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CONVENTION BUSINESS SEEN SUCCESSFUL HERE BUT PROPOSALS TO TRIM CONVENTION BUREAU'S BUDGET MIGHT KILL THE GOLDEN GOOSE

A dozen years ago, the Buffalo Convention Center opened to resounding cheers.

However, the $20 million facility, designed to be the hub of downtown Buffalo, soon was dubbed a white elephant, known more for its lack of business than for generating activity.

Today, efforts by the Greater Buffalo Convention and Visitors Bureau, working in tandem with the center, have produced a complete turnaround.

Since 1987, the year the Erie County hotel bed tax was raised to 5 percent from 3 percent and the convention bureau was given a substantially larger budget, the number of Buffalo conventions has more than doubled. During the same time period, the economic impact of conventions has nearly tripled, to $90 million for 1990.

For a number of reasons, Buffalo's convention outlook is bright.

However, as the city and Erie County begin to reap big-time economic benefits brought to town by conventions and meetings often booked five years in advance, the convention bureau, the convention center and businesses that rely on the hospitality industry stand at a crossroads.

The entire convention-related industry must choose between continued growth or stagnation.

Budget cut debated

The county, which owns the convention center, and the city, which subsidizes its operation, determined earlier this year that the convention bureau could absorb a $600,000 cut in its current $2.14 million annual budget. The bureau derives more than 95 percent of its funding from the 5 percent county bed tax, specifically 2.75 cents of the 5 cent-per-dollar levy.

Although County Executive Gorski has restored the 28 percent cut through 1991, there is no doubt the well is there to be tapped.

Gorski said he regretted taking any money away from the convention bureau, but said a definite revenue stream for Pilot Field expansion was needed when a pitch was made earlier this year for a major league baseball franchise.

"When the expansion committee makes its decision to award Buffalo a franchise, which I think will happen, we will have to look at how we can incrementally restore funding to the CVB," Gorski said.

But tapping convention bureau funding could place it in a deep hole compared to many of its chief competitors.

Pittsburgh's convention bureau, for example, which last year had a budget of $2.54 million, soon will reap thousands of dollars in additional revenue.
The Pennsylvania state legislature has given its approval to raising the bed tax to 5 percent from the current 3 percent.

"With a guaranteed revenue source, the CVB's outlook is positive," said Karen Miranda, the Buffalo bureau's vice president of convention sales and service. "We will be able to maintain what we have and we will see greater consistency."

"One thing overlooked about the CVB's impact on the county is that, due to $700 million in visitor spending countywide (from conventions, meetings, trade shows and tourism), the county in 1989 realized more than $27 million in sales tax revenue," said Thomas M. Daly, bureau chairman and president of C.J. Tower Inc. "The CVB can survive with a budget cut of $600,000 -- but it cannot do its job."

A 20 percent sampling of the convention bureau board, including members whose business is and isn't directly affected by conventions and tourism, found total opposition to any cuts. "I will not support taking money from the CVB budget," said County Legislator Roger I. Blackwell, D-Buffalo.

For nearly two years, the convention bureau has operated without a senior executive in charge.

A KMPG Peat Marwick study released a year ago said it was imperative that a professional be hired to serve as a buffer between special interests and the professional staff, to direct the CVB's transition from a small, low-profile organization into a major countywide economic force, and to provide overall leadership and vision.

"From an operational standpoint, not having an executive vice president makes you ask 'where does the buck stop?,' and 'who does the staff report to?' " said James Allen, executive director of the Amherst Industrial Development Agency and bureau board treasurer.

Daly said hiring a new executive will be addressed soon, but that the board, which he took over 13 months ago, has had more pressing matters to contend with, including developing the new mission statement, working on a five-year plan and wrestling with the potential 30 percent budget cut.

The convention bureau recently rewrote its mission statement to expand its efforts: to "impact positively the economy of Erie County by aggressively marketing conventions, tourism and travel to the Niagara Frontier region."

"The mission statement broadens the CVB perspective," Daly said. "Our focus now is not just to impact downtown Buffalo, but all of Erie County."

Now the bureau must work to insure it does not get bogged down trying to cater to special interests that feed off convention and tourism business.

Expanding the center

The convention bureau faces additional challenges:

With about 64,000 square feet of first-floor exhibit space, the Buffalo Convention Center is small by today's standards. To compete, an expansion should seriously be considered, and at the very least, major upgrading of 12-year-old furnishings and decorations is paramount.

"We see a need for the center to be able to host both a trade show and a convention at one time," said Paul Snyder Sr., owner of the Hyatt Regency Buffalo. "Not having sufficient center space has a negative effect on the hospitality business."

Public and private interests must determine if another downtown hotel near the convention center is warranted. Hoteliers aside, the KMPG Peat Marwick study urged conducting a feasibility study on a new hotel, which convention bureau and center personnel say is vital.

"I know the hotels are doing very well from occupancy and rate structure standpoints," said Melvin P. Florczek, director of the Buffalo Convention Center. "We're ready for another downtown hotel -- no doubt about it."

Great strides made

Buffalo's entry into the big leagues of pursuing conventions, trade shows and meetings corresponded with the increase in the bed tax to 5 cents from 3 cents per dollar.

The convention bureau's budget skyrocketed from $579,000 in 1985 to $2.14 million in 1989 -- a 270 percent increase. About one-third of the total is convention-related, including sales staff salaries. The other two-thirds is divided between generating tourism business and general and administrative expenses.

The increased revenue allowed the convention bureau to beef up staff, spend the time and money needed to attend various trade shows, bring meeting planners to town, and make presentations and bids for convention business.

The numbers reflect the progress. In 1987, 110 conventions, not including corporate meetings, and 65,000 delegates came to town, pumping $25 million into hotels, restaurants, museums and stores.

By 1989, 188 conventions were hosted, bringing 88,900 delegates and generating $44.1 million in economic impact.

This year, 215 conventions of all sizes are projected to bring 115,000 delegates to town and put $90 million into the economy. And the economic impact is projected to grow an additional $10 million next year -- despite the fact that the number of delegates is projected to be down.

While relatively new to the game, the convention bureau and convention center generally receive high marks from convention visitors.

"We experienced the highest level of professional service from the CVB people, and the people at the center and the Hyatt were superb," said Sherrill Hayes, executive director of the board of education for the Church of God. The Anderson, Ind.-based organization brought 2,000 youngsters to town three months ago.

Hotels reap benefits

Convention business certainly has contributed to the success of Erie County hotels, as they experience occupancy rates much higher than comparable operations both statewide and across the country.

Through September, a total of 26 county hotels sampled by Gallatin, Tenn.-based Smith Travel Research had a 75 percent occupancy rate, up from 72.5 percent a year earlier. The average room rate was $58.91, up from $54.06.

Statewide, the occupancy rate was identical for both 1990 and 1989, 67.9 percent, while the average room rate climbed to $98.88 from $93.58. Nationally, the occupancy rate through September was 65.7 percent, up from 65 percent, while the average room rate jumped nearly $2, to $58.64.

But the good times for hotel owners could be over. Hyatt owner Snyder said hoteliers overall feel that 1991 could be a very tough year.

"We see transient corporate business down by more than 20 percent, while group convention business is up about 30 percent," Snyder said. The Hyatt relies about equally on transient corporate business and convention-related trade.

Several national forecasts agree with Snyder's 1991 assessment: business travel will lead the decline.

Thus, business that may have been booked by the convention bureau and convention center three to seven years ago will have to pick up the economic slack.

And proponents maintain the momentum must not be stalled.

"You've got to view CVB funding as an investment of money," Daly said. "Looking at the CVB from a business perspective, it's one of the county's most successful businesses. For about $2 million, you're getting a return of about $700 million. In what other business do you get that kind of return?"

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