AIPC’s Rod Cameron makes the case for exhibition centres in generating economic benefits both local and national.
Every once in a while we see indignant news items about why investment in a convention or exhibition centre is in the worst possible interests of a city. As ammunition, these stories typically draw on data that show the worst possible consequences for any destination dumb enough to build or expand a centre ‘for the wrong reasons’.
The best arguments in favour of centre development can often be found in the kinds of reasoning put forward as to why centres are a bad idea. They cost too much; they don’t meet their financial or business projections; there’s already an oversupply. Oh, and all that money would be best spent elsewhere.
Collectively, a seemingly insurmountable assembly of negatives that any politician would only contest at their peril. But the answers to these criticisms generally hold the key to why so many destinations are looking at centre investment or re-investment in the first place.
A few examples. ‘They’re not profitable’. They’re not supposed to be. If they were, private investors would be building them. What they’re intended to do is attract incremental business into the city that will generate economic benefits beyond the centre itself. As a result, they’re only unprofitable if you ignore the broader economic benefit they generate, which, while they may not go to the centre’s own bottom line, are nevertheless very real and inevitibly recaptured in part via the incremental tax revenues that result, something easily calculated.
To ignore the broader economic impacts generated by a centre is to misunderstand the reason it was built in the first place, yet that’s what a simple profit/loss analysis does.
Yes, but community facilities like hospitals and schools should be the priority for government investment. All those community amenities have to be financed and if, as a taxpayer, you’d rather not take the whole hit yourself, a facility like a convention centre that generates non–resident income can be used to support those amenities.
Then there’s the charge that they’re built for non-resident delegates and don’t serve the local community. Not unless you count generating visitor revenues, supporting the business and academic communities, attracting global expertise, promoting knowledge transfer and creating educational opportunities.
While it may be convenient to ignore these broader benefits simply because they’re not as easy to measure, they are in fact the real reasons business events take place and the host community generally gets a large proportion of the resulting spin-off.
A centre also forms an important part of the capabilities a community has for accommodating its own events, including everything from local trade and consumer shows to banquets and community celebrations.
Another charge is that existing facilities aren’t full, but it’s generally considered that when you take into account the down times associated with moving events in and out, dead periods in the event season and maintenance intervals, any convention centre occupancy over 65 per cent is a miracle.
But that’s not the point: if you’re generating net economic benefits, does it really matter how ‘full’ you are. Do restaurants close down if every table isn’t taken 100 per cent of the time? The real determiner is if they’re making money. And, speaking of making money, some say there are better ways to stimulate economic development.
Most cities in hot pursuit of new investment (read: economic development) spend enormous amounts of money on development agencies, who in turn spend it on trying to attract decision makers, expose them to relevant business opportunities and encourage them to think about investing.
But wait a minute: this is pretty much what is happening in a convention centre any time a major national or international event is in town – delegates are much more likely to be decision-making business, professional and academic people than any other category of visitors. Furthermore, these prospects are actually paying the vast majority of their own way, even a subsidised centre is recovering by far the largest proportion of its operating cost from users, which is more than you can say about many other approaches to attracting new investment via more traditional development strategies. Isn’t the role of responsible government to invest in those things that are going to support an economic and social strategy for the future?
There are of course real wrong reasons for building centres: doing so for narrowly defined beneficiaries, or in the absence of a solid feasibility study. To be understood, they need to be seen (and used) for what they are: a multi-functional investment that with a well-structured mandate, governance and priorities, can assume an integral role in the business life and aspirations of the community.
Investment in a convention centre may not be the right choice for every community, but neither is it always the wrong one, and those that suggest this are doing a huge disservice to those that have the potential and the plan to make it work for them.
This was first published in Issue 3/2013 of EW. Any comments Email exhibitionworld@mashmedia.net
