But Charlottes 400,000 square-foot convention center has more than enough space for the DNC, which will use the building primarily for media.
For the 2008 DNC, Denver built a 220,000-square-foot temporary building to house media.
Debt payment rises
The construction of the Westin and the Crown Ballroom pushed up the citys total debt payment on the Convention Center to roughly $22 million annually.
In fiscal year 2011, if the centers costs were divided by the total number of hotel rooms booked, the taxpayer cost per room would be $210.
That means each time a convention attendee booked a hotel room for one night, taxpayers had essentially paid for that room.
And for meetings in which hotels lowered their rates significantly, which is common, taxpayers also bought their breakfast, lunch and dinner. Heywood Sanders, a University of Texas-San Antonio professor who has studied and criticized the economics of convention centers, said
Charlotte is a case study of a city sticking with its vision of becoming a top-tier convention destination even if previous efforts havent worked.
To underscore his point, he asked, half in jest, if the city is spending more than $200 for each hotel night booked, Why not just buy everyones hotel room?
Despite the center performing below expectations, the Charlotte hotel industry supports the CRVA and its efforts to generate business.
Because of that building, and those hotel rooms that came with it, we can attract bigger and bigger meetings, said Sid Smith of the Charlotte Area Hotel Association.
Smith said only looking at hotel room nights booked doesnt tell the whole story of the center. The building helped land the DNC, he noted. 1,000-room hotel coming?
In the last several years, groups and associations have told convention and visitor bureaus nationwide they would like a 1,000-room hotel near a convention center to make it easier for all of their delegates to be under one roof.
In a written report four years ago, a consultant told the city of Dallas that building a 1,000-room hotel is the next step in what it called a convention center arms race.
Cities such as Dallas, Indianapolis and Washington have recently built taxpayer-subsidized 1,000-room hotels. St. Louis also built a 1,000-room convention hotel, but it went into foreclosure in 2009.
In Charlotte, the CRVA has discussed the need for expanding the Westin or building an entirely new hotel, which could cost more than $300 million.
This year, the citys debt payment on the Convention Center drops to $16 million, which frees money for a hotel. Murray, the CRVA chief executive, said that would ease what he sees as Charlottes scarcity of hotel rooms for conventions. He also said: 1,000-room hotels dont get built without public assistance.
The Convention Center and any subsidized 1,000-room hotel would be paid for, in part, with the current 3 percent tax on hotel and motel rooms, a cost primarily borne by visitors.
But two-thirds of Convention Center funding comes from a 1 percent tax on prepared food and beverages, which is mostly paid by Charlotte-area residents. By state law, the money must be directed toward the center or tourism promotion.
In practice, the money flows to the Convention Center each year with little scrutiny.
Its a substantial investment. Compared with the $30 million the city and CRVA spend on the Convention Center, the city spends $7.5 million a year building sidewalks.
It spends between $10 million and $15 million every two years building affordable housing.
Competition with other cities
As Charlotte expanded its convention center by building the Crown Ballroom, other cities were doing the same thing.
The amount of exhibit space nationwide increased from 52 million square feet in 2000 to 70 million in 2010, a jump of 35 percent, according to data compiled by Sanders, the University of Texas-San Antonio professor.
Raleigh, for instance, opened a new $225 million convention center five years ago. Nashville is building a nearly $600 million center. Indianapolis, another Charlotte competitor, finished a $275 million expansion in 2010.
While Charlotte and other cities expanded, the value of hosting meetings and conventions didnt grow as it did in the 1990s.
The industry slumped after the attacks of Sept. 11, 2001. That dip deepened after the 2008 financial crisis.
Atlantas Georgia World Congress Center in 2000 hosted 716,000 people for major trade shows and conventions. That fell to just under 540,000 in 2011.
Seattle saw an even bigger decline, from 180,000 out-of-state guests in 2005 to 85,500 in 2010.
On paper, the Charlotte Convention Centers decline isnt as stark.
But thats because the CRVA counts the CIAA basketball tournament as a Convention Center event because it hosts a fan fest. The CIAA produces 41,000 hotel-room nights, according to the CRVA. Thats more than 25 percent of the centers hotel business.
James Rooney, executive director of the Massachusetts Convention Authority, said even the most optimistic growth forecasts for the meetings industry is 2 percent a year.
Clearly, thats not enough to accommodate the supply, Rooney said. This is a mature market, and there will be winners and losers.
In a draft copy of its sales plan for the coming year, the CRVA said the opening of new convention center hotels and expanded centers in other cities makes those cities hungry for business, further putting us at a disadvantage.
The CRVA is already concerned about a huge drop in business for 2015, as bookings are far below its target.
Republican City Council member Warren Cooksey, who has supported the CRVA, remembers last decade a Auditorium-Coliseum-Convention Center presentation showing the amount of convention space nationwide was increasing significantly faster than demand.
The message, Cooksey said, was that the city needed to spend more to stay competitive.
No one wanted to go through the analysis that perhaps this is a business that Charlotte shouldnt be engaged in, Cooksey said. Researcher Maria David contributed.