The Long Road to Approval

When the Metropolitan Council approved plans for a $585 million Music City Center Jan. 19, 2010, it was not just a win for Nashville, Tenn., but a victory for the meetings industry at large. With plans for renovations, expansions, rebuilds and new facilities on hold due to the economy, many cities can only dream of the day when their renderings reach realization. In order to bring the Music City Center to fruition, Nashville had to prove its need and demand for more meeting space.

“We have about 11 million visitors that spend $4 billion annually,” says Butch Spyridon, president of the Nashville Convention & Visitors Bureau. “For a city our size, that makes the hospitality industry a very significant industry to our local economy. Our city leaders get that and they have always supported us. We just see the approval of the Music City Center as another vote of confidence in our industry.”

In a recent report, the Nashville CVB said the city had lost 300 conventions — including the Southern Baptist Convention, which is headquartered in Nashville — because its existing building is too small, awkwardly designed and technologically outdated. Now, as a result of extensive research, years of planning and the support of city officials, Nashville has a success story other destinations can hope to emulate.

In 1999, Nashville Mayor Karl Dean and the Metro Council partnered with the Metropolitan Development and Housing Agency for predevelopment activities, planning and the design of the Music City Center. After an 11-year conversation, withstanding an industry-wide recession and 18 economic studies, Nashville realized its CVB’s pre-bookings best demonstrated the city’s need to grow.

To date, the CVB has pre-booked more than 240,000 hotel room nights and 28 conventions from 2013 to 2019. The CVB anticipates pre-booked conventions will generate approximately $2.2 million in rental income fees and $63 million in visitor spending over a five-year period following the completion of the project.

“I think the advanced bookings were a huge indicator in terms of confidence in the market,” says Spyridon. “The CVB made an informed decision to move forward on pre-bookings so that we can maximize revenues and ensure a strong opening for the center. These bookings prove that there is a strong demand for Nashville and the center.”

Of the 28 meetings the Nashville CVB has already booked, three are faith-based meetings. The Southern Baptist Convention and Youth Specialties both outgrew Nashville but are now returning. The CVB recently met with and is currently courting the Christian and Missionary Alliance.

“We actually had documented the lost business of existing clients that outgrew us,” says Spyridon. “It was an interesting dilemma. The profile of Nashville grew and that created a greater interest in conventions that we couldn’t accommodate.”

The new Music City Center will more than triple the exhibit space available at the current convention center, which has 118,000 square feet of exhibit floor space and 25 meeting rooms. Nashville’s limited capacity meant it could only compete for one-fourth of the U.S. convention market. When the Music City Center opens in 2013, Nashville will be able to compete for three-fourths of the convention market. Plans for the state-of-the-art center include a 350,000-sq.-ft. exhibit hall acoustically designed to double as a concert hall, more than 50 meeting rooms and two ballrooms. Nashville dropped a hotel headquarter from the project due to lack of deep-pocketed equity investors or attractive financing, but plans for a Marriott Marquis adjacent to the Music City Center are currently in the works. The Nashville CVB is confident it can finance the 750- to 1,000-room hotel without public financing.

A study by HVS Consulting found that the center would generate $86.6 million a year in direct spending on hotel rooms, meals, taxis and the like by 2017. The center, funded by an increase in hotel taxes that began in 2008 in anticipation of the project’s construction, would also spur $25.7 million in indirect spending by business owners and $22.6 million in induced spending by restaurant servers and other employees each year on top of creating 1,524 jobs.

Backers of the project believe buying low now, when construction costs are depressed, will put them in a better position to sell to meeting planners when the economy picks up. “I’m not sure there has ever been a better time to construct a major project,” Charles Stark, executive director of the Nashville Convention Center, told the Knoxville News Sentinel. “We can put a couple thousand to 2,500 construction workers back to work. The cost of construction is at some lows we haven’t seen in many years. And the cost of money is lower than we have seen in many years for municipalities borrowing money.”

Critics of the center cited cost and the recession’s crimp on the convention business as reasons to scrap the plan. Some Metro Council members believed the study by HVS Consulting was too optimistic and feared Nashville taxpayers would be at risk of having to cover shortfalls in visitor taxes and fees. The Gaylord Opryland Resorts & Convention Center, the largest non-gaming hotel property in the U.S. with 2,881 rooms and 288,999 square feet of exhibit space, was opposed to public financing for the facility. In September 2009, the Gaylord Entertainment Co. acknowledged giving $8,500 to Nashville’s Priorities, a citizen-led opposition group that lobbied for the defeat of the project.

But many city officials, including Mayor Karl Dean, who backed the center since the beginning, believe the new downtown convention center will add almost $135 million a year to Nashville’s economy and, by growing convention business, will allow Nashville to expand the sales tax revenue from visitors and depend less on property taxes from citizens.

“At the end of the day, the reality of how important this industry is to growing our tax base and the negative alternatives of doing nothing were dramatic,” says Spyridon. “There is a huge desire to visit Nashville and we are booking conventions that we never could attract before.”

According to HVS Consulting, Nashville’s attractive downtown and Music City brand combine to create a destination appeal that will provide sufficient demand for a new convention center. In fact, the hospitality industry is the city’s second largest industry employing 60,000 residents. A report by Smith Travel Research recently found, of the top 25 hotel markets in the country, Nashville was the only one to post positive growth in revenue per available room in December 2009.

Nashville isn’t the only city getting a vote of confidence these days. Updates on new convention center construction and hotel additions will make headlines in 2010. Irving, Texas, Indianapolis, Ind., and Louisville, Ky., are three destinations that will welcome new convention space in 2010. Chicago’s convention industry leaders have formed a task force to review all aspects of the convention business in the Windy City. In an effort to keep Chicago a top national convention and trade show destination, its convention industry is coalescing — as Nashville did in 1999 — to commission studies, hold presentations, conduct public meetings and start the legwork necessary to keep the city competitive.