RALEIGH -- Faced with increasing competition for national convention business, the managers of the Raleigh Convention Center want to more than double contributions to a fund it uses to offer discounts and incentives, from $350,000 to $750,000.
The money comes from local hotel/motel and prepared food taxes, which have declined in recent years.
The request was presented at Monday's work session of the Wake County Board of Commissioners as part of preparations for reviewing the convention center's agreement with city and county governments in December.
"The recent dip is the product of the current recession we are all dealing with," County Manager David Cooke told officials at the county office building meeting.
In a memo proposing the increase, officials of the Greater Raleigh Convention Center and Visitors Bureau asked that contributions to the business development fund increase at least by the 2015 renewal period, but preferably in the 2010-2011 fiscal year.
"The sales teams are working on groups beyond 2015, and in many cases they are unable to bid" without knowing the incentive money is available, the bureau's proposal said.
How they lean
The seven-member board of commissioners did not vote on the proposal Monday. Afterward, Commissioner Stan Norwalk said that given the competitive nature of the convention business, he is leaning toward granting the request, which would also require approval by the Raleigh City Council.
But board member Paul Coble said he is initially opposing it.
"I'll wait to see what form it takes," Coble said. "It strikes me that we're not being that successful with it."
The $221 million convention center had losses of $4.1 million in its first two years of operation, slightly more than the $3.8 million deficit a 2003 study conducted by a hotel group anticipated the facility would lose.
The plummeting economy, with travel often the first item businesses and individual cut, accounts for a large part of loss, said Roger Krupa, the convention center's director. Convention center staff have had to deeply discount many of the events that book at the convention center.
"There wasn't an economic downturn when this projection was done," Krupa said. "We're doing it; we're winning."
The losses are covered by the $6 million budget the convention center gets from the countywide pool of food and hotel tax money as well as additional money that Raleigh taxpayers pitch in from the city's general fund.
Convention centers generally operate in the red, the loss justified by the money injected into the local economy by conference attendees sleeping in hotels, eating in local restaurants and dropping dollars in local shops.
The convention center managers don't keep a complete list of the discounts and perks they offer visiting conventions and events. But they do track money given out by the Business Development Fund, the $350,000 annual pot of money from the countywide tax levied on hotel room and restaurant purchases. That's the fund that management wants to see increased.
Conventions for $1
At least 14 groups attending conventions through next June will pay $1 or nothing, a discount that would have meant nearly $532,000 in the convention center's coffers had full price been paid. Convention center staff point to the $22 million they estimate those groups spent locally as reason for offering those discounts.
Offering deals like that is part of the game in the convention center industry, said Laurie Okun, the center's marketing director. Other convention centers across the country, many also backed by public money, are offering incentives just as large, and Raleigh needs to meet those demands, she said.
"We are doing what we need to do to propel us forward," she said.
But others don't have that same level of reassurance.
"The public is losing out by having to subsidize the building and essentially pay to bring visitors to a very concentrated area of downtown Raleigh," said Michael Sanera, a research director of the conservative John Locke Foundation, which has been highly critical of the decision to build the convention center with public dollars.
