Direct exposure is a significant branding and marketing tool. We saw this on a global level with the Olympics, we see on a national basis in terms of the number of outdoor companies that now call Utah home having been exposed to our area from the Outdoor Retailer Trade Shows. —Scott Beck, president and CEO of Visit Salt Lake
Salt Lake City has played host to some of the biggest events in the sporting world — the NBA All-star game, the MLS All-star game, the Outdoor Retailer Expo, the recently-concluded second round of the NCAA men’s basketball tournament and the 2002 Winter Olympics come to mind.
NBA fans would love to see the All-Star game return to EnergySolutions Arena. Local merchants want the Outdoor Retailers Expo to stick around for decades to come. The city would love to see the NCAA Sweet 16 and Elite Eight return, and there is talk already of being in the running for the 2026 Winter Olympic Games.
These events bring exposure and money to the local economy, but hosting events of this scale and magnitude may not be logistically possible anymore.
The sad part is that it’s not because tickets wouldn’t get sold. It’s all about beds, baths and parking stalls.
The benefits of building a convention center hotel
Most cities fit for hosting major events have a central hub for lodging — a convention center hotel, also known as a “headquarters hotel” — but Salt Lake City is not one of them. Such structures provide hotel rooms, parking, ancillary meeting space and all other necessary infrastructure.
Scott Beck, president and CEO of Visit Salt Lake, the city’s convention and visitors’ bureau, said Utah and Salt Lake City are missing out on a terrific opportunity to promote themselves.
“Direct exposure is a significant branding and marketing tool,” he said. “When you bring thousands of people to your destination, they become fans. We saw this on a global level with the Olympics, we see on a national basis in terms of the number of outdoor companies that now call Utah home having been exposed to our area from the Outdoor Retailer Trade Shows.”
As the state’s fan base has grown, the state’s infrastructure has not kept pace. The Outdoor Retailer Expo has expressed numerous concerns and threatened to leave Salt Lake multiple times. Although the show recently announced it intends to stay in Salt Lake City through 2016, proponents for a convention center hotel say Utah and Salt Lake City should be concerned about the ability to keep the conference — as well as its ever growing list of 22,000+ attendees — after the current contract ends.
Outdoor retailer isn’t the only concern. Without a hotel, it’s difficult to get event organizers to consider a city, and it’s already excluding Salt Lake from seeing major expos and athletic tournaments. That means Utah may have seen its last NBA All-star game, MLS All-star game, Winter Olympic Games and NCAA Tournament Sweet 16.
Non-sporting events are not any more likely to come either. For instance, Utah Republicans have said Salt Lake City would be a fantastic place for the Republican National Convention. Proponents have said it’s disappointing that a major Microsoft, Oracle or Cisco convention cannot be held in Salt Lake given how tech-business-centric the Wasatch Front is.
These lost conventions do not simply result in lost promotional opportunity. They also result in lost money and jobs.
“It is significant and very quantifiable,” Beck said. “The latest report from Smith Travel Research and the University of Denver commissioned by the Salt Lake County Council estimated the lost revenue from the lack of a convention center hotel to be $90 million annually.
“And remember, this is not just a loss to Salt Lake City. The largest beneficiary of any tax revenue is the state of Utah as they receive the largest portion of all sales and use taxes.”
A study commissioned by Visit Salt Lake and shared with the Deseret News found Salt Lake City lost 27 citywide conventions in the last year. Beck indicated that convention planners for 23 of those lost conventions specifically pointed to the lack of a convention hotel. That translates to tens of millions of lost dollars to the Utah economy.
Salt Lake County has also commissioned studies to understand the economic impact of a convention hotel. Most recently, a report from Strategic Advisory Group, also shared with the Deseret News, found that such infrastructure would deliver $170 million in annual economic impact, 2,060 jobs and an estimated $600 million in new state and local tax revenue over a 30-year period.
According to that report, 40 other U.S. cities have invested in convention center hotels.
Why Salt Lake City does not have a convention center hotel
The problem with building a convention center hotel and the accompanying infrastructure is the price tag. While local developers desire to build the hotel itself, they have looked to the state to acquire the land and construct a parking structure, which alone would cost the state approximately $100 million up front. The cost of the entire project is apparently too much for private developers to handle by themselves.
Proponents for a hotel have advocated public-private partnerships to fund development. Such arrangements are not uncommon. Local and state governments generally are willing to subsidize development because the costs are paid off from new tax revenues these properties create and development creates jobs and stimulates the local economy.
“There are times when the greater good is served through a public/private venture,” Ryan Barker, development consultant to Royal Wood Properties, said. “In the case of this project, we have the opportunity to bring an additional 150,000 people to our state each year through new demand, which means $170 million to our economy.”
Visit Salt Lake and other proponents for a convention center hotel have worked for years with businessmen and lawmakers to arrange such tax benefits for entrepreneurs willing to build a hotel. Those efforts brought a bill to vote in the Utah State Legislature this year by which the state of Utah would acquire the land and build a parking garage. Private developers would cover the rest. The bill passed the State Senate but failed in the House.
One of the more notable skeptics is Utah Gov. Gary Herbert.
“I'm a free market guy," Herbert told reporters in March. "I'm a little concerned about subsidizing one entity against the private sector and others who are not getting help from government. It doesn't seem fair."
The Utah Constitution requires the state to maintain a balanced budget, which means that money for a hotel would come at the expense of other projects such as public education ($130 million), state employee health insurance ($35 million), state-funded retirement pensions ($45 million), state and local jails ($18 million) and improvement and maintenance for the Capitol building, ($55 million) among other needs.
“Me, personally, I'm not in favor of it. I'm not convinced it's a good use of taxpayer money to subsidize a hotel," House Speaker Becky Lockhart said in March.
Rock and a hard place
In the end, decision-makers face a tough road. Utah residents want to see tourism growth and economic development, but they also want to see fiscally responsible government.
For a majority in the Utah House, those two considerations are diametrically opposed for now. Regardless, the reality is Utah isn’t likely to see growth in big events — sports or otherwise — until lawmakers and developers get something figured out.