Saturday, January 22, 2011

A less conventional take on convention centres

Bad for business
I came across a blog the other day in praise of convention centres.  Its a few months old now, but it  backed the competitive bid by the Edge  (which already runs a centre that can host 2,250 people) to provide a large one for Auckland. 
It was followed by a comment that suggested convention centres don’t actually contribute to city well-being .  The author of the blog, Sydney, said he had not seen the research behind this claim. 

Well, try this 2002 article in the Economic Development Quarterly.   Heywood Sanders assessed evidence from 36 feasibility and market studies in the United States.   The results were pretty conclusive.  Large downtown convention centres, once built, rarely deliver.  One reason is  the static or declining market for trade shows, conventions and conferences.  Another is the tendency for consultants to substantially over-estimate attendance, and optimistic forecasts of occupancy to be accepted without question.
Monuments to bad decisions
A convention centre is being promoted as something of an anchor project for an internationalised CBD in Auckland.  I put some ideas for how we might remake Auckland’s CBD into a recent blog.  A new convention centre has no  part in any prescription I could come up with. 
Monumentalism – building (hopefully) iconic, large structures with ratepayers’ money (and future ratepayers' money ) – is a high risk business.  And convention centres, alongside large sports stadia, are among the least likely to deliver.   
Take the North Harbour Stadium, for example.  As stadia go, it certainly looks good.  It’s beautifully designed, and sits well in an attractive location.  Is it often used?  No.  Is it ever full?  No.  Has it contributed to the economic well-being of North Shore or Auckland?  No.  Has it cost the ratepayers? Yes, big time.  The lesson?  Something more modest would have delivered the sporting and entertainment benefits at a lot less cost.  Big and iconic is not always beautiful.
Why not?
So what’s wrong with a big, bold convention centre for central Auckland?  It’s not the same as a sports stadium on the outskirts. Is it?
Well here are my reasons for dismissing it and moving on.
First, convention centres are so 1990s.  There is evidence that the market has been in  decline for some time as conference and convention  budgets are cut back.  Why invest public money in a mature or declining market, especially when you already have low risk private investment in it?
Second, New Zealand is remote.  Remoteness may be a strength on some counts, but in the case of conventions its a weakness.  Don’t expect large numbers to travel for two, three. or four days just  to sit in a glorified hall for two or three days more, no matter how good the audio visual systems and morning teas.  Not many will.  And today fewer organisations are willing to pay for them to do so.
Even conventions focused on Asian markets experience a drop in the number of delegates once they come down here.  Big conferences in Singapore or Hong Kong become small conferences in Auckland.  Organisers and sponsors don’t like that.  They may encourage localities to build centres because the additional competition is good for them, if not for centre owners.  But their focus on attendance means that they locate conventions with a view to how easy it is to get people there.

And getting European and North American conventioneers to travel more than a day or two is even harder work. 
This point was made by the international panel invited in 2006 to review the Metropolitan Auckland Project.  They counselled caution based on the northern hemisphere experience.  Our city politicians would do well to heed the warning contained in the panel's Final Report (pages 30 and 31). 
Third, convention centres like sports stadia become significantly more expensive to build and run the bigger they get.  Those extra  500-1,000 spaces needed to take the capacity to, say, 4,000 or 5,000 delegates happen to be the least used but may cost the most to build.  Quite simply, the marginal costs of super-sizing exceed the marginal benefits.  Bad economics.
Globally large conventions are a very small part of the convention and conference market.  And, because lots of places have been sucked into building big centres competition for them is keen: too much capacity fighting for too little demand.  Bad strategy.
We can cater for the majority of conventions likely to come this way using facilities here now.  Let’s make sure they are continuously full before we build something that will be mainly empty. 
Fourth, convention centres tend to be imposed on prime central sites.  They are highly visible and cast big shadows.  They create dead areas around them  They are bulky and functional; and often ugly as result.  They privatise potentially good public space.  Barren concourses and echoing corridors may be the only concession to the local community.  Bad urban design.

Fifth, convention centres rely on keeping the public out.  They are built for business people, academics, and professionals. They may occasionally cater for concert goers.  But by definition they are largely for people from somewhere else.  Then they enclose those people for most of the day, isolated from the city around them.  True, a few locals may be able to walk the ramparts, or attend the occasional meeting.  But they are essentially exclusionary. Bad community development.
Sixth, if we did succeed in scoring one of the few really big conventions (say, more than 3,000 or 4,000 delegates) one effect would be to congest the accommodation sector.  Delegates are in for two to three nights, then gone.  This means a short peak in accommodation demand, potentially disrupting the flow of real tourists who come to stay, explore, and spend.  Bad tourism investment.
Would any of the current bidders want to build a large centre from scratch without a taxpayer handout?  No, they want the taxpayers – or ratepayers – to pay for them.  Even the advisors who make a living pushing these things onto governments are unlikely to invest their or their clients’ dollars.  But they will suggest we spend our taxes on them (and some of our children’s taxes as well).  Bad business 
Ah, but what about the multiplier effect?
The difficulty of justifying convention centres in conventional terms is why we rely on abstract multiplier analysesto demonstrate that dispensing large lumps of public money on uneconomic projects might just be justified by private spin-offs.  Multiplier analyses rely on a host of arbitrary assumptions to generate the numbers, though, and they generally presume we could not do something better with the funds (like leaving them in local pockets).  They are too abstract by themselves to justify big spending plans.  And the absence of follow-up reviews to see if what they predict is what happens is a worrying if they are used to justify fiscal foolhardiness.

Building a large convention centre is deadweight spending, giving new meaning to the idea of an anchor project.  So, if I might mix metaphors , let's treat this one like the downtown rugby stadium, and kick it into touch.  If we cannot justify a large new convention centre through a realistic, market-based business case, let’s move on.
How about a cultural centre instead? 
If we must try to manufacture an iconic place of assembly in the CBD, can we be a little more lateral?
Here's my idea.  This is Auckland; Tamaki Maka Rau, not the Gold Coast, or Vancouver, or Singapore.  If we want to invest (not too much!) on making Auckland’s mark on the world let’s do it on something meaningful to Aucklanders, something that we can share with our visitors. 
 An iconic cultural centre, perhaps?  It could reflect our roots, our reality, our people, and still explore our future.  Something unique and distinctive, on a site and of a scale, cost, and form that befits our city and setting.  Better to have a cultural centre for Auckland and of Auckland that welcomes visitors (and may even strengthen the city's appeal for modest conventions); a centre continuously busy, where what you hear is the beat of the city’s heart and not the whistle of the wind around empty halls.


Andrew D Atkin said...

Very agreeable!

I've always been uncomfortable with investing in massive structures that are hardly ever used. Surely we could do better for our money?

I also liked your comment on the multiplier effect. It reminds me of NASA part-justifying its space programmes with the spin-off value of its technology developments. They miss that you can get the same spin-off value from projects focused on planet earth. And yes, spin-off's are always going to be an iffy dynamic to measure regardless.

Phil McDermott said...

THe following article has just bee published in the journal European Urban and Regional Studies:
"Oslo’s new Opera House: Cultural flagship, regeneration tool or destination icon?" (
Although the structure involved is an opera house, the lessons are wider than that. The research reinforcfes the idea that we don't necessarily want large, me-too structures to develop something that may be an iconic cultural marker for a city. Instead we might look for something that relates to the place and the people that live there. Some of the abstract is reproduced below. It looks as if Oslo got something that works for it regardless of a string of justifications based on boosterism and internationalism ...

"New cultural buildings are justified via reference to a range of objectives including city image enhancement, national identity, tourism development, cultural engagement, economic development and physical regeneration. This paper examines the role envisaged for the Opera House in Oslo, which opened in April 2008. ... The case demonstrates the value of focusing good urban design, with the possible bonus of external image enhancement, rather than relying on an iconic building and a ‘look at me’ effect. Thus, the Opera House may represent a less speculative type of iconic building — where bombastic design and external focus are replaced with more attention to public access and a local orientation".