LURE OF PROFITS PROPELS PLANS

KEVIN HARLIN Business writer
Section: BUSINESS,  Page: E1

Date: Sunday, December 15, 2002

When 1,600 members of the Civil Service Employees Association got together in the fall, they rested their heads on Manhattan hotel pillows and spent their money in New York City shops and restaurants. In previous years, the Albany-based union for government workers held its annual meetings in Lake Placid, Rochester and Buffalo.


But why not hold it down the street from its headquarters on Washington Avenue in New York's capital city?


``We'd love to,'' said Lenore Barnard, director of meetings and conventions for CSEA. ``But there's just no place that can fit us.''


With the hopes of luring CSEA and others -- and reaping the millions of dollars these groups could potentially spend while in town -- the city is embarking on an ambitious plan to build a modern downtown hotel and conference center complex that could be ready by 2006.


But while the city grapples with how to pay for the $185 million project, looking for help from the state and Albany County, a bigger question is left largely unasked: CSEA aside, if the city builds it, will anyone come?


With a glut of convention space coming on the market nationwide, the answer, according to some urban analysts who follow such projects, is a qualified maybe.


``It's a dog-eat-dog world out there,'' said Heywood T. Sanders, chairman of the public administration department at the University of Texas at San Antonio, who has written extensively about the subject, including a critique in August of convention center feasibility studies.


According to Tradeshow Week, a Los Angeles trade magazine that covers the industry, projects already in the pipeline will increase total convention exhibit space in North America by 17 percent in five years, to 84.6 million square feet.


At the same time, attendance and the square footage in use are down, the trade group reports.


Despite those statistics, Albany officials are undaunted.


No one here expects to go up against convention giants such as Orlando or Las Vegas for huge national conferences.


But armed with a year-old consulting group's feasibility study, economic development officials argue that Albany's direct access to state government, and central location in the Northeast, mean it easily can beat out regional destinations such as Buffalo, Rochester, Providence, R.I., and Hartford, Conn.


Sanders, of the University of Texas, said the problem is that many of those same cities are planning new or expanded convention centers of their own. And every city that is planning one has its own feasibility study in hand.


``I've been through something like 50 of these, and you know what they say? Pretty much the same thing,'' Sanders said. ``Albany is convinced this thing can help remake their downtown -- and they're equally convinced in every other city, large and small, from one end of the country to the other.''


Hartford, for example, already has started construction on its convention center. Expected to open in 2005, a year before Albany's would, it is set to have a 145,000-square-foot exhibit hall and 40,000 square feet of ballroom space.


But Albany officials say their expectations are realistic.


The plan for the first phase calls for a 400-room hotel, with up to 130,000 square feet of rentable exhibit, meeting and ballroom space. Down the road, the convention space could double.


The facility could accommodate conventions of 5,000 to 7,000 delegates easily, said Michele Vennard, president of the Albany County Convention and Visitors Bureau and a member of Mayor Jerry Jenning's Albany Convention Center Task Force.


Over 30 years, the project could deliver a total of $53.9 million in taxes and hotel revenue, after paying building costs, debt and yearly operation expenses.


Other spending by convention guests -- and the secondary businesses a trade center would support -- could increase the economic benefit to $3.2 billion over those 30 years, according to the October report by the task force, a group of business leaders and economic development officials the city tapped to study the project.


``Yes, there are an awful lot of cities building convention centers, but we're not looking at the whole trade show and convention market,'' Vennard said. ``There's a demand for our very specific part of it.''


The city has some convention space downtown in Empire State Plaza and the Pepsi Arena, though neither location has the attached hotel rooms that conference planners prefer. Vennard said the city regularly doesn't go after many shows for lack of adequate space.


Many state associations, looking to lobby elected leaders, already use the Empire State Plaza Convention Center. But a lack of hotel rooms downtown often has them scattered throughout the region or driving in for day trips -- which brings in far fewer secondary economic benefits for the community.


``It is the state capital, and it's just expected that (a hotel and conference center) would be there,'' said Judy Siguaw, associate professor of marketing in the School of Hotel Administration at Cornell University in Ithaca.


And in a post-Sept. 11 world, Albany is a relatively safe destination, within driving distance of much of the Northeast.


Also working in the city's favor is an emerging high-tech industry, anchored by computer-chip consortium International Sematech, which plans a $403 million research and development center at the University at Albany.


George Leveille, city planning commissioner and president of the Albany Local Development Corp., the city's economic development arm, said Sematech, and the high-tech businesses expected to follow it to Albany, will demand large-scale meeting space.


``I don't think there's a deterrent out there in terms of overbuilding,'' he said. ``It's all about location -- being a state capital that is at the forefront of an emerging technological industry.''


That's what Austin thought.


The Texas capital, home to Sematech and semiconductor manufacturers, finished a $110 million expansion of its downtown convention center in the spring, doubling the rentable space to nearly 900,000 square feet.


That helped Austin land a conference of almost 20,000 hair stylists and beauticians in September. But the promised 800-room hotel to go with the center is not expected to open until 2004, and the center does not have any other really big conferences lined up in the next few years -- instead signing multiple smaller groups.


Still, officials in both Albany and Austin said the Austin Convention Center is a success for that downtown.


Albany's plans also have other cities in the region taking notice.


``It's like Fuji building a plant next to Kodak. You keep an eye on it,'' said Joseph A. Floreano, executive director of the Rochester Riverside Convention Center.


With downturns in corporate business from former Rochester elites such as Xerox, Kodak and Bausch & Lomb, state associations have become a major part of his center's traffic. That's the same market Albany expects to heavily draw from.


Still, Floreano said, to succeed, Albany's convention center will have to develop a reputation for quality to pull away loyal business from other venues.


Although Albany planners and economic development officials feel they are ready to do that, the proposed convention center has gone into a hurry-up-and-wait mode.


A task force subcommittee is trying to pick a site from three that four-star developers pitched earlier this summer: a Columbia Development Cos./Galesi Group partnership at the corner of State and Eagle streets; a Mercer Cos. project largely on land around the bus stations and fronting Broadway; and an Omni Development Co. project covering a lot of the same land as the Mercer plan. There are size concerns, access problems and land acquisition woes to overcome.


While that evaluation is occurring, city officials are still trying to cajole legislation from state lawmakers to establish a Albany Development Authority to issue bonds for the project.


The city wants that key component in place by the spring, and though Leveille stopped short of calling it a prerequisite, he conceded the project would be far more difficult without the development authority to take on the debt.


City officials also want seed money from the state and the county, both of which are facing their own budget crunches.


But many business officials said Albany cannot afford not to be competing for conference business.


``Especially with all that's happening here, such as Sematech, you need a convention center,'' said Jim Brodie, president of Global Travel Services in Colonie, which books mostly corporate travel and does some meeting planning. ``You have to have one, and I think it will be a huge plus for the city.


And while Tradeshow Week is not exactly bullish on new convention centers, it doesn't rule out the idea.


``Yes, there is no question that convention centers, if developed right, with the right marketing plan and a realistic outlook, can be successful and can create significant economic impact,'' said Michael Hughes, director of research services for the publication. ``We do believe that convention center projects will provide a positive return on investments, but we feel that in general the time frame for that return is likely to be longer than first expected.''