Charlottes hosting of the Democratic National Convention last fall has not resulted in a surge in bookings for the citys Convention Center, but Mecklenburg hotels are having such a strong year financially they may not notice.
Mecklenburg hotels are on pace this year to produce their most revenue ever, even eclipsing the DNC year in 2012.
The DNC was the citys biggest and most prestigious convention ever, raising the citys profile worldwide and proving to be lucrative for area hoteliers.
But it has not elevated Charlotte to a new level in the convention business, despite projections by the Charlotte Regional Visitors Authority and the DNC itself.
In the 14 months after the DNC, the Charlotte Regional Visitors Authority has booked 36 Convention Center events that are expected to sell about 139,000 hotel room nights.
The Convention Center usually generates enough business each year to book about 150,000 hotel room nights.
The CRVA is still upbeat about the long-term benefits of the political convention, which was estimated to have an economic impact of $163.6 million.
The world knows about Charlotte more. We are more sought after thats the good story, said CRVA chief executive Tom Murray, who came to Charlotte two years ago.
Murray said he didnt expect the DNC to produce a large bump in business immediately.
He said the good news is that the convention center is doing well financially, in large part due to smaller in-town meetings that generate rental revenue, if not visitor spending. The center had its best month financially in October, Murray said.
Murray noted that the overall hospitality industry is doing well. The main reason: The economy has improved, with more people traveling for business and leisure.
Center at crossroads
The CRVAs quest for more business comes at a crossroads for the citys Convention Center, which opened in 1996.
The Observer last year detailed the convention centers struggles, as it hasnt come close to meeting original projections for hotel room nights booked, as well as economic impact. The original projection for the building was that it would generate 529,000 hotel room nights a year.
The convention industry nationwide has become fiercely competitive, as cities have expanded facilities while the meetings industry has shown little growth. The result has been that so-called second-tier cities like Charlotte have been forced to offer steep discounts to win business.
The Convention Center is funded from two taxes a 3 percent hotel/motel occupancy tax and a 1 percent tax on all prepared food and beverages in Mecklenburg County.
The city has long maintained that those tax dollars are crucial for the center and for growing the city as a meeting destination.
As recently as two years ago, the city and CRVA spent more than $30 million annually on the Convention Center, for operating losses, payments to win bookings, and debt payments on construction.
That amount has fallen to a little more than $20 million, because some of the centers debt has been retired. The CRVA no longer releases detailed financial statements on the properties it manages for the city.
After some of that debt was retired, the City Council this year voted to spend $87.5 million in Convention Center funds to help the Carolina Panthers renovate Bank of America Stadium. That decision depleted much of the centers reserve fund, though the CRVA has said it will have some money remaining for small projects, such as bathroom renovations.
City officials have said they envision having to find additional money for the convention center in the future, possibly from a new tax. They have said the 17-year-old center is aging and must be modernized to keep up with cities that have built new convention centers, such as Nashville.
Its unclear whether there is any significant link between the size and modernity of Charlottes Convention Center and its ability to attract new business.
The citys hospitality industry appears to be less dependent on the convention business than it was a decade or two ago.
In fact, the countys hotel industry is thriving even if the citys convention business is slumping.
Mecklenburg County hotels are on pace to sell about 5.8 million hotel room nights for 2013, according to data from Smith Travel Research. That would be the most hotel rooms ever sold in the county. It also would be a 3 percent increase over 2012, which was a strong year due to the DNC.
Despite not having the DNC this year, the average daily rate charged for county hotel rooms is $94.37 through October. Thats down only slightly from the same period in 2012, when the daily rate was $94.65.
The countys occupancy rate is the highest it has been since 2007, and hotels are on pace to produce more in revenue in 2013 than for any other year.
Sid Smith of the Charlotte Area Hotel Association said he is supportive of the CRVA and its sales subsidiary Visit Charlotte. He said the two groups problem in booking conventions is because hoteliers are doing so well financially without conventions, which often require discounted rooms.
The convention bureau is going out and selling conventions and trade shows, but that piece of business needs X number of (discounted) hotel rooms, Smith said. Then the hotels are looking and going, Wait a minute, Im full, why do I want to give rooms at discounted rates?
He added: We are doing so doggone good, our ownership would get upset if we didnt take the revenue. Its really a balancing act.
There are plans to build new hotels uptown.
A 172-room Hyatt Place hotel recently opened, and there are plans to build a 230-room Embassy Suites near the NASCAR Hall of Fame. The Charlotte Knights have said they will build a 125-room hotel adjacent to their new ballpark, which will open this spring.
Murray, who developed hotels for InterContinental Hotel group before coming to the CRVA, believes the Charlotte market may be ready for a privately financed uptown hotel with more than 400 rooms.
Developers and investors may start finding Charlotte attractive again, Murray said. The easy hotels (125 rooms) are getting done again. Four hundred or more rooms would be helpful to attract conventions.
With Mecklenburg hoteliers selling 5.8 million rooms, the share of the convention business will be about 2.6 percent of all rooms sold in 2013. The center had a 4.6 percent share of the countys hotel business in 1996.
Promise of long-term gains
In the run-up to the DNC, CRVA officials said they believed the event would produce more long-term business for the city.
Steve Kerrigan, the former executive director of the DNC Committee, predicted Charlotte would also see a boom in new bookings due to the worldwide exposure from the political convention.
But the experience of other cities that hosted political conventions raised questions about the impact in Charlotte.
Philadelphia saw fewer bookings after the 2000 Republican National Convention. Denver tourism officials said they couldnt make a case for the 2008 DNC boosting their convention business. And Boston said an uptick in business after the 2004 Democratic National Convention may have been due to a new Convention Center having just opened.
In Charlotte, the International Association of Fire Chiefs in 2017 and 2021 have been the biggest conventions booked since the DNC. For each convention, the association is expected to bring 7,500 people and use 14,160 hotel room nights.
To land the 2017 fire chief convention, the CRVA gave the association reduced rent, as well as a grant of $70,800 to help with the groups costs.
The association said in a statement to the Observer that it came to Charlotte because of the size and quality of local facilities, affordability for both the association and the attendees, community support, and transportation and logistics options.
Other large conventions booked since the DNC include the 2018 American Football Coaches Association (10,239 hotel room nights) and the 2015 National Association of Counties (8,001 hotel room nights).
In June, the American Quilters Society booked a 2014 convention in Charlotte that is projected to use 2,045 hotel room nights.
Bonnie Browning of the quilters society said the group chose Charlotte because your convention (center) was large enough for our group and because we were looking for a site in that part of the country.
She said the DNC had nothing to do with its selection.
Overall, Charlotte has not been able to land some of the most coveted conventions, such as large electronics trade shows or large medical conventions, whose members are known to be bigger spenders.
Many of the citys conventions are part of the SMERF market, which stands for social, military, educational, recreation and fraternal.
SMERF conventions can be large, but they arent known for being lucrative, because many attendees are on tight budgets.
The CRVA has hoped the DNC would help it land business for 2015, when bookings are scarce.
The CRVAs goal is to book 410,000 hotel room nights a year, with most coming from non-Convention Center events like amateur sports or small meetings in hotels.
As of October, the tourism authority had less than 60,000 hotel room nights booked for 2015, which is only 40 percent of its target.
But its possible that the hotel industry will make up for the lack of bookings.
Another way to increase business is to renew the CIAA basketball tournament, whose 2014 tournament in Charlotte is the last under its current contract.
The event is one of the biggest for the citys hospitality industry, producing more than 40,000 hotel room nights for the weeklong event.
The CRVA had asked earlier this year for an exclusive six-month window to negotiate an extension, but the CIAA declined. Charlotte is waiting for the organization to release a formal request for proposals.
The city, Mecklenburg County and the CRVA have agreed in the past to provide the CIAA with the Convention Center rent free, as well as $1 million in cash.
We understand we are in a competitive environment, Murray said.
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