What Price Conventions? Rate Hike Both Good, Bad

November 14, 1985|DAVID HALDANE | Times Staff Writer

LONG BEACH — The situation had been simmering for at least a year. On one side was the Long Beach Convention and Entertainment Center, a city-owned facility steeped in the local entertainment and sporting events that had long been its fare.

On the other was the Long Beach Area Convention and Visitors Council, an organization contracted by the same city to attract conventions in lieu of local events.

Earlier this month the simmering rose to a boil when the center announced a dramatic increase in its convention rates. And if a solution is not found soon, some say, the results could be chaotic. "What it's done is handcuffed (us)," said Bill Miller, president of the visitors council, whose primary function is to attract conventions to Long Beach.

Increase 'Necessary'

Said George Matson, vice president and general manager of Facility Management Inc., a private firm contracted by the city to manage the convention center: "(The increase) was necessary."

As of July 1, 1986, the rates charged conventions and trade shows wishing to use the center's arena and exhibition halls will go up by as much as 50%. Thus the 78,000-square-foot arena that now rents for $4,000 a day will go for $6,000. The fee for the 88,000-square-foot exhibition hall, which now is $4,500, will increase to $5,500. Put in other terms, according to Matson, the average cost per square foot of exhibition space will go up from the present 12 cents to 15 cents.

Conventions Increasing

Matson, whose company manages the center free of city interference in return for paying Long Beach 30% of all annual revenues above $3.1 million, said the rate increases are necessary because conventions are gradually replacing the more lucrative concerts and sporting events. Traditionally, he said, the center receives 12% of the ticket sales for such events, in addition to income from concessions and novelty sales.

Thus a one-night performance last year by Rat, a heavy-metal band, brought in $58,584 from the sale of tickets, T-shirts, refreshments and parking spaces, while a four-day gathering of the California Math Council during the same period brought in only $12,349.

Because ticketed events generally book only three to six months in advance, Matson said, they cannot compete for available dates with the increasing avalanche of conventions that book as far as three years in advance.

15% Annual Increase

Until two years ago, conventions took up only about 33% of the days booked at the center; they now comprise about 60%. So even though the center has maintained a steady 15% annual revenue increase over the last four years (due largely to an increase in the number of days the facility is in use), he said, the rate hike is necessary to ensure its future financial health. "In order to generate the same amount of revenue, we've had to adjust our rates to compensate for who is using the facilities," he said.

But Miller, whose coalition of local businesses is primarily responsible for the dramatic increase in the number of conventions coming to Long Beach, sees grave long-term danger--and immediate loss of income--in the higher rates. Specifically, he says, the higher rates will make it impossible for Long Beach to compete with neighboring cities as a convention site.

'Not Yet a Prime Center'

"Long Beach ought to be priced lower because we are not yet a prime convention center," Miller said. "We're trying to establish an edge for Long Beach as a . . . site, but when you have (price) restrictions it really blows us out of the water."

With the new rates, he said, the Long Beach Convention and Entertainment Center will be renting exhibition space at about the same price as the Los Angeles Convention Center and at five cents more per square foot than the Anaheim Convention Center. Both facilities, he said, are larger and better known than the Long Beach center.

"Right now if we were low, it would be an incentive to get additional meetings," Miller said. "If we're going to be higher or comparable, it will be a handicap."

Cancellations Expected

Miller estimated that as many as 20% of the confirmed convention bookings for fiscal 1985-86--worth $10 million to $20 million to local hotels and restaurants--would cancel their reservations in light of the new rates. So far, he said, he had heard directly from only one--the California Glass Assn. based in Bellflower--whose 3,000 conventioneers are scheduled to descend on Long Beach next October.

"It was abrupt," said Donn Harter, executive vice president of the association, which, in a letter to the council, bitterly protested a hike from $10,000 to $16,000 for their planned two-day convention. "We had budgeted on the earlier (rates) and . . . the change was somewhat disruptive to our budget."

Because the group's only alternative at this late date was to cancel its convention entirely, Harter said, the gathering will go on as scheduled.

Hotel Loses Booking

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