The Vancouver Convention & Exhibition Centre: A boondoggle in the making?

An American expert on the economics of convention centres says there is certainly an issue if a public project, like the expansion of the Vancouver Convention & Exhibition Centre, ends up costing far more than taxpayers were promised.

Yet according to Heywood Sanders, the larger, more problematic, and less-talked-about concern is whether or not such a venture yields the benefits that the Gordon Campbell government has forecasted. Sanders, a professor at the University of Texas in San Antonio, acknowledged that this will only be known once the expanded centre opens for business in 2009.

"But we can certainly ask how the centre is doing now, and does an expansion appear to have been a sensible, plausible investment," Sanders told the Georgia Straight . "If we look at other centres in North America, expansions rarely result in substantial increases in business."

One indicator, Sanders said, is the number of hotel rooms booked by convention delegates. For that, he cited the 2006–2007 annual report of the BC Pavilion Corporation (PavCo), a provincial Crown corporation that operates the VCEC and B.C. Place.

The figures show the VCEC generated 100,023 hotel-room nights. Estimating total demand for hotel rooms in the Greater Vancouver area at 3.6 million, he said that the VCEC-generated hotel-room business is a mere 2.8 percent of the total.

"It's not an industry average but, typically, convention centres generate a small fraction of total hotel-room demand," Sanders said. "Two-point-eight percent is barely there."

In 2005, Sanders wrote a study for the Washington, DC–based Brookings Institution that stated that convention attendance in the U.S. has been declining while more spaces are being opened up.

When he heard that the B.C. auditor general's office had released a report on October 25 stating there is no guarantee that the project will be finished for the latest approved budget of $883.2 million, Sanders said that he immediately went back to the business plan that made the case for an expansion.

"I'm really quite struck," Sanders said upon doing a quick review. He noted that the study done by the consulting firm KPMG in 2000 stated that the centre was then generating 247,000 hotel-room nights, and projected the number to increase to 600,400 a year by the time the expanded centre is finished.

"If this [2006–2007 report] is to be believed, the centre is now doing less than half the business that it used to do," Sanders said.

He also noted that the same KPMG study stated that the centre was then producing 395,000 delegate days, yet PavCo's latest annual report indicated that the number of delegate days for 2006–2007 was 173,547. "That's half of what KPMG said they [VCEC] were doing in 2000," Sanders said. "I'm amazed That centre can never generate the kind of figures that they were talking about then. It's just implausible that it will ever reach those figures."

In reponse to an October 29 Straight request for an interview to respond to Sanders, the VCEC, through vice-president Vic Johnston, instead sent a media release dated October 24. The release talked about "dramatic results" in marketing efforts leading up to the 2009 opening of the expanded convention centre.

"We're now really starting to see the benefits of our investment in the VCEC expansion," the VCEC release quoted Tourism Minister Stan Hagen.

The same release claimed that the 77 events are "projected to collectively draw some 1.1 million delegate days". It also said that these will generate $1.6 billion in economic output for the province.

Vancouver's former director of planning, Larry Beasley, pushed to ensure that the expanded centre would be a significant waterfront landmark. Provincial officials have previously claimed that civic demands for design improvements pushed up the cost.

Tourism Vancouver's Rick Antonson supports the expansion. He told the Straight that the "latter part of 2010 through to 2015 is the main concentration" of marketing efforts for the expanded centre. "The market overall is strong," Antonson said.

Sanders cited the opening last summer of an additional 470,000 square feet of exhibit-hall space in Chicago's McCormick Place. The VCEC expansion will bring its total meeting, exhibition, ballroom, and plenary-theatre space to 468,000 square feet, according to the project's Web site ( www.vccep.bc.ca/ ). "Chicago just added more space than will be in the entire expanded VCEC," Sanders said.

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