Projections Matter and the MCCA Got it All Wrong

The Boston Business Journal was dead-on when Craig Douglas wrote, “the BCEC’s expansion plan is a case in point for why Massachusetts is in such a financial quagmire today. It’s had virtually no relevant financial vetting. Its cost projections are Big Dig-esque.”

His case in point was the recent room-night figures reported in the Massachusetts Convention Center Authority’s annual report.  “In the fiscal year that ended June 30, the BCEC’s slate of events directly generated 264,669 hotel room nights — its second lowest 12-month total since 2007. The Hynes generated another 208,000, or half of what it managed to book in 2001.”

Charlie Chieppo, the master of all things Convention Center, put the grim hard numbers into further context in a Boston Herald oped.  To summarize some of his points:

• The 1997 feasibility study lending support to build the Boston Convention and Exhibition Center projected the center would generate 794,000 hotel room nights annually, but the number came in at only 264,669 room nights last fiscal year, 67 percent below target.
• Even more troublesome was the fact that the BCEC generated more than one-third fewer hotel room nights in FY14 than the much smaller Hynes Convention Center produced in 2000.
• Looking at the industry more broadly, there was about 36 million square feet of exhibition space in the United States in 1989. By 2013, there was 71.1 million. All the while, demand remained flat, at best. In Las Vegas, Orlando, Chicago and Atlanta where expansions were recently completed, the larger facility did the same amount or less business thanbefore the expansion.

To “remedy” the BCEC’s longstanding inability to get much past even the 50-yard line of their original projections, its soon-to-be former executive director, Jim Rooney, has been pushing for the state to spend $1 billion to expand the convention center.  His belief is that we can only improve operating results if we build a larger convention center to attract bigger shows, the same philosophy professed in the cities cited above where expansion dreams met harsh reality.

Interesting how, against all past evidence, the Massachusetts Convention Center Authority’s (MCCA’s) forecasts look better than ever.  A review of the recent projections for the BCEC offers further evidence of their abounding optimism. At as the end of last April, the MCCA, in its 2013 Economic Impact Report, projected that the Hynes and BCEC would generate 629,000 room nights in 2014.  So how is it that in its 2014 annual report the room nights came in at only a combined 472,000, and only 462,000 the year before that?  Perhaps, it’s a fiscal year/calendar year difference, but that would be a pretty big leap in performance.

And a bigger leap of faith for the public. We’ll be keeping an eye out for those numbers.

The MCCA’s projections historically amounted to nothing more than high hopes; pie in the sky on which we can’t risk $1 billion.