October 23, 2014

Tourism

Conventional Wisdom

Central Florida governments are chasing convention center deals in a big way -- despite uncertain benefits.

Ken Ibold | 10/1/2004
Just last year, the Orange County Convention Center opened a $750-million expansion, adding to what was already one of the largest centers in the world. That facility's heft hasn't deterred nearby counties from trying to build or expand their own convention centers, however. And the race to lure business travelers continues despite the huge investments required and the need to subsidize the facilities.

Osceola County has had dreams of a convention center along Highway 192 for more than a decade. The most recent incarnation, a $355-million convention center/hotel project, crumbled when the lead developer, FaulknerUSA, bailed out in the face of skeptical credit markets and Hilton Hotel Corp.'s decision to withdraw when it was asked for more loan guarantees.

Faulkner had hoped to build an 800-room hotel and 250,000-sq.-ft. convention center and paid a non-refundable $1 million deposit to the county. However, as the deal sputtered, the county's share of the anticipated debt escalated steadily from $98 million two years ago to $350 million.

The Orlando-Kissimmee Hotel & Motel Association strongly supported the project. "The indirect economic impact will benefit our industry as well as virtually every other facet of the county's economy," said association Chairman Domien Takx.

Meanwhile, Gaylord Palms Resort, also in Osceola County, had been seeking a $140-million loan from the county to help it expand its own convention facilities by 250,000 square feet. When the Faulkner deal collapsed, Gaylord decided to re-examine its own plans. Despite the proximity to Orange County's center, the Gaylord facility "wouldn't be competing with the Orange County facility because it's really a different kind of convention market," says Gaylord spokesman Keith Salwoski.

Farther up I-4, Daytona Beach's Ocean Center is undergoing an expansion, thanks in large part to $55.6 million in tourist development tax revenue bonds issued by Volusia County. The expansion, set for completion in two years, will nearly triple the center's exhibit space by adding 100,000 square feet.

The Ocean Center already operates at a loss of about $3 million a year, which is made up by tourist development tax money. After the expansion, the losses are expected to widen to about $3.5 million in 2007.

While convention centers typically require tax subsidies, a shortfall in tax collections means the government entity has to make up the shortfall from its general fund or cut back on other tourist-development activities funded by the tax.

All three expansions are essentially bets that the projects will bring in more tourists. And given the fact that the Orange County Convention Center has some groups booked into 2027, many cities are willing to take that bet.

Tags: Dining & Travel, Central

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