U.S. cities are in a great race for space, chasing the lucrative tourist dollars spent by the nation's conventioneers.
As cities of every size are building bigger and better convention centers to lure business, Nashville has taken the tortoise approach.
Armed with a second study recommending a new or expanded convention center downtown, city leaders are vowing to thoroughly examine the options before deciding to spend the estimated $200 million to $300 million in construction costs.
Nashville's caution may serve it well. While the nation's supply of meeting space has grown rapidly in recent years, the demand has slowed, leaving many cities scrambling to fill unused space.
"We're not talking about a 2 or 3 percent decline, we're talking about cities having lost 40, in some cases 50 percent, of their business. It's not good out there. It's genuinely not good," said Heywood Sanders, a University of Texas, San Antonio professor and noted authority on the convention center industry.
Ever since the closure of the Opryland theme park in the late 1990s exposed the vulnerability of Nashville's tourism industry, support for a bigger convention center downtown has gained momentum.
Opened in 1987, the center's 118,675 square feet of exhibit space is inadequate to handle the needs of many of the larger associations, tourism boosters say. The problem hit home last year when the NAMM Summer Sessions trade show bolted from Nashville after 12 years, taking its 20,000 attendees to Indianapolis next year.
"When you lose your largest convention and your largest convention is musicians selling musical instruments in Music City, you have to seriously rethink what you're doing," said Tom Lee, past chairman of the Metro Convention Center Commission.
Last month, tourism and downtown leaders saw the evidence in black and white. A study from consulting firms KPMG and HOK Venue cited the need for a center of up to 420,000 square feet, including up to 300,000 square feet of exhibit hall space.
A 2001 study, commissioned by tourism officials, also recommended a larger facility. Moving with caution, Mayor Bill Purcell ordered the new study from a different consultant. He has appointed a task force to make a recommendation about whether to build a new center or expand the current one to the north or south.
Marty Dickens, chairman of the Nashville Convention & Visitors Bureau (CVB), is co-chairing the task force with Randy Rayburn, a restaurateur who serves as chairman of the Metro Convention Center Commission. They said they will involve all stakeholders and come up with a recommendation that's best for the city as a whole.
"It's very important to understand that we've got a long ways to go still," Dickens said.
They admit the decision won't be easy. Not only does expansion present obstacles, such as relocating church properties in the area, but the city would have to raise taxes on hotel stays, rental cars and other visitor services to fund construction.
But at least the case has been made.
"Here's an independent, Metro-hired, trusted consultant that took a lot of time to look under every rock. And so I'm obviously pleased that they have validated what we have suspected, and I think they did it from the right perspective," said CVB President Butch Spyridon.
KPMG said 80 percent of meeting planners surveyed won't consider meeting at the Nashville center because of its limited space. The city has lost 87 events the past two years for various reasons, the report stated, although only nine of those events were lost due to inadequate exhibit space.
The American Society of Association Executives is bringing its 5,000 members to Nashville next year. The group has booked its August meeting at the larger Gaylord Opryland Resort & Convention Center, with 289,000 square feet of exhibit space.
"I think that if there was a new or expanded exhibit facility [downtown], you'd certainly have an ability to attract a number of other clients," association president John Graham said.
But whether conventioneers would come in droves remains to be seen, judging by other city convention centers that have yet to hit the numbers of attendees projected by their feasibility studies.
Even though many of those projections predated the impacts of 9/11, demand is still lagging behind supply, says Michael Hughes, director of research at Tradeshow Week. With 400 convention centers now operating in the U.S. and Canada, 60 construction projects are underway to increase exhibit hall space by a total of six million square feet within six years.
Hughes said over the last five years, exhibit space supply has grown by close to 5 percent a year, while the trade show industry has been matured to the point that growth has been flat.
"The real challenge for convention centers is that there are very few conventions or business-to-business trade shows launched every year," he said.
KPMG consultants concede the challenge facing Nashville and other cities. Even though events at convention centers have grown by nearly 8 percent since 1998, the majority have been less-lucrative consumer shows. Sought-after association meetings decreased by 18 percent, KPMG pointed out.
In Nashville, attendance at the downtown center has decreased the past three years - from 377,929 attendees in 2001 to 331,446 attendees in 2003.
The KPMG consultants said several industry sources note the convention and meeting industry is recovering from a cyclic downtown and will continue to rebound.
David Kushner, president of the Professional Convention Management Association, agrees: "You have obviously had a recession economically, you had security challenges, so, yes, the market did consolidate itself. What I hear is that the market, and I see it, is coming back very strongly."
Expanding Nashville's center would attract 220 to 263 events generating between 451,000 and 594,400 in total attendance over five years, KPMG pointed out. That translates into visitors spending an additional $150 million to $213 million annually during the first five years in Davidson County.
But Professor Sanders, who just completed a national study of the convention business for Brookings Institution, said the forecasts of increased demand are a sad, cruel joke on the people of Nashville.
"It is certainly the case that the decline in convention center activity around the country is far more dramatic than is portrayed in this report, and its impact likely to be much more persistent," he said.
He points to many examples of cities not seeing projected results, including Hartford, Conn., which is scheduled to open a $230 million center next fall. In the next four years, KPMG projected the center would draw an average yearly attendance of 65,700 conventioneers. But counting all definitive and tentative bookings, the center will host an average of 17,313 delegates, reported The Hartford Courant.
Similarly, San Antonio was told that the number of attendees at its new convention center would consistently grow to 628,000 in 2004. The latest projections are for 313,849 attendees this year, fewer than the 336,966 delegates it attracted in 1989.
Whether a midsize city like Hartford or a top-tier destination like San Antonio, Nashville is increasingly competing with all cities for business, both Sanders and KPMG point out. Some of these cities not only offer far more generous space - over 2 million square feet in Las Vegas and Orlando - but also incentives that include free or deeply discounted space.
To complicate matters, an expanded downtown Nashville Convention Center will also face increased competition from the private Opryland Resort & Convention Center, the KPMG report pointed out. Already, Gaylord Entertainment Co. is seeing increased success in its strategy to rotate big associations through its network of four resorts in the country.
If Gaylord officials are concerned about expanding the downtown center, they're not letting on publicly just yet.
"We're just pleased to see this process proceeding like it is. We think the mayor has done a very good job of putting together a good process to address the issues," said Jay Sevigny, chief operating officer of Gaylord Hotels.
However, consultants and tourism officials say there's room for both centers. Some associations prefer to take advantage of downtown amenities while others prefer services under one roof in a suburban setting.
KPMG consultants have been bullish on Nashville's prospects. They pointed out the Nashville Convention Center's occupancy rate has remained healthy during the leaner trade show years of 2001 to 2003.
They also note that there are factors other than exhibit space that catch the attention of conventioneers. Nashville has a relatively vibrant downtown and good access by freeway and airlines.
More importantly, Nashville tourism officials say they have something many cities can't offer: its world-famous brand as Music City. Meeting planners are attracted to the country music capital for its historic sites and unique entertainment offerings.
"I think that's part of the huge opportunity Nashville has, is that we have the brand that people want, we have the city that people want to buy, but we don't have the facility," said Ray Waters, manager of the Hilton Nashville Downtown.
In fact, the CVB's Spryidon says he's insulted when Nashville is compared to mid-tier cities such as Knoxville and Indianapolis. He considers Music City on par with the most attractive destinations, such as Orlando and New Orleans.
With space no longer at a premium, show producers are now looking to cities that can supply an adequate number of reasonably priced hotel rooms within easy access, said Hughes of Tradeshow Week.
Indeed, KPMG reported that most survey respondents would be interested in Nashville if it had a new facility built in conjunction with a new headquarters hotel.
Associations typically want a committed room block of at least 2,600 rooms. While the report identified 2,600 hotel rooms downtown, it said local hoteliers can commit approximately 1,800 rooms with the ability to commit 2,300 rooms if a new or expanded center is undertaken.
"Based on several factors ... any expanded or new convention space would need to be developed in conjunction with additional hotel supply proximate to the facility," the report stated, particularly to attract larger, national conventions.
That leaves another issue wide open for discussion. The KPMG report doesn't delve into the financial issues of building a new headquarters hotel either near the current facility or at a new location. But Waters of the Hilton said there are at least a couple of downtown hotels that could expand to meet the demand.
In addition, Memphis-based Peabody Hotel Group has expressed interest in building a luxury hotel in downtown Nashville, particularly in conjunction with a convention center.
Hugh Harper, president of the Greater Nashville Hotel and Lodging Association, said he believes Nashville leaders will come together in support of an improved convention center, which he said will spur further development of restaurants, hotels and other businesses downtown.
"I just hope the process goes well that we all come out of it with a couple of great decisions and that we keep everything moving pretty quickly, because we're going to be turning down many, many dollars if we don't move quickly," he said.