- The Washington Times - Monday, July 30, 2001

D.C. suburbs plan smaller convention centers

Washington can't build convention centers fast enough to accommodate the millions of people who want to rub elbows inside the Beltway.

The District is nearing completion on its new downtown convention center, which will feature about 1 million square feet of meeting space when it opens in March 2003. But the building won't mean much to groups that want to hold smaller gatherings, according to officials in two suburbs that are planning their own, smaller centers.

The Arlington County Department of Economic Development is considering plans for a conference center that could feature about 200,000 square feet of space. Meanwhile, Montgomery County hopes to break ground this year on its long-planned 100,000-square-foot conference center in North Bethesda.

The suburban projects will appeal to medium-sized businesses and trade groups that hold meetings that are too big for hotel ballrooms but too small for convention centers like the one being built in the District, Arlington and Montgomery officials say.

Arlington officials say they were recently forced to turn away a nonprofit group that wanted to hold a meeting for about 2,000 people because the county didn't have room for them. Officials in Montgomery County say they have encountered the same problem.

"There is clearly a market for additional space that is different from what will be available downtown," says Adam J. Wasserman, Arlington's economic development director.

D.C. officials don't view the suburban centers as competition. They say they are focused on attracting big conventions and trade shows, like the National Education Association, which plans to bring its annual meeting to the new Washington Convention Center in 2004.

"In all honesty, I see [the suburban projects] as complementing our center. They will only enhance our ability to attract business to this market," says William Hanbury, president and chief executive of the Washington Convention & Tourism Corp., a nonprofit group that promotes the District's new convention center.

But all three jurisdictions face a changing meetings industry, which has slowed after years of steady growth.

Businesses and associations have dramatically cut their meeting plans this year, according to a July 13 PricewaterhouseCoopers report. Four percent of all meetings planned during the first half of 2001 were canceled, twice the amount scuttled during the same period last year, the report said.

And though the new Washington Convention Center carries a price tag of $756 million, it's a worthwhile investment, Mr. Hanbury says. City research suggests the project will help pump $1.4 billion into the city's economy every year, he says.

"The meetings and conventions industry will always be a big business, and the new convention center will make us a competitive player in it," Mr. Hanbury says.

There is a market for all three projects, says Susan Sarfati, president and chief executive of the Greater Washington Society of Association Executives, a trade group for local trade groups.

"A large convention center is something that the city desperately needs to compete with other destinations. And there seems to be a need for space outside the city in the suburban locations," she says.

Complementary centers

The District's new center is under construction at Seventh and M streets NW, about one block north of the existing center. The 2.3 million-square-foot building will have roughly 1 million square feet of meeting space and 44,000 square feet of retail space.

It will be the twelfth-biggest convention center in the United States when it opens in March 2003, behind cities like Chicago; Orlando, Fla.; and New Orleans, according to research by Mr. Hanbury's staff.

The new center is needed because the existing convention center a two-level, 800,000-square-foot building is too small, says Mr. Hanbury, who ran the Greater Milwaukee Convention and Visitors Bureau for seven years before coming to Washington in April.

"A lot of people in this industry used to sit back and wonder how Washington could let its ability to compete deteriorate," he says.

In addition to the National Education Association, the city has also booked groups like the American Academy of Orthopedic Surgeons, which plans to hold its annual convention at the center in 2005, 2009 and 2013.

Officials in Arlington and Montgomery say their centers would appeal to smaller groups.

Arlington was recently forced to turn away the Coalition of Essential Schools, an Oakland, Calif., educational nonprofit that was interested in holding a meeting for 2,000 people in the county in November 2002.

Another nonprofit, the International Erosion Control Association, a Colorado environmental group, wanted to bring a big meeting to Arlington this fall, according to a spokesman for the county's Travel and Tourism Commission.

Big meetings could give Arlington extra exposure and dump millions of dollars into the county's coffers, Mr. Wasserman says. The people who attend conventions and conferences often spend money on everything from hotel rooms to souvenirs, which generates tax revenue for the county, he says.

The 100,000-square-foot Montgomery County Conference Center which will be built next to a 225-room hotel in North Bethesda, at the intersection of Rockville Pike, Marinelli Road and Executive Boulevard will also be geared toward local trade groups and associations, officials say.

"It's pretty typical" for big city convention centers to be complemented by suburban conference centers, says Loren Edelstein, executive editor of Meetings & Conventions, a trade magazine.

For example, the country's largest convention center, McCormick Place in downtown Chicago, has 2.2 million square feet of meeting and exhibition space and eight restaurants. But there are also several smaller conference centers in the Chicago suburbs, according to that city's tourism bureau.

Big and costly

There may be an untapped market for meetings in the Washington area, but convention and conference centers remain big, costly projects.

Officials say the new Washington Convention Center will probably cost $756 million to build, almost $50 million more than original estimates.

Cost overruns are common in long-term construction projects, says Lewis H. Dawley III, general manager and chief executive of the Washington Convention Center Authority, the agency managing the construction.

For example, steel costs more than it did three years ago, according to Mr. Dawley, who helped build convention centers in Detroit and Philadelphia. Also, the Washington area has experienced a labor shortage, particularly in the construction industry, he says.

The building's budget has not been affected by the collapse of a section of its roof this spring, because insurance helped cover the damage, says Tony Robinson, the Convention Center Authority's spokesman.

The dramatic impact the buildings have on their neighborhoods also make them controversial.

Residents of the Shaw neighborhood near the new Washington Convention Center have said they fear the project will bring new development to the area that could jack up the price of living there.

Real estate brokers say the new center will probably spur development of new hotels, shops and restaurants. The center, which will be near New York Avenue in Northeast, is also expected to boost property values along that corridor, which is historically one of the District's poorer areas.

In Montgomery County, officials approved the plans for the $72 million conference center in North Bethesda last July. But one resident has kept the project tied up in court for months because he claims planners did not follow proper procedures when they approved the project.

Neighbors have also said the project, which will also include a 225-room hotel, will create too much traffic.

Arlington County officials will probably decide this fall if the county will build its conference center, Mr. Wasserman says. The county began studying the need for a center in January.

Mr. Wasserman says county supervisors will not approve the project unless they determine it will be economically feasible.

"This will be a big decision for the county," he says.

Finding space for a conference center will also be a factor in the county's decision, Mr. Wasserman says. Arlington's Pentagon City and Crystal City neighborhoods are two possibilities because they are home to several hotels, he says.

"This is an urban environment, and it's not easy to find a place to build what we are considering," Mr. Wasserman says.

Sensitive industry

Officials in the District and Montgomery County, the jurisdictions that have already committed to building new centers, say their projects will help them cash in on the meetings industry, which is growing even though business has slowed this year.

Business at conference centers like those planned in Arlington and Montgomery counties grew about 2 percent between 1998 and 2001, according to the International Association of Conference Centers trade group.

But the July PricewaterhouseCoopers report shows the meetings industry is still sensitive to fluctuations in the economy, says Ms. Edelstein, the editor of the Meetings & Conventions trade magazine.

She also points to research by the National Business Travel Association, a trade group for travel managers, that shows 77 percent of all companies are eliminating all but essential travel this year.

"Businesses want to show their shareholders that they are trying to control costs, so you're seeing fewer meetings and smaller meetings," Ms. Edelstein says.

The slowdown in the meetings industry doesn't concern officials like Tina Benjamin, director of public partnerships for the Montgomery County Department of Economic Development, the agency that will oversee construction of the conference center in North Bethesda.

The new center plans to draw its business primarily from a growing base of nonprofit organizations in Montgomery County, such as Goodwill Industries International Inc. and the American Speech-Language-Hearing Association, two big groups with headquarters near North Bethesda.

Fifty-seven percent of all conference center business comes from companies and groups located near the centers, according to the International Association of Conference Centers trade group.

"We're losing business from local groups who say, 'We have to go outside the county to hold our meetings.' There is a lot of unmet demand for this type of facility in Montgomery County," Ms. Benjamin says.

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