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That's not quite right as a fair summary of the issue. The developers aren't saying they wouldn't do a decent convention trade, they just are saying they wouldn't make enough money with such a business model to make the return they would need to finance the hotel without subsidies.But the local benefits of hosting conventions go way beyond just the money paid to hotels. I'd be the first to agree these arguments are often presented in overly simplistic terms, but convention-goers often do spend on other things like local restaurants and such, and then there is the marketing benefit for the locale in question.
as do tourists...in fact, leisure tourists likely spend more. it's far from a self evident truth that the money would be well spent.
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Originally Posted by BrianTH
Oh sure. I think it would be a good investment at the amount they are discussing, but I'd also agree that if I wanted to actually prove that case here, we'd have to go into a lot more detail.
and obviously I'm skeptical of the claim that it is worthwhile. the market is saying that it is not worth while and it's far from clear that there is a market failure here.
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Originally Posted by BrianTH
Well, Corbett has put some such funding on hold for review (with no firm date for when said reviews will be completed), at least depending on what you mean by "projects like this."
right, but there has been no wholesale refusal to fund the commitments as there has been in other states. not that the projects are necessarily a good use of state funds.
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Originally Posted by nuwaver88
Being the Mayor Of Simpleton, I look at things very simpy. This hotel would have been built years ago with no public money if the need were there. Do you think those grand hotels in Las Veagas was used public money? If the hotel chains were chomping at the bit to build a major hotel connected to the convention center due to need, they would be bidding for the project. It is all about Pittsburgh being a major tourist city. Right now, it is not, despite progess.
this is exactly it. the hotel market isn't broken.
There is no guartantee that it would bring in more connventions.
Maybe not, but supposedly conventions have looked at Pittsburgh and then gone elsewhere because they couldn't block enough rooms. I have no way of verifying that, but that is what the SEA et al keep claiming.
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Still, it is hard to argue with hotel chains. They do their homework.
They are probably right about not being able to make enough money for themselves, but again, that's not the same thing as saying it wouldn't be worth it for the area as a whole.
In fact, as I understand it, part of the problem with downtown conventions is that from a convention hotel's perspective, too much money "leaks out" to other places in the areas (bars, restaurants, and so forth). If they are more isolated (meaning there aren't other places nearby easy to get to), they can keep more of those additional revenues for themselves (with a healthy markup).
as do tourists...in fact, leisure tourists likely spend more. it's far from a self evident truth that the money would be well spent.
That again seems like a false choice to me--we can go after leisure, regular business, and conventions at the same time.
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the market is saying that it is not worth while and it's far from clear that there is a market failure here.
Again I recognize you would have to do this in more detail, but the nature of the "market failure" is pretty clear: the hotel can only capture a portion of the economic benefit of a downtown convention, so the convention may be worth it overall, but not to the hotel specifically. That is a straightforward "positive externality" situation, and subsidies are a reasonable response in some such cases.
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right, but there has been no wholesale refusal to fund the commitments as there has been in other states.
I guess that remains to be seen--and of course a "review" that never ends and a refusal are practically the same thing, just with different politics (in fact, I have a suspicion the Transportation Committee's recommendations are going to the same Prison of Review with no possibility of parole, but I digress).
It's very simple. If the demand were there, the hotel chains would be fighting over this site and be asking for zero handouts. It is not really a chicken/egg argument either. There is no guartantee that it would bring in more connventions. Sure, some may not come because there aren't enough adjacent rooms. Still, it is hard to argue with hotel chains. They do their homework. If Pittsburgh's hotel rooms were bursting at the seams, and Pittsburgh was a tourist city more in line with a Las Vegas than a Cincinnati or Cleveland, this hotel would have been built years ago. No major hotel chain is going to sit on the sidelines and let a golden oppurtunity to make money slip away. When the demand justifies it, the hotel will be built.
That's not exactly true. The argument to justify using public funds would be that the economic impact of attracting more conventions that don't book here due to a lack of a hotel space would benefit the city (not just the hotel) with increased toursim and their money being spent here and thus be an "investment" that would pay for itself and then some over time. Having lived in Baltimore which seems to attract a lot of convention tourism and their dollars despite being a total craphole of a city I see where the desire to make Pittsburgh a stronger destination city for this sort of stuff comes from.
I'm not saying its actually true that building a new hotel will accomplish this. I have strong doubts myself but have no knowledge of the convention industry aside from occasionally attending these sort of things. Just what the argument is.
Maybe not, but supposedly conventions have looked at Pittsburgh and then gone elsewhere because they couldn't block enough rooms. I have no way of verifying that, but that is what the SEA et al keep claiming.
OMG, simple anecdotal evidence!
I've heard that reasoning as well. As much as I love this area, if I get a chance to attend a convention in November, Pittsburgh is not on my list. I don't see how we can compete with the Sun Belt cities from October-April. Would those hotel rooms sit empty?
This is a great area in the warm weather months, this Summer has been jumping with the Buccos drawing about 90K people to the city every weekend they are in town, to the concerts at AE, and all the arts in the cultural district. That would attract conventions, but in the Winter, not so much IMHO.
This is a great area in the warm weather months, this Summer has been jumping with the Buccos drawing about 90K people to the city every weekend they are in town, to the concerts at AE, and all the arts in the cultural district. That would attract conventions, but in the Winter, not so much IMHO.
in the winter you have the pens I suppose but I'd guess a solid business draw is more important in winter than convention business.
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That again seems like a false choice to me--we can go after leisure, regular business, and conventions at the same time.
that's because you're missing the point. you can do a lot of things but that doesn't mean you should.
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Originally Posted by BrianTH
Again I recognize you would have to do this in more detail, but the nature of the "market failure" is pretty clear: the hotel can only capture a portion of the economic benefit of a downtown convention, so the convention may be worth it overall, but not to the hotel specifically. That is a straightforward "positive externality" situation, and subsidies are a reasonable response in some such cases.
no, this isn't a fair summary at all. this is the argument being used for public funds but it's by no means necessarily true. it is not clear that there is either a market failure or a reason to subsidize. the convention center already receives subsidies, this one would target a single developer.
regarding baltimore, the inner harbor seems to have a lot to do with its modest success at the convention center (though I understand business is off there as well).
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Originally Posted by BrianTH
I guess that remains to be seen--and of course a "review" that never ends and a refusal are practically the same thing, just with different politics (in fact, I have a suspicion the Transportation Committee's recommendations are going to the same Prison of Review with no possibility of parole, but I digress)
except that money is being awarded already so I don't see any rational for thinking that this is the case.
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EARLIER: From Valentine's Day through June 21, Pennsylvania's Republican Gov. Tom Corbett has approved $249 million in funding for 40 Philadelphia-area projects, to the benefit of for-profit companies, developers, and nonprofit agencies, under the Redevelopment Assistance Capital Program (RACP).
And this isn't an idle point. A particular locality like Pittsburgh (City or Metro) is in a constant contest with other localities to get funding from limited pools at higher levels of government (e.g., state or federal). You never really know what projects will actually manage to run the funding gauntlet, so it makes sense to apply for, and push for, whatever funding you think you might be able to get.
I understand the thinking behind it, but I think with the fiscal crisis in the federal and state government, this kind of strategy would seem to be nearing its end.
The developers are saying the numbers don't add up. As I understand the issue, it is that the business model of a convention center hotel requires it to reserve large blocks of rooms and then provide full service. And it seems right now the numbers Downtown more work in favor of not reserving large blocks, and not offering full service. So people are willing to invest in new Downtown hotels, but not a convention center hotel.
Well, yeah, that's what the story said. But is it because convention business is down? The convention center was built in good times and even then they couldn't get a hotel built. If it is a hopeless cause without subsidies then I'm worried about the business model in general. In terms of location, this is as good as it gets.
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This is really 500 rooms in addition to 616 in the Westin. A total of 1116, adjusting for the relative sizes of the cities in question, seems consistent with your Atlanta example.
The Marriott Marquis is our beast.
Beside it is the downtown Hilton, 1250 rooms
And on the other side the Hyatt Regency, 1250 rooms.
Across the street it the 720 ft Westin Peachtree with over 1000 rooms.
And there are more. I don't expect Pittsburgh to match Atlanta, but still you'd think any such hotel would have at least 1,000 rooms considering how many can attend a convention.
It just seems that given its location, it should get most of the business so should be larger than 500 rooms. The convention center hotel should be more of a signature building for Pittsburgh to go along with its architecturally significant David L Lawrence center. If it requires subsidies, better make it look great.
that's because you're missing the point. you can do a lot of things but that doesn't mean you should.
OK, but can we agree that whether or not pursuing more conventions is an idea that stands or falls on its own merits? I'm happy to agree that it isn't obviously a good idea, but I also don't think it makes sense to talk about other things that aren't mutually exclusive.
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this is the argument being used for public funds but it's by no means necessarily true.
Fair enough. The next step would be to independently verify the claims being made, and I admit I don't have a means of doing that.
So we have defined the issue, but I think we don't have the means of conclusively determining the truth of the issue.
I understand the thinking behind it, but I think with the fiscal crisis in the federal and state government, this kind of strategy would seem to be nearing its end.
Neither of those are necessarily permanent conditions. Part of the problem on both levels are recession-related revenue shortfalls and automatic spending increases, which should recede (and already are) as the economy recovers. The other part of the problem on both levels is the people standing in the way of comprehensive fiscal reforms (including revenue reform), but I don't think those people are going to retain their positions forever.
But in any event, there will still be money being taxed out of the Pittsburgh region, and money distributed on a discretionary basis, on both levels. I don't think tighter conditions on spending is a reason for Pittsburgh to be less aggressive in pursuing possible funding--just the opposite, I think it will have to work even harder to get closer to its fair share of spending.
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