Economic Development and Travel & Tourism

GRBJ 30th Year: Convention business checks in as major economic player

September 13, 2013
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GRBJ 30 Year Convention
DeVos Place opened in 2004 replacing the Grand Center, significantly increasing hotel room occupancy and boosting business throughout the downtown. Photo by Chris Pastotnik

The local convention business has dramatically changed for the better since the Convention and Arena Authority came into existence in April 2000 and DeVos Place was opened in January 2004.

At that time, as it is now, the seven-member board was chartered by the state and chaired by Steven Heacock. In 2000, the convention facility was still the Grand Center, an outdated structure owned by the city and one the Downtown Development Authority and Grand Action Committee desperately wanted to replace.

The Grand Center was useful in its time. It enticed state groups and local businesses to hold their conventions and meetings there, but large exhibitors were nowhere to be found. The many pillars inside the structure didn’t allow the Convention and Visitors Bureau to book groups that needed a wide open space to showcase their products.

Regional and national groups weren’t booking the Grand Center, either, and those in the local hospitality industry — especially the downtown hotels and restaurants — had to make do without that revenue.

GRBJ 30th Year

Still, the Grand Center posted some profitable fiscal years near the end of its life. However, 1995 wasn’t one of them. The building lost $800,000 that year — just one in a string of years the center was in the red — and the city decided it was time to stop managing it and find someone else to do it.

It hired Spectacor Management Group of Philadelphia, known today as SMG, to run the Grand Center. In 1999, the building had a surplus of $125,336. The following year, its profit reached $270,266, and 2000 became the building’s most profitable year ever.

“I think that speaks very well for the team that is in place,” said Mayor John Logie, who also served on the CAA and was chairman between Heacock’s two terms, of the management change.

However, just a week prior to Logie’s comment, a ground-breaking ceremony for the new convention center, DeVos Place, took place, and when construction of the $212 million facility began, traffic to the Grand Center suffered, as the modern, column-free structure with plenty of exhibit and meeting space was going in where the center stood. In 2002, the Grand Center returned to its losing ways and dropped $506,161.

The following year, the Welsh Auditorium, also known as the Civic Auditorium during its 71-year run, was razed for the new convention center, but its stylish art-deco façade and lobby were restored and became a part of the new building.

According to Experience Grand Rapids, which replaced the CVB in 2010, 2002 was the final full year of business for the Grand Center.

“In 2003, several months of business had used a portion of the new DeVos Place, so 2002 is the year we show as a ‘full’ year,” wrote Doug Small, president of Experience GR, in an e-mail to the Business Journal.

In 2002, the Grand Center hosted 28 groups that brought in 45,850 convention-goers who filled 32,509 hotel room nights. Compare those numbers with the figures Small provided from last year: In 2012, DeVos Place hosted 60 groups that brought in 215,720 convention-goers who filled 149,266 hotel room nights.

The biggest beneficiaries of that traffic were the hotels. Total room revenue reached $127 million last year, and the average night’s stay cost $96.60. Both figures were modern-day highs. Occupancy finished at 60.6 percent in 2012; just three years earlier, the rate was 48.6 percent.

The DDA, Grand Action, Kent County, the state and the federal government all chipped in to pay for the construction of DeVos Place, and the city handed over a key piece of property at the corner of Monroe Avenue and Michigan Street for the project. The county issued two bonds that totaled $94.6 million in 2003 and agreed to pay bond buyers with receipts from the Lodging Excise Tax, a 5 percent tax that hotel and motel operators add to each guest’s bill.

In 2004, the Business Journal gave Grand Action, the DDA, Kent County and the city its Newsmaker of the Year Award for their combined and cooperative efforts to make DeVos Place a reality. The massive new building was seen by many as one that would draw regional and national groups to downtown.

Although construction on DeVos Place didn’t officially end until early 2004, the building hosted three conventions in 2003 that drew 12,500 delegates. In 2004, its hosted 36 groups and 59,500 delegates; 46 and 81,350 in 2005; 52 and 72,925 in 2006; and 62 and 100,300 in 2007.

From 2003 through 2007, 199 groups met at the new convention center. Their delegates booked 234,537 hotel rooms and spent nearly $109.5 million here over those years.

But despite the booking momentum, the building was running deficits for the CAA. For its first nine years, the convention center recorded operational losses of more than $5.2 million. This past fiscal year, however, DeVos Place made fiscal history with an unaudited operating surplus of $95,725.

“It’s rare that facilities like this operate in the black,” said Rich MacKeigan, SMG regional general manager and CAA executive director.

Perhaps the building’s turning point began in February 2006 when the CVB announced it had booked a major national convention: The Religious Conference Management Association agreed to hold its 2009 World Conference and Exposition at DeVos Place. The RCMA is an international interfaith group with more than 3,000 meeting planners who plan 16,000 religious conventions and meetings annually.

“This is quite a coup for our community. The ability to bring RCMA to Grand Rapids signifies we have arrived as a player in the convention market,” said CVB President Steve Wilson at the time. “The individuals who attend this convention plan conferences all over the world. This single convention has the potential to generate hundreds of new bookings. The potential economic value could easily exceed $20 million.”

Another major national convention booking came in 2009, when the National Organization of Black Law Enforcement Officers agreed to hold its annual training conference and exhibition here in July 2014. More than 2,000 delegates will spend three days here next summer, with an economic impact of about $4 million.

“I’m ecstatic. This is probably the proudest moment of my career,” said Small of the booking at the time.

“This is a group that we, as an organization, made a commitment, along with SMG, to really start to position this destination to attract more multicultural convention groups,” added Small, who arrived here in 2008.

Shortly after that announcement, the Fraternal Order of Eagles decided to hold its North American Convention at DeVos Place. The group brought 2,500 members here last July and had an economic impact of $4.2 million during its four-day stay.

But possibly the biggest catch came in February 2011 when Experience GR snagged the American Quilters Society for three consecutive years. Each meeting will bring 10,000 quilters to the city and add $15 million to the local economy. Two have already been held, and the third is set for August 2014.

“I’d say that our message is certainly being heard. We’re getting more ‘looks,’ if that’s proper to say, and that’s all we ever ask. We think our brand message and our marketing is working,” said Small then.

The recent past has been bright for the convention business here, especially with the lavish JW Marriott solidly entrenched along the east bank of the Grand River.

And the future may even be brighter.

Small recently told county commissioners that the Experience GR sales staff, headed by Executive Vice President George Helmstead, booked 353 groups last year that will meet here over the next several years. Those groups are estimated to bring 217,722 delegates. Also last year, Small pointed out that 157 potential clients toured the facility and the city, and 611 sales leads were checked out.

Small also hinted that the 2012 record of $127 million in hotel revenue may be topped this year if the current trend continues over the remaining three months.

“This year we’re 8.2 percent ahead in room revenue from our record year,” he said. At that pace, 2013 will set a new all-time high of $138 million.

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