Cause of Jackson Convention Complex deficit goes beyond HQ hotel

December 11, 2011

Economic Development, Real Estate

Lack of a convention headquarters hotel has been blamed for the Jackson Convention hotel complex losing $12 million in business last year. But the 330,000-square-foot complex has lost far more meetings and convention business since its late 2009 opening for reasons other than available hotel space, a study by H.C. Johnson Consulting of Chicago found.

H.C. Johnson, which specializes in real estate and hospitality sector research, did the study at the direction of the Jackson Redevelopment Authority. Charles Johnson, the firm’s principal, and JRA executive director Jason Brookins emphasized that the study looked at market strategies and conditions for a convention hotel — not at the market feasibility of the project.

In the reported submitted in draft form this fall, the firm noted that the absence of a headquarters hotel has caused the Jackson Convention Complex to lose approximately 22 events, 33,000 attendees and 34,900 rooms since 2009, as well as some future events.

“Additionally, since 2009, the JCC has lost approximately 139 events, 253,000 attendees and 79,000 rooms for reasons other than hotel supply,” wrote study author Brandon Dowling, a H.C. Johnson project manager.

“In total, the JCC has lost approximately 161 events, 286,000 attendees and 114,000 rooms since 2009,” he added.

Dowling attributed some of the lost business to a long-ago decision to limit exhibition space at the complex to 85,000 square feet, a total achieved only by converting 25,000 square feet of banquet room space to exhibition.

In doing his market assessments, Dowling used peer cities of Charleston and Greenville, S.C., Chattanooga, Tenn., Savannah, Ga., and Biloxi. Of the peer cities, the Jackson region is ranked third in terms of population at 542,000 people, but second-to-last in exhibit hall space for its convention center, leading only Charleston’s 80,000 square feet of space.

“The imbalance of convention center space at the JCC represents a significant competitive disadvantage when compared to its strong position in terms of population, and its role as the state capital,” Dowling said.

Low funding of the Jackson Convention & Visitors Bureau is a further handicap, he noted.

At $3 million annually, Jackson’s CVB ranks fourth among the peer cities in CVB budget size. “When the average CVB budget is calculated across the comparable cities, it is $4.2 million, which is $1.2 million greater than Jackson’s CVB budget,” Dowling said.

The Jackson CVB also has the fewest number of hotel rooms to offer among the five other comparable cities, with approximately 4,700 hotel rooms. Charleston and Savannah rank first and second in terms of total hotel supply, with 15,000 and 14,948, respectively.

The Jackson CVB’s job is made even more difficult by it having to sell prospects on lodging distant from the Convention Complex, according to Dowling. “Even though the JCC ranks last in total hotel supply, it ranks second-from-last in hotel rooms within 0.5 miles of the center, with approximately 764 rooms,”

Even with such competitive challenges, management of the JCC does an “outstanding job” of attracting events and attendees to the facility, with 333 reported event days totaling 146,625 attendees in 2010, ranking third overall, Dowling said.

The downside, he added, is that “this success comes more from local oriented business rather than the room night generating regional and national events that it could attract if the balance of venue space and CVB budget was more in line with peers.”

The Jackson complex is also losing vastly more money than the other venues, according to Dowling, who said the facility has a net operating income deficit of about $1.4 million annually compared to a peer average of $871,340.

Dowling blames the operating income deficit on a combination of insufficient hotel rooms, a shortage of exhibition space and inadequate funding of the Convention & Visitors Bureau.

“You have three things working against you where other cities have only one or two working against them,” Dowling said in an interview last week.

Pinpointing how much of each circumstance is to blame for the complex ending up nearly $1.5 million in the red each year could be key in the debate over the convention headquarters hotel. Mayor Harvey Johnson assigns the bulk of the blame to the absence of a hotel to support the center and insists a 16-floor, 300-plus room hotel is the only way to save the center from a steady demise.

“What causes me unease is having a convention center of 300,000 square feet that is being under-used by 50 percent,” Johnson said in answering whether he is uneasy about putting $96 million of the city’s general fund up as collateral in the hotel deal.

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