LETTER: Convention Center "Commitments"

"From the Lancaster Sunday News published on November 23, 2008, page D-2, under "Briefly"

'Interstate Hotels & Resorts, the company managing the center and the adjoining Marriott Lancaster at Penn Square hotel, said it has more than 90 commitments for conventions, meetings and other functions at the new center.'

"For those of us who have been following the taxpayer-financed hotel and convention center project, this statement came as something of a surprise.

"To date, Interstate Hotels and Resorts (the sole manager of both the 'private' hotel and the public convention center) has told the Lancaster County Convention Center Authority board about no more than two dozen committed events. IHR has never mentioned how many events would be held in the hotel's part of the 'shared space' (supposedly this is privileged private business information). Could it be that IHR is driving events to benefit the hotel, where groups that book a block of rooms can avoid facility rental fees?

"At the LCCCA Public Relations, Marketing, and Hospitality Committee meeting on December 18, 2008, representatives of IHR attempted to clarify their November announcement. LCCCA board members were told that the '90 commitments' figure included 'events' booked at both the hotel and the convention center well into the future, as well as blocks of rooms booked together in the hotel that do not include any meeting space rental.

"Our observation is that the only reason for defining 'room blocks' as an event is so the combined facility looks far more successful than it actually will be.

"When asked how it is determined if an event is booked in the convention center or in the hotel's spaces, a representative from IHR clearly said that it is always the customer who chooses what space they want to rent. We question the truthfulness of this statement, since the primary job of any salesman is to sell a specific product to a customer.

"Representatives from IHR, in response to a direct question from an LCCCA
board member, did say that 62% to 63% of the events booked so far in the
hotel and convention center is new to Lancaster County. That means only 37%
to 38% of the events in the combined hotel and convention center will be
stolen from existing privately-owned hotels and meeting facilities in
Lancaster County.

"As of the end of November 2008, construction of the combined hotel and convention center was 70% complete, but this includes 60 days of 'slippage' behind the original schedule. Consequently, the opening of the facility for business has been delayed for several weeks, until April 21, 2009. This has caused the cancellation or rescheduling of several events, including a major consumer show.

"Through November of 2008, IHR released their updates on a calendar year schedule. As of December 2008, IHR changed to a fiscal year, to match the LCCCA's calendar and align with the opening of the facility. IHR's fiscal year 2010 (April 21, 2009 through March 31, 2010) includes the following events booked specifically for the convention center so far:

"Trade Shows: goal = 5, scheduled = 3 (total days = 5)

"These are events for a specific purpose, such as a business group or fraternal organization; 'Trade Shows' generally are not open to the public, and are usually held two or more days during the week.

"Consumer Shows: goal = 11, scheduled = 7 (total days = 19)

"These are events where merchandise is sold to the public, and are usually held over a weekend.

"Other Events: goal = 52, actual = 11 (total days = 25)

"These are smaller events, often private, including business meetings, weddings, and private celebrations.

"Included in the 'Other Events' categories so far are:

4 Meetings or Conferences (13 days)
4 Competition Events (8 days)
2 Galas or Ceremonies (2 days)
1 Entertainment Event (2 days)

"Why is this shortfall so significant?

"According to figures distributed at different public meetings over several years (including as recently as November 2008), the LCCCA needs to collect nearly one million dollars in revenue IN ADDITION TO the anticipated revenue from the 'hotel tax' to be able to pay its bills. This is complicated by the fact that no one knows exactly how much it will cost to operate the convention center; it could easily be far more money than preliminary estimates. In addition, revenue from the 'hotel tax' is down significantly.

"About half of the revenue collected from operations of the convention center will come from facility rentals; the rest is expected to come from event services, such as booth and equipment rental. As of November 2008, IHR has booked only $216,600 in convention revenue, or only 42% of the budgeted $515,805. Without enough additional sales to provide the budgeted amount of convention revenue and its associated event services, the LCCCA will encounter an operational deficit before the end of 2009.

"Consequently, the LCCCA may be forced before the end of 2009 to enact a provision of the Convention Center laws, and claim the portion of revenue from the "hotel tax" which currently helps fund the Pennsylvania Dutch Convention and Visitors Bureau (which could also receive reduced State funding due to the financial crisis). This will place the Lancaster County Commissioners, all of whom have publicly expressed opposition to additional funds for the project, in a difficult position: if the Commissioners do not approve an increase in the 'hotel tax', the PDCVB will be forced to severely curtail its promotion and support for tourism and the hospitality industry in Lancaster County - most likely including the three full-time PDCVB
employees whose job it is to bring meetings and conventions to Lancaster County, primarily to the downtown hotel and convention center.

"December 2009 could easily become an interesting milestone in the continuing saga of the taxpayer-financed hotel and convention center project."