Dayton Convention Center’s red ink tied to age, decline

“This is a community asset. If we want to keep it then we have to help the city with this challenge,” said Phil Parker, president and chief executive of the Dayton Area Chamber of Commerce.

Read the in-depth story:

The 42-year-old Dayton Convention Center is gushing red ink and showing its age while cities like nearby Sharonville have expanded and upgraded their facilities to attract business that might otherwise have come to the city-owned building in downtown Dayton.

“This is a community asset. If we want to keep it, then we have to help the city with this challenge,” said Phil Parker, president and chief executive of the Dayton Area Chamber of Commerce, which is headquartered in the center. “It’s not performing well. It’s not being utilized well.”

The convention center at 22 E. Fifth Street is beginning its seventh year in the red and has seen convention business drop by about half since 2011. Its escalators were closed for safety reasons last summer and only just reopened. Carpets and walls are stained. Paint is chipping. Wallpaper is peeling. Bathrooms are outdated. In the frigid walkway leading to the adjacent city parking garage water drips from above in several places near corroded steel window frames and a cracked window.

"I don't want to sound like it has gone to the disrepair of the Arcade, but I think we are headed down the path of Hara Arena if we don't do something with it," said Walt Hibner, executive director of the Home Builders Association of Dayton, which has offices in the building.

UPDATE: Report: $28M needed to fix convention center

Don't expect immediate changes. While Dayton officials know a significant investment is needed to make upgrades that could help regain lost business and be more competitive, Dayton Mayor Nan Whaley said the cash-strapped city must put more urgent capital needs — such as roads and police and fire fleets — ahead of the convention center.

“The choice is, do we pave roads or do we fix the convention center? Pretty clearly the roads are going to win on that,” Whaley said.

The center’s $2.9 million budget is funded with money from the city’s 3 percent lodging tax — about $595,000 annually — as well as transportation center parking revenues, charges for using the facility and rent from the chamber, which subleases some of its space to other tenants.

For two decades Montgomery County kicked in $100,000 a year from its lodgings tax revenue but stopped in 2007.

The last time the building had a major renovation was 1986. Since 2009 the city of Dayton has used General Fund money to cover annual deficits ranging from about $172,000 to more than $330,000. The roof was replaced in 2012 and in 2007 the city spent $2.4 million fixing the crumbling facade, which was held up with nets to protect pedestrians. But most interior upgrades like painting and carpeting date to the early 2000s and now the city says it can’t even afford to replace two aging forklifts.

“We can’t do the best we can with what we have forever,” said Joe Parlette, who oversees the convention center as director of recreation and youth services.

Parker said the closing of the escalators for six months became a symbol of the building’s problems and likely cost the center business. The delay in repairs was caused by a dispute with maintenance contractor KONE over who was responsible for replacing the escalator steps at a cost of $180,000. KONE repaired the steps earlier this month after agreeing to split the cost evenly with the city. Parker held a tongue-in-cheek ribbon cutting and handed out “free escalator ride” tickets.

Speaking afterward, Parker said it’s time for business leaders and government officials county-wide to view the convention center as a regional asset and the funding of renovations as more than just the city of Dayton’s problem. He called for the formation of a task force with membership from the county, local governments and the business sector to look at ways to improve the center and how to pay for it. Parker and Hibner both believe there are people in the business community who may be willing to help with funding.

“It seems like we need to find a way to get creative, maybe sell the naming rights and take the money you get from naming rights and put it into operations and maintenance,” Hibner said. “Maybe it needs to be spun off from the city of Dayton.”

The Dayton/Montgomery County Convention and Visitors Bureau — the building's convention-marketing arm — is reviewing proposals from six consultants to perform a needs assessment and market analysis study. The study will also explore whether the convention center is in the right location, said Jacquelyn Y. Powell, president and chief executive of the private, non-profit bureau, which is headquartered at the convention center.

Powell said the consultant bids range from $50,000 to $100,000 and she expects to award a contract by spring. The bureau — which gets nearly all of its $1.9 million annual budget from Montgomery County’s lodgings tax — is committed to funding at least a portion of the study.

While Powell and Parker have both had private discussions with city leaders about the convention center, neither knew of the other’s efforts. Both said they could see the two concepts — forming a local task force and paying for an independent consultant’s study — working well together and in cooperation with the city.

Montgomery County Commissioner Dan Foley said the bureau’s analysis will help stakeholders come to a common understanding of what needs done with what he said is clearly a “regional asset.”

“I think it needs to be organized and governed by a regional authority, as opposed to a city department,” said Foley, a passionate advocate for regional government. “I think that way people would have skin in the game, not just the city, for the long term.”

Competition fierce

Competition for conventions and other events is fierce in Ohio. The "big box" convention centers in the state's three major cities — Cincinnati, Cleveland and Columbus — compete against each other and with other large cities for large conventions, including for the 2016 Democratic and Republican political conventions. Cleveland won the GOP bid but the Democrats picked Philadelphia over Columbus.

Powell considers the big-three to be Dayton’s competition, but convention and tourism officials in those cities said Dayton’s 150,000 square-foot center is too small to be a serious competitor. The Greater Columbus Convention Center is 1.7 million square feet, the new Cleveland Convention Center is 767,000 square feet and the Duke Energy Convention Center in Cincinnati is 750,000 square feet.

“My argument is no matter what you do with the site, you are still not going to get conventions because it’s not a big enough site anymore,” Whaley said.

Powell said Dayton also competes for conventions with centers in Toledo, Akron and the Sharonville Convention Center, a former conference center expanded to 70,000 square feet in 2012.

In recent years Dayton has hosted conventions or conferences for composites manufacturers, architects, religious groups, turbine engine technology companies, tree care companies, public works employees, pesticide applicators and a slew of others.

"There's a hobby and an association for everything. Swizzle stick collectors. I'm not kidding, we've bid on them," Powell said.

She said convention center staff are in charge of booking meetings, banquets, and major ticketed events like the Dayton Auto Show and the World A'Fair, while her focus is on events that will bring people in to stay overnight.

“Convention centers typically are there to drive the economic vitality of the community, to bring events and businesses in whose delegates and attendees are going to stay in their hotels, eat at their restaurants, shop in their retail establishments, rent cars, (visit) entertainment (venues),” Powell said. “That’s all outside money coming in to our community that stays here.”

The National Watch and Clock Collectors’ 2013 convention had a $1.3 million economic impact on the city, Powell estimated, the Interchurch Holiness convention, here since the 1980s, generated close to $1 million and the Order of the Eastern Star, hosted in Dayton since 2004, brought in $647,000. The Dayton Juniors’ Presidents’ Day Cup volleyball tournament, here last weekend, generates about $775,000 in economic impact, Powell said.

Historically it has not been uncommon for larger city-owned convention centers to have trouble turning a profit. Government subsidies — often through lodgings taxes or city revenues — were considered the price to pay for the positive economic impact from conventions and other large events. But after weathering the Great Recession, and several years of state budget cuts, the use of subsidies to cover convention center operating losses is getting harder to justify.

Bigger convention centers are “kind of known in the industry as a ‘loss-leader,’” said James Downton, executive director of the Sharonville Convention Center. “Now the rule of thumb is ‘we need to find self-sustaining facilities that are not going to need subsidies to sustain themselves.’”

The inability of larger convention centers to sustain themselves has driven growth in the construction of smaller convention centers and events centers, Downton said, a trend also fueled by changes in the industry. Some businesses and trade groups have shifted to less expensive regional conferences rather than mega-conventions in large cities.

The Sharonville Convention Center, owned by the city of Sharonville, is self-supporting although the city’s lodging tax is used to cover the debt for its $25 million renovation, Downton said. He sees the center as a complement to the much larger Cincinnati convention center and said he has snagged business that Dayton competed for, including the School Nutrition Association of Ohio.

Tracey Hogan, executive director of the association, said the group has met in Dayton and likely will again but shifts its annual conference and food show for 350 people to different regions in the state.

“The Dayton Convention Center is great,” Hogan said.

The Southwest Ohio division of the American Public Works Association has used both Sharonville and Dayton, said Eric Pottenger, who works for the Butler County Engineer and serves as board president for the APWA division. He said Sharonville was picked because of its central location for the group’s 2013 and 2015 snow and ice control conferences but the larger Dayton center was best for the 2012 statewide expo and conference.

The Dayton Juniors’ annual volleyball tournament also regularly uses the Dayton Convention Center, along with a variety of other local venues and the Greater Columbus Convention Center for its 400-team weekend event each February. Parents interviewed last weekend at the Dayton Convention Center said they loved it because of the upholstered furniture throughout the building that gave them and their children somewhere to lounge or sleep while awaiting matches. They also praised the food available on site, clean and convenient bathrooms, proximity the the parking garage and roomy space with chairs between courts in the exhibit hall.

“We’re all over the country,” said Lisa Petrina of Mason, whose daughter plays for Cincinnati Volleyball Academy. “I think it’s nicer here than Columbus.”

Convention attendance down

The convention center’s largest crowds are drawn by ticketed public shows that occur every year. The Dayton Home and Garden Show drew 27,000 people in 2013, the Dayton International Festival-A World A’Fair attracts about 24,000 people and the Dayton Auto Show brings in 20,000 people.

Estimates are provided by the organizers of events.

The number of events at the convention center increased by 41 percent between 2011 and 2014. The estimated attendance at the 186 events held in 2014 was 167,367, up by about 11 percent compared to 2011, according to city event data that city officials were still verifying at press time.

But attendance at conventions — the key events that bring in outsiders who will spend the night in town — are down by about 44 percent to 7,160 last year, when the center hosted just seven conventions. In 2011, the center hosted 14 conventions that brought in an estimated 12,715 people. Since 2011, the Dayton Convention Center has hosted one trade show: A Holistic Event in 2014, which had an estimated attendance of 6,000, according to the city data.

Powell said convention center bookings from bureau-issued proposal requests declined to 10 in 2014 from 17 in 2012.

She declined to name specific groups that chose other venues over Dayton but said Sharonville won a state association event with anticipated attendance of 600 people and Toledo beat Dayton for a sporting event with 400 attendees.

Powell said some event organizers considering Dayton have said they’d like to see improvements in the restrooms, walkways and elevators. It’s “curb appeal,” she said.

No events occurred in the building on 30 percent of the days in 2011 through 2014, according to this newspaper’s review of scheduling calendars for those years.

The building is used by local residents for church services, board meetings, test taking, graduation ceremonies and the annual Thanksgiving community feast, although those do not result in many overnight stays.

Customer service lauded

Even as the number of conventions has declined, the center is attracting increasing numbers of non-convention events such as sporting events — up nearly 92 percent since 2011 — as well as banquets and meetings.

“We have to book a lot of local events to make up for the lack of conventions,” said Mike Cashman, the division manager in charge of the building.

Cashman said most of the problems with the building are cosmetic and the original designers created a very functional space, with good load-in facilities and some unique amenities like a full-stage theater. Standing on the second floor landing by the popular fish pond that is home to a giant koi he calls Moby Dick, Cashman gazes out at the well-lit, brightly colored first floor entryway area. He said he still believes the convention center is in the right location.

“With an aging facility our victories will be had in customer service,” Parlette said. “When we book an event, from the very beginning of the event to the conclusion of the event, if we deliver better service than anyone in the region than that’s how we can compete.”