Brewtown Gumshoe: April 2016

The Milwaukee Business Journal had a recent cover story discussing Milwaukee's hotel growth. Other than talking about hotels, the main thrust of the article seemed to be that - to fill all these new hotel rooms Milwaukee needs to step up their convention center game. The "if you build it they will come" mantra is alive and well with the convention center interests.

But, as experience has shown, the number of conventions and convention-goers has been falling the past few decades. With faltering demand already in place, increased supply drives the value down for everyone. A classic case of a race to the bottom. Maybe it's a good thing Milwaukee hasn't wasted hundreds of millions on pointless convention center expansion.

From Governing magazine's The Great Convention Center Bailout:

“A lot of the over-building is a result of local business leaders who see the centers as a bulwark against declining property values in cities,” he [Heywood Sanders, professor of public administration at the University of Texas at San Antonio] says. Throw in consultants who often play up the impact of a convention center, says Sanders, and the result is an overbuilt market.

I wrote about this topic in 2014:

As Steven Malanga reports, in The Convention Center Shell Game, "A vast expansion of Chicago’s McCormick Place, costing $1 billion in the mid-1990s, didn’t prevent a drop in that city’s share of major conventions... Another word of warning: city-commissioned studies almost always wind up recommending convention centers—meaning that the industry of consultants who churn out such studies has a pretty lousy track record, considering the long list of underperforming centers around the country."

Chicago is the biggest convention center city in America. If a billion-dollar investment can't prevent their slide, does anyone plausibly think a different outcome will occur in Milwaukee?

And, the numbers in the Business Journal article show that, even though we haven't expanded the convention center (which is deemed so necessary), hotel occupancy rates have improved. We've built more hotels and more of those rooms are being used even though Milwaukee hasn't upgraded the convention center. This increase in hotel room occupancy (from 58% in 2010 to 62% in 2015) has occurred alongside declining convention center events (from 78 events in 2014 to 53 in 2016). So, it may be more accurate to believe that investing dollars into the convention center would be a drain on other more effective economic activities in Milwaukee.

A University of Wisconsin-Milwaukee (UWM) Center For Economic Development study explained:

Whatever the original economic folly of Miller Park and the Midwest Airlines Center, what’s done is done: both facilities exist and will certainly operate for the foreseeable future. For the purposes of this study, there is no point in reopening a historical debate about whether public dollars should have been spent on these facilities. However, down the road, as part of a city strategy to build a chimerical tourist industry in Milwaukee, taxpayers once again may be called upon to provide public funding for an expanded convention center, or perhaps a new arena for a local professional sports team. Such expenditures should be scrupulously avoided: tourism has been a losing economic development strategy for Milwaukee as a whole, and for the inner city, tourism investments have represented a huge 'opportunity cost’ of funds that could have been invested in inner city economic renewal.

For Further Reading:
Beware Of The Economic Development Hucksters

Brewtown Gumshoe

Friday, April 29, 2016

Hoisted By Own Petard

Saturday, April 23, 2016

More Than Just A Wingnut Sheriff

Sunday, April 10, 2016

The Convention Center Cabal

Sunday Reading

Friday, April 8, 2016

Long Lines At The Wisconsin Primaries

Sunday, April 3, 2016

Sunday Reading