and less and less appealing or worthy of affection.

Following World War II, officeholders, downtown developers and their allies cities stopped viewing convention centers, stadiums and performing arts facilities for their inherent potential and began to coopt them as a means for the public sector to prop up private property values.

After researching nearly nine decades of documents in scores of cities, in a new book public policy expert, Dr. Heywood Sanders has followed up his controversial  2005 study for the Brookings Institution with a much more in-depth analysis of these phenomena and the history behind convention centers.

For neighborhood activists, officeholders, policy makers and expecially DMO executives, Sander’s book belongs on the shelf of required reading of this nature such as Dr. Mark Rosentraub’s Major League Losers and the follow up Major League Winners.

And out next year, Building Cultural Facilities in U.S. Communities by Drs. Joanna Woronkowicz and  Norman Bradburn, an elaboration on the study Set In Stone they authored along with five other researchers for The University of Chicago Cultural Policy Center.

Convention Center Follies is a page-turner for anyone who has witnessed or be party to the backroom processes and copy-cat techniques so often used to rationalize these facilities along with stadiums, ballparks and performing arts centers.

Some in my former profession along with feasibility consultants are quick to quibble with details of these studies but a few are having a  critical-thinking epiphany.

First, if they are half right, the problem is just as big.  Second, it DMOs and consultants want clearer information, they need to become less defensive and far more reflective and critical themselves.

The communities I served may have dodged the bullet but that doesn’t mean they have been immune to the group think that has led to so many billions of dollars of public facilities being spent less effectively than it could have.

During my career, I witnessed first hand many of the things Sanders reveals, both as other communities followed this path but to a lesser degree in my own communities as well.

The formula hasn’t varied for almost 90 years.

Hatch the plan in private.  Find a way around voter approval.  Shop for data to support proposals rather than build proposals based on data.  Avoid factoring in macro overbuilding or long term trends.

Let the ends justify the means.  Never go back and recalibrate expectations based on performance or admit things that didn’t work. Hope memory fades before the even bigger down stream costs come.

As business professor friend of mine has written.  Communities are in denial that initial constructions costs are only a tiny fraction of the ultimate cost of facilities.  Officeholders rotate off, developers flip, community memories fade.

Seldom does the outcome endure.

Sanders reminds us that in 1956 when Booz and Allen conducted the first independent feasibility assessment of a convention center in the nation, it concluded the new facility was not feasible.

Developers and officeholders insisted that the head of the DMO in that community, probably with a gun to his or her head, insisted that it crunch numbers more favorable.

Today, it happens in reverse but that is probably when the ugly business of consultant shopping was born.

As feasibility consulting rapidly grew lucrative, many acknowledged that the accuracy of the reports was made irrelevant because community’s had already made up their minds by that time they were engaged.

If a DMO’s research was felt too conservative or one consultant’s numbers didn’t work, another would hastily be contracted as happened more than once during my career.

In 1984, when a new convention center was built in Anchorage as part of Project 80s (along with a sports arena and a performing arts center) the total amount of convention center space nationwide was closing in on 32 million square feet.

By the time my career ended two and a half decades later, that amount more than doubled during a time when it was clear that demand was in a long, slow decline, especially as a proportion of overall travel.

A look at the data shows the same thing has happened with sports facilities and performing arts theaters, far outstripping demand.

Cultural facilities are important, especially when they are carefully evolved as part of a diverse ecosystem designed to differentiate communities and foster unique sense of place but built in response to demand, not as a means to create it.

As Rosentraub cautions, cities need to do a whole lot more planning and a lot less hoping.

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