Conventional Wisdom

Is It Wise To Expand Austin's Convention Center?

Ric Luber, Executive Director of the Austin Convention & Visitors Bureau, shares his vision of Austin's future.
photograph by Jana Birchum

We're told that the out-of-town wallets that downtown needs in order to thrive can't fit into the Austin Convention Center. But will an expanded Center, and the tourists it hopes to attract, fit into Downtown Austin? This is an old question, but it got asked again, sorta, at last week's city council meeting, as the Austin Convention and Visitors Bureau (ACVB) screened its flashy, high-NRG new promo video for our fair city, crafted especially to entice conventioneers, but bound to be shown around town as part of the Bureau's campaign for doubling the size of the Austin Convention Center. Said video, which has no dialogue but lots of Austin music -- along with quick cuts of our hotels, restaurants, corporate giants, leisure hot spots, and bats -- has in its brief lifespan been enthusiastically received in the hospitality trade, ACVB says.

It was not so warmly greeted by the city council, especially by Mayor Pro Tem Gus Garcia, who sternly chewed out ACVB sales director Rick Phegley over the video's lack of Hispanic faces, businesses, and musicians. Then Councilmember Willie Lewis -- who had already laid down the gauntlet with the Bureau's subcontractor for African-American marketing, the Capitol City Chamber of Commerce -- chimed in with similar objections (although the video features W.C. Clark, it has no jazz, no Eastside venues, and no other visible black people). Then Daryl Slusher added his qualms about the video's promotion of the Barton Creek resort and conference center, which is famously outside the city limits and doesn't pay the bed tax that supports ACVB and paid for the video. And so on.

All of this appeared to catch the Bureau, which was privatized by the city last year, completely by surprise, as Phegley repeated how well the video was received by meeting planners and the professional tourist-delivery system. Which, in a roundabout way, underscores the problem that ACVB, and the hospitality industry in Austin, will face as they flog a multi-million-dollar Convention Center expansion, designed to meet the needs of people who don't live here, to the Austin voters who'll have to approve it.

Since long before the Center opened in 1992, the push for tourist dollars has been held in suspicion by many Austinites, including many friends of downtown, who fear the eradication of what makes Central Austin unique, special, and livable, and the advent of plastic, generic "destination" development, keyed to the tastes of out-of-towners, in its place. Yet ACVB and the industry repeatedly argue that, on the contrary, it's precisely what makes Austin special that makes it attractive as a destination, and that downtown revitalization depends on tourist dollars.

Apparently, what makes Austin special does not include cultural diversity, or so Garcia and Lewis inferred from the video, although more than a third of Austin's electorate is non-Anglo. It also doesn't seem to include anything that's actually near the Convention Center, which sits in a downtown desert, even as the rest of Central Austin booms as never before. Convincing voters that a much larger Center, and much larger tourist crowds, will not simply increase that dead zone at the expense of the rest of downtown will be a high-wire act. And as the mini-debacle of the video showed, gracefulness is not one of ACVB and the industry's primary virtues.

Waller in It

This is not the first faux pas that expansion boosters have committed in their quest for more convention space. We've already seen the conflict between the Center's planned expansion to the north and Capital Metro's plans to run light rail through the same site. And the city's high-profile push for more downtown housing got a jolt when it became clear that Convention Center expansion would destroy scores of existing downtown housing units at the Railyard. (That apartment complex's owners have vowed to fight any involuntary condemnation by the city.)

These stumbles could pale in significance, though, to the bollixing spawned by the city's apparent desire, spinning forward as we speak, to link Convention Center expansion with the construction of a flood bypass tunnel along adjacent Waller Creek. This is designed to take advantage of the stadium law passed last year by the Legislature, which was drafted to allow Dallas to raise its hotel/motel occupancy tax and spend the extra proceeds -- which otherwise would be limited to use on tourist-related expenses (including convention centers), or for the arts -- to build a replacement for Reunion Arena.

By defining the expanded Austin Convention Center as a similar venue, and the Waller Creek project as a necessary public-safety and infrastructure improvement, the city could tap into this revenue to pay for the tunnel as well. This ultimately changes the Convention Center's political path very little, since an expansion by any financial means would still need voter approval, and the hotel industry has loudly endorsed the combo package.

However, whenever you talk about the Waller Creek project, which has floated on and off the city's drawing board for two decades, you inevitably hear the word "creekwalk," à la San Antonio's Riverwalk, sustained by a similar engineering project, and that scares the hell out of many Austinites. Given the anti-boondoggle climate that has reigned in Austin of late, it would be very difficult to sell the Waller Creek tunnel, and thus Convention Center expansion, if it means the likes of Planet Hollywood colonizing downtown. Yet such theme-park attributes are precisely what one sees in most cities that have aggressively courted tourism.

Fear not, says ACVB. "There's no intention to turn Austin into San Antonio," says Bureau director Ric Luber. "Waller Creek won't become a Riverwalk but more of a natural amenity. The business we're targeting are people who want to come to Austin because of what's unique and original here. If they wanted to go to big chain restaurants, they'd go somewhere else."

Revitalization or Boondogglization?

In Luber's view, this works both ways -- the downtown amenities and businesses we cherish and patronize would not long prosper without the dollars brought in by the tourist trade. "People want to live downtown because of the people and activities that thrive there," he says. "That interest wasn't there before the activities were there, and those things are supported by visitors. It'll take more than the people living in new downtown housing to support all the entertainment and retail that's going on downtown."

The Bureau backs up this assertion with various facts, such as data from American Express that 73% of AMEX-card spending in downtown is done by out-of-towners, and he notes that if the target market for downtown residential is people who already work there, as is often asserted, then many of those people will be employed in the growing hospitality and entertainment industry. "Expanding the Convention Center takes care of a number of needs downtown without putting an inordinate burden on the city's taxpayers," Luber says.

Still, the complete lack of obvious renewal in the area surrounding the Convention Center raises doubts about the center's value as an engine for revitalization. "That part of downtown has never taken off the way it was supposed to," says Slusher. "Obviously, conventions are bringing in sales tax, but you can't point to a strip of restaurants or businesses and say, `Those were brought to us by the convention center.' Which is what we were told at the time."

Slusher, more than any of his council colleagues, will have a big role in shaping political and public opinion about expansion, since he's done the most to make the word "boondoggle" a permanent part of the Austin vocabulary, and since in his previous life as the Chronicle's political editor he (along with this reporter) was a frequent critic of the Center. From 1994: "The most deserted, tomb-like corner of downtown is... home to the Austin Convention Center... The city's largest (downtown) investment sits unused more often than not, an unbecoming hulk of concrete covering four downtown blocks."

While Slusher vociferously denies that he's "unilaterally against the Convention Center and out to kill [expansion] by any means necessary," he still has questions about the need for, and value of, an additional $70-million-plus public investment. "We already have a convention center, so it's definitely part of the mix of downtown development," he says. "I don't necessarily consider it to be as key to the mix as the convention-center boosters would indicate. It certainly hasn't succeeded as a catalyst for the other kinds of development that we need downtown."

Growing Pains

The city wants to acquire all of the two blocks directly north of the convention center for expansion

So far, Slusher has cast the only "no" vote concerning the council's baby steps toward expansion -- the acquisition of property to the north of the Center, part of $2.8 million in land purchases by the city since 1996, including the Old Bluebonnet Market, the Decker Building, and a half block between Neches and Red River. The expansion envisioned by the Bureau and industry -- specifically, doubling the size of the exhibit hall -- would require the entire two blocks between Third and Fourth, Trinity and Red River, and would thus take out 88 units of the Railyard. "Our top priority downtown is housing," says Slusher, "but we're going to end up knocking out some of the only housing downtown, and I'm not convinced of the wisdom of that."

The political debate is especially frustrating to the industry because, by most accounts, the Convention Center really is too small to pick up meeting business that Austin would naturally have. "If they want to keep business of any type of magnitude in Austin, they have to expand it," says the Texas Medical Association's Tricia Hall, president of the local chapter of Meeting Planners International. "Right now we have a difficult time competing with larger cities because they have more space. What we've got is a nice center for small-scale meetings, but a lot of the state associations that are already based in town can't meet here because the center's too small."

This is absolutely true; the Convention Center's 126,000 square feet of exhibit-hall space is half that available in San Antonio, about a quarter of that in Dallas, and the Center's meeting room facilities are even more sparse in comparison. Texas' growth in recent years has been reflected in swelling membership in professional and trade associations, most of which are now locked into a Houston/Dallas/San Antonio loop for their meetings.

Add to this events like SEMICON, the chipmakers' trade show that last year took over Palmer Auditorium and several hotels as well as the Center, and the South by Southwest music conference and festival -- that is, meetings that have a special reason to be in Austin -- and the potential business for a bigger center is enough to satisfy Luber without the Bureau's breaking into new markets. "We'll never be a `first-tier' city and compete with Dallas or Houston," Luber says. "Our goal is to protect the market share we currently have, compete for the business we're losing, and take advantage of the opportunities from people who want to come here. We'd be cream-skimming."

We're still a few consultants away from knowing how big the Center really needs to be to realize this goal. The doubling-in-size figure is basically hypothetical; for Austin to effectively compete for that business -- especially the cyclical and seasonal meetings of state associations -- the Center will need to be big enough to hold two major events at once. If it's not big enough now to hold one major event, then it may be more honest to talk about tripling its size.

It also must be said that not everyone in the industry is necessarily content, as Luber appears to be, to simply expand to meet currently evident needs and then stop. "We need to officially verify research and... determine who's really going to meet here," says the Hyatt Regency's Mary Wilson, incoming president of the local chapter of MPI's sister organization, the International Association of Exposition Managers (IAEM). "So much depends on the type of association we're out to market to, but we definitely want to be marketable to national associations as well."

Tricia Hall says that, "The major issue is whether we're a second-tier city, or if we want to run with the big dogs. It seems to me that Austin, as a city, has such a positive reputation that we'd be able to have a huge draw, especially with a trend of national meetings moving south. We're very, very marketable."

Field of Dreams

Councilmember Daryl Slusher has questions about the need and value of an additional $70-million-plus of public investment in the convention center. He says, "It certainly hasn't succeded as a catalyst for the other kinds of development that we need downtown."
photograph by Martha Grenon

To be truly marketable at the big-dog level, though, Austin would also need to see some substantial new investments in hotel rooms. "We also don't have enough sleeping rooms, and if we expand the center we need to expand those as well," says Hall.

Right now, it's almost impossible to book an event into Austin in March, when the UIL basketball tourneys and SXSW take over the town, or during football season, and the situation is made even worse in legislative years. San Antonio, by contrast, has 8,000-plus hotel rooms within walking distance of the Henry B. Gonzalez Convention Center, and is bringing a couple of thousand more on line in the near term. National-event planners find that much more attractive than Austin's fragmented hotel market.

Back when the Center was planned, approved by voters, and built, many boosters assured citizens that downtown hotel expansion would quickly follow, but it has not; instead, the industry's growth has been in suburban corridors. And Slusher is one of many in Austin who argue that spending public funds to create a market for one or two big hoteliers inverts the normal process of free enterprise.

Yet Luber -- who claims that "multiple companies" are interested in developing the Big Convention Hotel attached to the new Center, with at least 750 rooms, more likely 1,000-plus argues that the Center's success so far has created the market for more hotel rooms all over town, not just in its vicinity. "We need a major property to support business at an expanded Center, but we also need big events to generate business throughout the industry," says Luber. "Other hoteliers understand that it's in their interest."

Despite the industry's assertions that new properties will come automatically once the Center is expanded, many cities -- Seattle, Phoenix, and San Antonio among them -- have ended up subsidizing, in one or another fashion, the construction of convention hotels. These are just a few of the scores of cities that are likewise trying to expand their slice of the growing convention trade; it's perhaps easier to locate major cities that aren't either building or expanding convention centers or their attendant hotels.

And the road to tourist lucre in many of these communities has been littered with failed goals and diminished expectations, which is something to consider when looking at the consultant studies the city's already commissioned that identify an expanded Center as an economic no-brainer. Sacramento, to pick one example, also had studies saying it was a natural convention market and could support a big new center -- yet it has consistently underperformed expectations, required taxpayer subsidies, and recently started laying off staff.

Meanwhile, the big markets just keep getting bigger. Orlando, which has expanded its convention center seven times, will soon, if plans hold out, become home to not only the existing center, but to the largest meeting facility in North America, in suburban Osceola County (i.e., close to Disney World). San Francisco has expanded Moscone Center twice, and Chicago's McCormick Place, currently the biggest center in the U.S., is being expanded. With markets like these, Miami, and Las Vegas -- and closer to home, San Antonio, New Orleans, and Dallas -- escalating the stakes for big national meetings, Austin ventures beyond its base market of state associations and the like at its peril.

This offers a niche for Austin, though, the Bureau says. "People have been to all those other markets over and over," says Luber. "We're different and we're hot right now. And as those markets get more competitive, a lot of meetings that are too big for us right now are becoming too small for Dallas or San Antonio." (To get first crack at desired dates for booking the center in San Antonio, a meeting has to guarantee that it'll use 1,200 hotel rooms on its peak nights. In Austin, the figure is only 350, and though it would likely increase in the event of the center's expansion, it would still be below the first-tier cities' average.)

So maybe we can expect that an expanded Center won't be a waste of money from the marketing perspective. But it still requires us to make some decisions about what we do -- and don't -- want to see in Downtown Austin, and whether an increased convention trade will ultimately be compatible with the goals of city and citizens. As Luber concedes, "We have to look at plans for the Center from the perspective of those who pay for it and use it. And that's not the citizens, but the visitors, to Austin."

Yet it's the citizens who will decide whether the visitors get their wishes. "There's no question about it," says Hall. "If we want to compete, and develop the facilities we need to compete -- the Center, the hotels, the other amenities -- then it'll definitely change the complexion of downtown."

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