Burlington won't get convention center/arena yet

Vermont Business Magazine, Apr 01, 1997 by McQuiston, Timothy

Chittenden County has neither the winter market draw nor enough quality hotel space to develop a convention center. Such were the conclusions of consultants given a mandate that a Burlington-area conference center and/or civic arena had to be financially viable based on winter-time revenues.

Consultants Jeff Sachs and Jerry McClendon, from the Atlanta office of the E&Y Kenneth Leventhal Real Estate Group, a division of Ernst & Young LLP, were commissioned by the Lake Champlain Regional Chamber of Commerce to determine the feasibility of such facilities. They gave their conclusions March 21 a packed press conference at the Chamber's offices in Burlington. The Chamber did not ask for a location recommendation, and one has not been determined.

Their ringing discouragement of either plan could be seen on the faces of promoters in the room.

"We're disappointed," said David Coates, of KPMG Peat Marwick who led the Chamber effort with Karen Makowski, former KeyBank president. "We thought they would find something for us."

The Convention/Civic Center Task Force of the Lake Champlain Regional Chamber of Commerce had entrusted the $30,000 study to E&Y in January. The Task Force was comprised of local business and civic leaders, as well as members of the Burlington-area hospitality industry. All but $5,000 of the study came from unnamed private donors. The other $5,000 came from the City of Burlington.

Mayor Peter Clavelle said, "We spent $5.000 to save $25 million." He also thought that conventioneers would go elsewhere during the winter. "I wouldn't come to Burlington in the winter," he said.

As its report states, E&Y was charged with studying if there would be market support and, if so, what type of facilities would be needed.

In addition, the report states, "The key concern in the study was whether sufficient convention demand exists to fill hotel rooms in the winter." That is, bringing in new business that would not take away from existing hotels and entertainment venues -- especially the Sheraton Burlington Hotel and Conference Center, the Radisson Hotel, the Champlain Valley Fairgrounds, the Burlington Memorial Auditorium and the Flynn Theatre -- while filling the off-season gap in the winter.

The consultants also were asked if such a facility would make a return on their investment, given that, as Coates said, local investors could only come up with $10-15 million.

In neither case, said the consultants, could a sufficient facility be built for under $25 million. In addition, the convention center simply would not draw enough conventions of sufficient size, nor was the local population base alone large enough. In their well-documented study, they surveyed convention managers and facility managers, as well as looked at the minimum-sized city needed to build such facilities.

Put point blank, they said, conventioneers would rather go someplace warm in the winter. In addition, transportation was mediocre and conventions are usually booked into hub cities, like Chicago and Atlanta. To get to Burlington, they said, conventioneers could usually have to change planes, some times twice. Also, the current level of hotel space is very well booked during the peak months from May to November. Any competition during those months would hurt the existing stock, both in terms of the competition and the discounting convention planners demand.

"In summer," the report states, "Chittenden County's hotel supply is considered a major issue in marketing to larger conventions, particularly in terms of room count and availability during peak convention demand periods. With a limited number of major convention hotels, some delegates may be housed in nearby mid-level and limited service properties, which may not meet the expectations of seasoned convention delegates."

The consultants itemized the drawbacks of trying to draw a large convention to the Burlington area: Limited hotel availability in peak season; no large headquarter hotel/must utilize multiple properties; harsh winter weather; difficult air access (limited number of flights, commuter service, etc); proximity to delegates; limited destination appeal (versus other national cities such as Las Vegas, New York, Washington, DC, etc).

On the specifications for a convention center, the report states: "A starter facility for Chittenden County would likely be appropriately sized with 60,000-plus square feet of exhibit space, a ballroom to seat 1,000-plus and 10 to 20 meeting rooms, requiring approximately 165,000 gross square feet and a $25 million investment, exclusive of land and financing costs. In addition, these facilities typically require an annual operating subsidy of approximately $500,000. Given this level of public investment and the limited market potential, it will be difficult to achieve Chittenden County's objective of return on investment in terms of new tax revenues to the state."

For a civic arena, E&Y recommended a 10,000-seat arena with ice. This would allow the Garth Brookses and Billy Joels to play in Burlington, while also supporting ice and other family shows and, perhaps, a minor league hockey team -- events that would not compete with existing facilities, like the Flynn Theatre.