April 22, 2008

Courtesy of tradingmarkets.com

The $220 million Raleigh Convention Center is the most expensive public project in the Capital City's history, and it has been touted as the linchpin to the rejuvenation of downtown Raleigh.

At more than triple the size of the former convention center building, which was demolished last year, the 500,000-square-foot Raleigh Convention Center and an attached 400-room Marriott City Center Hotel are expected to lure thousands of visitors and guests to downtown Raleigh each year after they open this year.

The RCC already has more than 160 conferences, meetings and parties booked through 2023, a pace that is ahead of the center's business plan, says RCC Director Roger Krupa (`72).

The $70 million Marriott hotel, being developed by Noble Investment Group of Atlanta, is set to open in July. The 17-story hotel will have a coffee shop, an upscale, Tuscan-style restaurant, and an indoor pool that will overlook the nearby Progress Energy Center for the Performing Arts. The hotel also will house a 9,000-square-foot ballroom and 15,000 square feet of meeting space.

The Raleigh Convention Center is scheduled to open two months after the hotel debuts, with a grand opening celebration planned for the week of Sept. 8.

"What can I say without being overly dramatic? The new convention center will bring a whole new population into the center city and, as a result, create new markets for businesses already there," says Harvey Schmitt, president of the Greater Raleigh Chamber of Commerce.

The majority of Raleigh's leaders were convinced the project was feasible after a city-commissioned study concluded a bigger convention center could pump nearly $500 million into the local economy and create almost 2,000 jobs during its first five years of operation.

Funds collected from Wake County's prepared food and occupancy taxes have paid for most of the center's construction. Taxpayers also are footing about $20 million of the hotel's construction costs.

With a varying configuration of meeting rooms and exhibit halls, the center will be able to accommodate crowds of 50 to 5,000 people. It will have 12 covered loading docks and ramps for direct drive-in access to the exhibit hall for trade shows and conventions.

In addition, Cree, a Durham lighting company, has agreed to sponsor a massive $1 million shimmer wall on the center's western side that will use LED fixtures to light up the wall with images and light displays. Negotiations are ongoing for naming rights to the plaza in front of the center.

Recruiters insist that the center will still be a powerful tool for economic development, but it won't reach its full impact until the supply of hotel rooms matches its full meeting capacity. Meanwhile, recruiters are focusing on groups whose needs fit the available rooms.

"If we're going after bigger groups, not having many hotels is going to make it an uphill battle," said Loren Gold, executive vice president of the Greater Raleigh Convention and Visitors Bureau. "It's just a matter of being very strategic in who you're going after." If conventions get more attendees than expected, things could get tight -- especially with growing demand from business travelers and tourists. Even though the city has been without a convention center since the old facility was demolished in 2004, downtown hotel occupancy has climbed.

"There appears to finally be some critical mass with all the development," said Joe Rouse, one of the partners who bought the 202-room Clarion Hotel on Hillsborough Street in 2004. "It's having a positive effect. The weekend business, with the restaurants and the nightclubs, is a big boost."

That business may compete with groups such as the National Genealogical Society, which reserved hundreds of rooms at the Marriott, the Sheraton and the Clarion for its four-day conference in Raleigh in 2009.

The organization learned about the headaches a tight hotel market can bring when it began planning its annual convention in Kansas City this year. Organizers have had to reserve more and more rooms as registrations have grown beyond expectations.

"We're scrambling," said Barbara Little, who organizes the genealogy conventions.

The society's 2007 conference was in Richmond, where it could find just one hotel within convenient distance of its convention center.

"We think we have what we need [in Raleigh]," she said. "But of course you never know."

Profit and risk

Not knowing can put city recruiters in a bind, too. The more hotel rooms the city has, the bigger conventions they can lure. Bigger conventions mean more money in the region's coffers.

But the city's salespeople don't want to overpromise and then lose event planners who commit to Raleigh only to leave unsatisfied. "We can't oversell and risk destroying our early successes," Krupa said.

In order to accommodate the North Carolina Community College System, which will bring its 3,500 delegates to Raleigh later this year, the convention center has crafted a transportation plan that will shuttle attendees between area hotels and downtown.

"We're able to do that, but that is not the ideal sales situation," Krupa said.

Some large prospects that considered coming in the next two years are delaying those plans until more rooms are built.

Until then, city boosters are watching the banks. Developers are hopeful that credit will loosen in the coming months. Others think it could take much longer if a slowing economy crimps travel.

Hotels such as the Clarion, the Sheraton and the forthcoming Marriott are benefiting from project delays.

Occupancy at the Sheraton has risen at least 10 percent in the past two years -- even as asking daily rates have climbed at least 15 percent to between $139 and $150.

"The convention center creates a field day down here for hotels," said Rouse, the Clarion owner. "We haven't had anything for four years."