A little more convention center cold water

In a post last week, I wondered if it was really worth building a convention center hotel in Salt Lake City, given that the existing hotels are not particularly full.

Salt Lake City's convention center

Salt Lake City’s convention center

While we’re on that topic, I thought I’d bring up this article, published last year in The Altantic Cities, which argues that demand for convention space in the U.S. is actually falling:

But there’s a problem with this building bonanza, and it’s a doozy: There aren’t really enough conventions to go around. The actual number of conventions hosted in the U.S. has fallen over the last decade. Attendance at the 200 largest conventions peaked at about 5 million in the mid-1990s and has fallen steadily since then.

The article provides an interesting brief history of convention centers, but the overall diagnosis of the industry is not good. Basically, it says that the supply of convention space in the U.S. exceeds demand. That situation is squeezing top tier — Chicago, for example — and the article points out that “second tier” cities like Cincinnati and Buffalo have a hard time competing.

That’s particularly bad news for Salt Lake City; in terms of density, population size, and historic national prominence a city like Cincinnati is a tier above Utah’s capital.

The article continues:

… convention center market over-saturation means that reeling those visitors in has become harder and harder. Christopher Leinberger, a non-resident senior fellow at the Brookings Institution Metropolitan Policy Program […] says that too many cities bought into the same dream at the same time.*

“So many were saying, ‘all you have to do is get one percent of the national market and you’ll do just fine,'” he says. “Three hundred cities bought the same logic.”

The interior of Salt Lake City's convention center

The interior of Salt Lake City’s convention center

I have heard people in Utah make that same point, almost word for word.

And maybe Salt Lake City will be the city to pull through and defy the odds. As a resident of Salt Lake, I hopeful (if not especially optimistic).

But before Salt Lake uses public money to build more convention space or convention-related amenities like hotels it’s worth considering the message here:

• Demand for convention space is decreasing.

• Supply of space is holding steady and probably increasing nationally.

• Less demand + more supply = less profit for a city like Salt Lake

That means we’ll have to offer more and more incentives to hold on to a shrinking market, which in turn means less net revenue. To keep the huge Outdoor Retailer’s conference, for example, we’ll need slash the “price” of the conference to compete with other cities. The same goes for getting other conventions; it’s a race to the bottom.

This means, in other words, that the value of convention space and convention center hotels is decreasing.

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