As Miami Beach considers an historic $1 billion upgrade of its convention center, the resort city also must decide how big of a bet to place on a major turnaround in the meeting business.
Increased bookings are crucial for keeping the upgraded convention center from needing even larger subsidies than are required by the two proposals set for a showdown vote by the Miami Beach City Commission on Wednesday.
Currently, the out-dated convention center counts on about $5 million a year from county hotel taxes to cover operating losses and ongoing maintenance expenses. But thanks to roughly $600 million in public funds required for construction, the cost to city and county taxpayers would increase significantly with an upgraded center, to about $30 million a year, according to a Miami Herald analysis of the proposals filed by the two development teams pursuing the project.
Those costs would be lower if rents from a privately operated hotel attached to the convention center and nearby retail outlets end up higher than forecast. Both developers — Atlanta’s Portman Holdings and a consortium known as South Beach ACE led by New York’s Tishman Hotel and Realty — expect to pay the city more than their minimum obligations.
But the public costs also could be higher if the upgraded convention center doesn’t match expectations for a significant boost in a city where hotels often balk at the discount room rates demanded by large groups. With enough public debt to rival the $550 million Miami and Miami-Dade borrowed to build Marlins Park, some city leaders are questioning whether the Miami Beach plan is too ambitious.
“The convention center should be brought up-to-date, yes,” City Commissioner Jonah Wolfson said. “Should we bury ourselves in a mountain of debt to do it? No.”
The pursuit of more convention dollars puts Miami Beach on the front lines of an ongoing national debate over tourism subsidies. Critics describe an arms race among cities spending millions to upgrade their money-losing convention centers in order to compete with rival destinations. Backers of the Miami Beach plan see the dated center as turning off top-tier corporate groups and industry gatherings.
“We’re selling a 25-year-old piece of [junk],’’ said Stuart Blumberg, a longtime advocate for Miami-Dade’s hotel industry and chairman of an advisory panel overseeing the center. “Conventions want to come here. This is the hottest place in the world. They say, ‘We love your city. But your hall stinks.’ End of story.”
The city estimates the convention center generates about 235,000 overnight stays a year. That is roughly 4 percent of the 4.6 million stays recorded by Miami Beach hotels last year, according to information from Smith Travel Research and the Greater Miami Convention and Visitors Bureau.
“Conventions are a very small portion of our business,’’ said Max Sklar, Miami Beach’s tourism director. “There is definitely a large potential for growth there.”
A top target for that growth from a new center would be deep-pocketed medical groups. As many as 20,000 members of the American Association of Orthodontists gather each year for a convention, and Miami would be a big draw, said director Chris Vranas But with the current center’s Spartan layout, Miami Beach can’t offer the selection of modern lecture rooms the group needs for the gathering.