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Wilmington Convention Center still has room to grow

READ MORE: Wilmington Convention Center still has room to grow
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WILMINGTON, NC (WWAY) -- The City of Wilmington said if you build it, they will come about the $60 million convention center downtown, but how is the facility really doing.

The Wilmington Convention Center gave city council its year-in-review report Tuesday night. General manager Susan Eaton says the center hosted some 113 events and almost 67-thousand people from July 1, 2011 until June 30, 2012.

That number included nine conventions, 12 shows, 60 banquets, and 32 meetings. Eaton, however, did not break down specifically how many people attended any particular events.

Eaton says there are two problems that continuously come up when trying to get people to come to the convention center. Where people are going to stay and where they are going to park.

Right now, parking for events is eight dollars a day at the attached parking garage. Eaton says she knows no one likes to pay for parking but it has to be done.

"You got to collect money so that you can pay those bills," says Eaton. "It's kind of a necessary evil to have such convenient parking."

Eaton says she knows the facility has more to do before they reach their full potential. She hopes the addition of the hotel next door will help bring even more events to the area in 2013.

"Obviously there's room to grow, there's space to grow, there's room for people to physically grow their events too," says Eaton.

The convention center cost $60 million to build and is being paid for with hotel room occupancy taxes. Based on rooms available as of right now, that fund will run out in a few years - but Eaton and council members hope new hotels currently being built and a proposed convention center hotel will help that fund survive longer.

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In 2010,

Ms. Eaton was interviewed by Donn Annsell. If you google, you can find three You Tube entries which contain her interview.

This was before the Center opened.

She noted three area hotels, within walking distance, offered 375 available hotel rooms. She stated very clearly she could not imagine any event which could not be accomodated with that number of available rooms.

So what changed to now make available hotel rooms an issue?

Why is the sudden need for an adjacent hotel an issue? It was not in 2010. Have they even come close to booking an event which would require over 200 hotel rooms?

Don't take my word for her statements. Check You Tube.

Then she states parking costs are an issue. I believe the parking deck can house around 550 vehicles. I've attended events from New York to Georgia and as far west as California. One of two things happen at those.

The parking cost is built into attendance fee; when it is invisible it becomes an non-issue. Or parking is free for attendees who have prepaid their attendance fee and receive a parking sticker for their windshield. That's called marketing.

Now I looked at the CC website. Including an event which took place yesterday, there were 8 events listed between now and year end. None were after December 1. With the exception of an Arts & Craft affair on 11/24, none would seem associated with the Thanksgiving or Christmas holidays.

Is there no marketing effort which can be made to bring in a Holiday themed event? Not even a day with Santa for the little ones?

Of course part of the problem may be she is not an employee of the city; she is employed by SMG, Corporation which is the management company of choice for the city.

Now if you look at their website, you note SMG is headquartered in PA. But it notes they assist the managed facilities in booking events through their industry wide, country wide relationships.

Can Ms. Eaton point to one event which has been booked which is a direct result of the SMG organization?

Can she or the City specifically provide the revenues collecetd from CC events and the amount of managment fees paid to SMG? That should be pretty simple.

Isn't the internet wonderful? All types of information at one's fingertips.

Tom-

I will repeat a thought here - it's not Eaton's fault.
In reading through SMG's data and selling points on their website it appears as though they are a premiere CC operations group.
If our current bookings are the best they can do, it means to me that the industry of conventioneering is in a decline. Once I check convention numbers I see it's been bad for conventions for years. It started with a decline in attendees, then the number of conventions themselves declined.
Again we built ours in the face of an industry decline but technology may kill off MOST of the need for larger facilities. I can "attend" webinars online for organizations I still belong to. I used to attend smaller meetings using video conferencing technology which eliminated a lot of travel costs for the place I used to work for.
So what's left for convention centers?
Banquets
Shows (wedding, trade shows, manufacturers trade shows, car shows), which are in decline.
Some meetings

This is exactly what she's done.
As for holiday shows? Santa is everywhere now with malls being the biggest place. Free parking at the mall and you are probably gonna be there anyway. As for entertainment shows? Thalian Hall has that covered.
As far as state wide organizations go? I have belonged to one or two in years past and they are cognizant of the fact that in some instances they may WANT to rotate meetings at different locations to spread the wealth around and to limit travel for certain people. This is also true for some athletic events. NCHSSA state wide events are staged in Raleigh to even out travel. A school in Asheville would not want to travel to Wilmington to play a tournament, but even that out so both travel to Raleigh and it becomes more palatable to both - so I don't see basketball championships being played here, at the CC. collegiate tourneys? I would say they're rotated for the smaller leagues and played at centrally located sports cathedrals for larger leagues.

So the bottom line is Eaton took a job in an industry that's failing and in a location that is NOT centrally located.
I thinks it's "doomed" to fail.
Just what should we do with it?

Vog

VOG

it is Ms. Eaton's fault when she does not present realistic numbers and expectations to the City Council. Sorry VOG, but on this one we may not see eye to eye.

Why don't they compare the success of the local CC with the one in Cabarrus County. They are the only two facilities in NC managed by SMG.

I never said SMG was anything but a first class organization. I did say that from their website they appear to be focused on larger sites, some as large as 200,000 square feet. And from the website, clearly Wilmington is the smallest facility managed.

What should be done? Good question

First, get some straight answers as to revenues produced versus total expenses incurred; and that includes management fees paid to SMG as well as debt service.

If it's a money loser; and the trend is for a continued downturn in convention and meeting activity, then non-renew or cancel the SMG contract.

Also, remember it is a convention center and not a fine arts center. Some of the baseball proponents continue to try to sow confusion on this very topic in an effort to show how wonderful and profitable the convention center is.

Maybe the answer is to convert it from a CC to a Performing Arts Center. Maybe an art museum.

They may need to think outside of the box. Look north to Norfolk. They took an underperforming building near the harbor; made some modest modifications; and viola, it became the Douglas McArthur Museum; if you've never been there, it is worth the trip.

Second, once the financial drain is known, and it appears to be increasing from the link you provided, the city should bring in an unbiased professional consultant to determine what, if anything, can be done to stem the flow of tax payer dollars into the bottomless pit. Is there a better use for the CC then currently being pursued?

They were willing to spend thousands to try to promote that river front albatross before it was even approved; financing arranged; or ground broken. Why not drop a few on the existing white elephant to determine, professionally, if the white elephant can be tamed and put to at least break even use.

If no corrective measure can be identified, then perhaps the city should repudiate the debt, they do that abroad all of the time -- Cuba and Venezuala are famous for it.

Then create the International Curling Foundation with its headquarters and museum located in the existing White Elephant.

With the ice surface which would be installed, you could hold curling tournaments as well as minor-minor league ice hockey. Fayetteville has the Fire Antz; perhaps Wilmington can have the Sand Crabs or Sand Fleas. Add to that the Ice Capades.

Just a tongue in cheek thought or two.

But something needs to change on how the CC is managed.

Tom-

"But something needs to change on how the CC is managed."

But we need to see the numbers to see what needs to be changed. That's the paradox here.

And why compare us to Cabarrus county? Don't we offer more then they do to possible attendees? I would think that we do.

As for this
"it is Ms. Eaton's fault when she does not present realistic numbers and expectations to the City Council"
Was she asked? Apparently not, and the city chose (Not Eaton) to hide the numbers in the budget. She has absolutely no control over that.

I keep going back to our budget documents because it's OUR facility. Management fee's, profits or (Losses) should be made known - not rolled into other funds.

"If it's a money loser; and the trend is for a continued downturn in convention and meeting activity, then non-renew or cancel the SMG contract."
I agree but someone has to run it until all events are done - just who would that be within city government?

A Museum sounds nice but celebrating what? WWII? Possible given the battleship across the river. Which, BTW COULD be moved TO the CC, and turned into a WWII museum. Get a couple of more ships and that might be workable. Here's something from my home town that might interest you
http://www.battleshipcove.com/
BB59 (the Massachusetts) the Destroyer Joseph P Kennedy, and the submarine Lionfish, along with planes etc. A Maritime museum - right on Riverwalk.

Maybe it could work here but I have my doubts.
Performing arts? Just what do you do with Thalian Hall then?
We are asking the tough questions in retrospect, which is unfortunate.

Vog

VOG

I would almost think you are related to Ms. Eaton.

The bottom line is the CC is a white elephant which is a bottomless pit.

So as I previously stated, bring in a consultant with plenty of experience on just how these centers should be run.

Have them analyze the actual numbers.

Have them determine just what venues or events will be best for the white elephant.

If it turns out there are no practical, year round uses, then what will work throughout the year.

Do that before you splurge up to $37 million on a river front albatross.

The city can not afford it.

No Tom

I'm certainly not related to her and as you can probably tell I don't eschew most spending done by our fair city.
The CC is done and I'm against a taxpayer funded stadium.
Heck I don't want ANY stadium down town.

"So as I previously stated, bring in a consultant with plenty of experience on just how these centers should be run."

OK let me ask you -
This is exactly what the city did with Mandalay - they said "We want to double check this but we don't have the expertise - who do you recommend?"
Mandalay says "NSS, they are the premiere folks for this type of stuff".

You know when you mention the word consultant the first person that pops into my head is Kuebler. Yeah, I know - he's the LAST person you'd want doing this.

I don't know what the answer is for the CC.
But according to most measures, Wilmington is not in dire straights financially - and if they fund the stadium the situation still won't be dire. It won't be good, and it could be a LOT better but it won't be dire.

If we could get a truly independent over view of the CC's operations I'd say yeah go ahead, but I'd like the numbers to be made public.
Hey it's new, under normal circumstances I would say give it time. My problem is that conventions, as an industry is dying.
The CC, as a meeting place for local, small groups, is being replaced by "bandwidth" using telephones or computers.

You mentioned why the regional film commission didn't consider the CC?
Why didn't Smokey Robinson? He's coming to the college. And Saffo is giving him a key to the city - so why didn't the mayor say "Why not the CC?"
The fact is this is a competitive endeavor and as I've said - the bigger the group the better our CC will be. But when they are competing against coastline, the Hilton and the college - they may have to lose money to book functions.
Is this what we want?

Vog

Correction VOG

if you recall, the city was bringing in Ripken Design to study sites; estimate construction costs; and make a recommendation as to the best locale.

Mandalanta quashed that with their whiney "they're our competitor".

I think anyone following it knew Ripken would shoot that river front albatross down as the least desirable site; and there were too many who wanted the city to take over that albatross and build a stadium.

Now, we have Ripken putting together a proposal for a site across the river in the county. And they have stated repeatedly, Mandalanta can still operate their team. They just won't be operating downtown in a city funded ball park.

So the best consultant available was initially on board until the river front proponents had Mandalanta raise cain.

Good grief Tom

The closest I came to an actual number was this:
http://www.wilmingtonnc.gov/Portals/0/documents/City%20Manager/Budget/FY...

Pg 196
And I quote:
"The Convention Center Operations Fund budget for FY 2011-12 includes operating and debt service costs associated with the convention center and parking facility. This budget also funds personnel expenditures for food and beverage operations, general administrative costs,
parking facility expenditures, and utilities. Funding for the continued management by SMG, marketing by the Convention and Visitors Bureau (CVB), and the ongoing coordination and management involved by City staff is also included."

They have purposely obfuscated the numbers by including all these things together. I suspect somebody from budget knows the breakdown.
But they're not telling us - that's for sure.
I had forgotten about SMG - thanks for reminding me of their involvement. Looking at the budget its impossible to tell how much is being charged.

Vog

Is that a surprise?

Since they really have no control over Ms. Eaton, she is not a city employee, their only course of corrective measure is with the management company.

When does the contract come up for renewal?

Should other management companies be encouraged to solicit the opportunity.

If you look, the management company only has one other client in North Carolina. A Conention Center in Cabarrus County.

From their website, it appears their area of expertise is larger facility managment. If the CC website is correct, they can accomodate 1,500; and have 30,000 square feet; that makes them the smallest client for SMG.

So again, the question for Ms. Eaton is "how many events have been generated as a direct result of SMG?" After all, their website notes event lead generation is one of their services included within the management fee.

That's a pretty simple question to answer.

And then, for the most recent fiscal year:

1. How much actual revenue was generated by the CC?

2. How much in management fees were paid by the City to SMG.

Again pretty simple questions to answer.

Now does any member of City Council or the Mayor have the spine to get those answers and present them at the 09/18 Council meeting?

It's past time for city affairs to be run with some business smarts. If your swimming pool springs a leak, you plug the hole before you refill it. That does not seem to be the city approach.

Mayor -- with a little over 3 months remaining in 2012, how many new booked events should the General Manager and staff be able to add before year end.

Dukie -- you noted she has a small staff. Go look at the CC website and see just how many people are employed by the juggernaut.

SMG should get the message. Increase marketing efforts immediately. Provide monthly status reports on prospect calls made and contracts signed.

Here's another question for Ms. Eaton and the Mayor. Why is the Wilmington Film Commission (which is partially funded by the city) holding its breakfast meeting at the Hilton and not the CC?

Mayor -- what was the contract term for SMG? It appears it's been nearly two years that Ms. Eaton has been in place. 8 posted events for 3 and a half months is pretty shabby. That's not even one every two weeks. And from the CC website, there are only 5 posted events for 2013.

What happened to all of the "hundreds" of events noted in Ms. Eaton's report to City Council? Was that a mis-statement or a mistake?

How about an answer to that one?

Mayor -- do you think it might be time for a change?

In the private sector, you meet or exceed contracted goals or you get your contract terminated. The city and its taxpayers can not afford to continue this type of white elephant management.

And Mayor, should the city continue support for an agency, the Wilmington Film Commission, when its head sticks a stiletto in the City's back by booking an event at the Hilton rather than the city supported CC?

Interesting questions to be answered. Amazing what you can learn from the internet.

In Texas, my friends tell me they have tall oak trees and rope for those who are less than truthful or try to pull city slicker stuff on the taxpayers.

The CC Failure

Another staggering Convention Center failure.
A local event of EPIC proportions and the CC failed to book it.
Imagine the number of visitors to an event with a decidedly small town feel to it brought to a bustling metropolis like Wilmington.

Yes folks I'm talking about the Tabor City first annual corn hole tournament that will take place Sept 29 at their town library.
(See SNO)
The fact that the CC couldn't book this event means thousands of Tabor City folks won't get to see the mighty Battleship North Carolina on the pristine waters of the Cape Fear River.
Now no one will be awed as the pass over the crest of the CF Memorial Bridge with the majesty of Wilmington laid out before their very eyes.
Wilmington Businesses will now not rake in millions of tourist dollars this event could bring into their coffers.
Heads should roll for this marketing failure

Vog

Hey Vog .... I didn't see that coming

Really funny.

Funny

Based on rooms available as of right now, that fund will run out in a few years - but Eaton and council members hope new hotels currently being built and a proposed convention center hotel will help that fund survive longer.

So with the amount of hotel rooms that are empty, the fund will run out in a few years. But if we add more empty hotel rooms the fund will magically last longer?

365 days per year

That is the booking Goal.

They HOPE the fund will survive longer .......

"Eaton and council members HOPE new hotels currently being built and a proposed convention center hotel will help that fund survive longer."

Gee, I can just picture the CEO of a major corporation telling shareholders at the annual meeting "Well, I sure HOPE the monies we set aside to keep us from running even more in the red will last longer."

Of course, in the private sector, where people are held more accountable for their actions, the CEO and board would be immediately replaced and the shareholders wouldn't have been forced to buy the stock in the first place.

Doing better than I expected

I expected a quick crash and burn, but it is doing ok so far. Having the amenities that this area offers I'm sure has been a huge part of the center's limited success to date.

Financial Reporting

You know what would be nice, Katie Harden? It would be nice to see the financial payback plan for the $60,000,000 of taxpayer dollars. How much interest and principle have been paid off? How long will it take to pay off and what assumptions are being made in that repayment schedule? How is the debt being financed now and what happens when "the fund" runs out? "Convention Center has Still Room to Grow" covers none of the financials.

"...the center hosted some 113 events and almost 67-thousand people from July 1, 2011 until June 30, 2012. That number included nine conventions, 12 shows, 60 banquets, and 32 meetings. Eaton, however, did not break down specifically how many people attended any particular events." So, how much money did we make?

This isn't the only debt I'm worried about. I'd like to see an article that does the same thing for all the school debt that's been taken on, how we're doing in paying it back and when it will expire.

It's a challenge

for the reporter when the information is not provided or is so hidden in a larger report a CPA likely could not identify it.

Remember that when you vote

No matter what

In no particular order:
9 conventions and 12 shows seem to be the only events that bring people into the area. IF they are trying to pay for this with increased hotel tax revenues then they have to have shows that attract people from outside of Wilmington. Eaton and the city expect conventioners to pay for the parking deck and stay at local hotels.
They built this thing in the face of declining attendance at ALL convention centers nationwide. There is still no turn around at them either.
Locally gasoline prices are hampering peoples ability to freely go places for things like shows and stuff.
In order to over come the headwinds they are facing OUR center will have to do things "differently". Some people say Wilmington is a destination place - to a certain extent they are right but for work ? Or play? The same economic forces that stop people from "play" traveling (high gas prices and stagnant wages) stop businesses from attending trades shows and conventions.
I guess the good news is the "play" part seems to be rebounding as the local beach towns are reporting a good year for tourism. The bad news? Convention attendance is still down and there's more and more space available putting pressure on each location to offer free amenities.
IF I have a meeting with 15 people I won't go to the CC. I'd rather book the Hilton (validated free parking) or the Coastline.
Plainly put - there's no justification for having a CC and the events they have don't justify ANOTHER down town hotel.
And they are losing money....
There will always be "room to grow" there...
Vog

That certainly

sows confusion.

How will 2013 activity improve through the addition of an adjacent hotel on which construction has not begun? If the 2013 time frame is July 1, 2012 through June 30, 2013, nearly 1/4 of the time frame has expired with no construction begun and not even a serious ground breaking. If they started construction tomorrow, it likely would not be ready prior to February 1, 2013.

I may have missed something. I am in Wilmington every week. Where are these new hotels under construction? For the most part those in town now compete with reduced rates to bring business in; many of them post "Special Contractor Rates"; and the parking lots are half empty.

113 events with 67,000 people in attendance. That's an average of 593 people per event. Now 9 of those were conventions of some sort; how many of those 67,000 were convention attendees?

Is anyone on the City Council capable of asking similar questions and perhaps setting some realistic goals for attainment? And if the goals aren't met, and there has been no Cat 5 hurricane to explain poor attendance, then it may be time for a new General Manager.

so they might default on the bond fund because

room occupancy taxes aren't bringing in enough revenue to make the payments? Let me guess, they knew this going into the whole deal too right? but were hoping for a miracle of new hotel growth to make up the difference??? And with that track record, they think we owe them another huge multimillion dollar project like a baseball stadium. What unmitigated gall!

Speaking about baseball...

There was a great article about public spending on stadiums in Bloomberg today:

In Stadium Building Spree, U.S. Taxpayers Lose $4 Billion

During the past decade, studies by Grant Long; Robert Baade of Lake Forest College near Chicago; Victor Matheson, an economist at College of the Holy Cross in Worcester, Massachusetts; and others have found that stadiums are poor municipal investments. Nonetheless, political leaders are still willing to offer taxpayer-funded aid to team owners -- including muni-bond financing -- to lure or avoid losing a franchise and the civic pride and event-related jobs that go with it.
http://www.bloomberg.com/news/2012-09-05/in-stadium-building-spree-u-s-t...

I THOUGHT THEY GAVE OUT A

I THOUGHT THEY GAVE OUT A GLOWING UPBEAT REPORT, SO WHATS THE PROBLEM? GIVE IT A FEW YEARS. AS I SAID BEFORE, TIME WILL TELL. OTHER CONVENTION CENTERS IN LARGER CITIES THAN ILM ARE NOT DOING GOOD. ALSO, YOU KEEP RAISING THE ROOM TAXES AND THE TOURIST WILL STOP COMING. CAN'T AFFORD IT.