- Voice of San Diego - https://www.voiceofsandiego.org -

The Story Behind the Conflicting Convadium Predictions

The Chargers tout their proposed convadium project as a boon for San Diego tourism. San Diego tourism leaders, meanwhile, pan it as a pricey investment that wouldn’t draw nearly the impact the Chargers claim.

And the two groups are pushing wildly different numbers to drive home their arguments.

The Chargers claim the city would draw an average of nearly 225,000 new hotel room night stays annually with the stadium-convention center project in East Village; the tourism industry concluded the project would bring in just 40 percent of those new room nights.

That drastic difference stems from vastly different assumptions.

The Chargers and the Tourism Marketing District each hired consultants to project convention business, hotel stays and hotel tax revenues they’d expect if voters approve Measure C [1], which would increase the hotel room taxes to help bankroll the estimated $1.8 billion project.

If the Chargers’ predictions come true, the convadium would generate about $127 million in new hotel tax revenue over 10 years to help pay for the project. But the tourism-backed study estimates the project would bring in just $34 million during the same period.

The story behind those opposing realities is revealing.

Here are the four major areas where the consultants differed, and why.

The Chargers say the project would fill a need. Tourism leaders say customers disagree.

Experts hired by the Chargers say their project would help the city tap into the demand for small-and-mid-sized conventions it can’t accommodate now. The tourism industry, on the other hand, say customers aren’t interested.

This speaks to one major difference between the two studies: They didn’t talk to the same Convention Center customers.

Chicago-based consultant Rob Hunden, who was hired by the Chargers, sought out potential customers. He analyzed a large database to find groups that haven’t hosted events in San Diego for the last two decades despite an interest in West Coast venues. Hunden then focused on those whose exhibit space needs the convadium could likely accommodate.

Hunden found the convadium ballroom and breakout rooms would meet the needs of nearly all the groups his firm contacted.

After those interviews, Hunden came to this conclusion: “Many groups want to be in San Diego, but there are simply no open dates in the existing facility. By opening up a new facility, most groups would have date options that could be accommodated.”

In his study commissioned by the hotelier-run Tourism Marketing District, Tom Hazinski largely focused on current customers.

The tourism study relied on Convention Center data on business San Diego’s lost, a past convention center demand study and interviews with event planners already in contact with the Tourism Authority. Those convention planners typically schedule their events years in advance and most would need the entire Convention Center space, if not more space than that facility currently offers.

Hazinski’s analysis of lost Convention Center business also revealed the convadium’s exhibit space would meet the needs of less than a third of conventions that book far in advance and that the football field would appeal to less than 6 percent of customers tourism officials most want to lure.

“Fundamentally, what we found is a mismatch between what the proposal offers as a Convention Center and what your customers want and need,” Hazinski said at a recent debate over Measure C, the Chargers-backed ballot measure that would fund a convadium.

Hazinski’s conclusions match a longtime refrain among boosters and tourism officials that the current convention space isn’t large enough and that expanding it on its existing footprint would be the best way to address that.

Hunden rejects that argument. He’s repeatedly said the Chargers are focused on drawing new conventions and thus new potential customers, especially small and mid-sized ones. He also said potential customers he interviewed were interested in using the football field.

“The (San Diego Convention Center) is at capacity,” Hunden wrote in an email to Voice of San Diego. “The proposed project is an opportunity to increase San Diego’s convention base and so we focused our study on the new business opportunity that the building, via Measure C, will create for the city.”

The Chargers say games won’t interfere with convention scheduling. Tourism folks are skeptical.

The Chargers have repeatedly said the NFL has promised to work with San Diego to make sure that football games don’t keep conventioneers away throughout the season.

The Chargers have projected the convadium could be available for events 87 percent of the football season and that groups that often book years out could be accommodated during about two-thirds of the season.

But the tourism industry study concluded the convadium would be available for longer-term bookings just 43 percent of the NFL season – and this difference is a major contributor to the gulf between Hazinski’s estimates and the ones produced for the Chargers.

The problem, Hazinski wrote in his study, is that nearly three-quarters of current convention events booked at least a year and a half in advance require a continuous block of at least eight days. He said the Chargers’ schedule most often offers just four-day windows and that his projections about new events at the facility reflect that.

At a Measure C debate [2] last month, Chargers consultant David O’Neal – who coordinated with Hunden – said the NFL has agreed to allow bookings as far as 15 years in advance for three weeks during much sought-after fall months to help address these concerns.

He also said many smaller conventions will be able to handle the shorter time window and that sharing the convadium with an NFL team will actually be beneficial when business is slower, including during the holidays.

‘The NFL has offered unprecedented support here,” O’Neal said.

But the NFL hasn’t publicly committed to any arrangements and tourism industry leaders aren’t convinced it will.

The Chargers assume visitors will stay longer – and more of them will bring spouses.

Two seemingly small assumptions may have led to major differences between the Chargers’ and tourism-backed studies.

For the tourism study, Hazinski ran the numbers for current convention and trade show events at the San Diego Convention Center that could be accommodated by the new convadium and came up with an average hotel stay of 1.08 nights. That’s the average he used in his study.

The Chargers’ study instead assumed an average hotel stay of 2.25 nights and that perhaps 10 to 35 percent of attendees would bring a significant other with them to San Diego, a group Hazinski didn’t include in his study.

Hazinski argues these differences significantly inflated the Chargers’ projection of nearly 225,000 new hotel room nights annually. He said correcting for those differences would bring the projected room night total associated with the convadium project to about 94,000 each year – close to the number his study predicted.

Hunden, who conducted the Chargers study, said Hazinski has it wrong. He said spousal attendance wasn’t baked into his projections for hotel stays, and his estimates were based on weighted average of various types of events.

And he criticized Hazinski for drawing conclusions.

“He’s critiquing our model without having access to the model and making these broad assumptions. It’s just completely false,” Hunden said.

The Chargers predict major cash from sports and entertainment events. Tourism folks, not so much.

By Hazinski’s math, the Chargers assumed 48 percent of the total economic impact of the convadium project – from increased visitor spending, hotel room prices and any additional hotel stays in the project’s first decade – would come from sports and entertainment events, including Chargers games.

There’s some reason to believe that Chargers’ estimate could be overblown. For one, the overwhelming majority of economists agree sports venues don’t generate lots of economic benefits [3] for cities. Then there’s the fact that most sports fans aren’t traveling from elsewhere to attend games.

Two more recent analyses – including one by Hazinski – also point to a particular lack of impact in San Diego, a year-round tourism mecca with or without pro sports.

The Chargers report concludes sports and entertainment events at the convadium will draw about 27 percent of the new hotel stays associated with the project and that room rates will rise when the Chargers are in town.

Hunden said that projection was bolstered by team estimates that 30 percent of those who attend Chargers games live outside San Diego and that San Diego’s new convadium would be downtown.

The Chargers report includes a chart showing increased hotel room rates in other downtowns when their NFL teams had home games.

The data it presented isn’t comprehensive, though. Hunden used advertised rates on Expedia.com to compare game days and non-game days in Baltimore, Pittsburgh, Indianapolis, Seattle and Nashville. In two cases, the dates he compared were in different months. In all cases, he picked just two dates and a handful of hotels.

Hunden said he chose this method because it allowed for specific information about hotels closest to the NFL stadiums and to eliminate weekends where other major events might have further inflated hotel rates.

Hunden found that hotel room rates rose an average of 12 percent on game days in the other cities.

Hazinski more recently ran his own numbers and came away with an entirely different conclusion. Hazinski conducted a broader review of San Diego hotel trends during Chargers football seasons from January 2012 through January 2016 using hotel data from Smith Travel Research.

Hazinski’s analysis largely showed decreased room occupancies and rates in seven submarkets throughout San Diego on game-day weekends.

That led him to conclude Chargers games may even reduce hotel demand when the team’s playing in San Diego.

“There’s no evidence of any positive impact of Chargers games on hotel occupancy and rate,” Hazinski said.

A recent analysis [4] by a national hotel industry website Hotel News Now lines up with Hazinski’s findings – at least in San Diego.

The site found Chargers home games contributed a paltry 1 percent hotel revenue impact in 2015, a percentage much lower than most other NFL cities.

The Chargers’ hotel revenue impact has fluctuated between -3 percent and 19 percent since 2008, according to the report.

Hunden argues the situation would improve if the Chargers played downtown and that his assessments are conservative.

He said his study revealed marked increases in hotel revenue during home game weekends for cities with downtown stadiums.

He noted that he didn’t factor in playoff games, college bowl games and NCAA Final Four games expected along with a new stadium out of caution and he acknowledged he was surprised by his own conclusions.

San Diego may see a lesser relative impact than less popular tourism destinations like Green Bay or Detroit but he’s convinced a downtown stadium would still draw significant impact.

“To say there is no positive impact is simply wrong and uninformed,” Hunden said. “The current stadium is not in a destination location. A downtown stadium enables a visitor to have a full and fun itinerary centered around a downtown game experience with walkable hotels, restaurants, retail and attractions.”