Whither the Con?

Posted by on August 3rd, 2010 at 9:00 AM

THE TOWN OF SAN DIEGO TOOK A WHILE TO GET GOING. The harbor was first sighted in 1542 by a Spanish explorer, but nothing much happened until 1769 when famed Father Juniper Serra established the first mission in California at what is now Old Town, a few miles north of the bay. Then in 1867, Alonzo E. Horton, aged 54, came to San Diego and, miffed at the inconvenient distance to the nearest habitation, started a town next to the harbor. What is known these days as the Gaslamp Quarter—a vibrant hive of restaurants and nightclubs (but mostly restaurants) in the neighborhood nearest the waterfront Convention Center—was thronged with saloons, gambling halls and bordellos in the 19th century. Called the Stingaree, it was where Wyatt Earp and his wife Josie came somewhere between 1885 and 1887 to invest in real estate and saloons. (The shootout in Tombstone had taken place in the fall of 1881, in case you’re wondering). San Diego in the Earp days—a booming neighborhood.

By the 1950s, decay had set in, infesting the vicinity with porn shops, burlesque theaters, and massage parlors—a well-known and widely disparaged haven for sailors on shore leave from the nearby naval base. But in 1976, the city began reviving the area, preserving the old buildings and creating what is now a national historic district, alive and well.

Among his numerous civic achievements, Alonzo Horton built a hotel, the Horton House, which stood where the U.S. Grant stands today. And it was in the U.S. Grant that the first Comic- Con was held in March 21, 1970: a mere one-day affair, it was staged in the hope of generating enough capital to fund a longer convention later. Those hopes were realized, and the second Comic-Con, officially dubbed the San Diego Golden State Comic-Con, was held August 1-3, 1970, 41 years ago.

The U.S. Grant in those early years was not “the snazziest of venues,” as one of the early con committee members, Scott Shaw, says. And it didn’t become very snazzy until quite recently.

In one of my earlier lives—the one as a convention manager—I visited the Grant in the late 1980s on a site inspection, and I remember the elevator ride up to the sales office on the top floor of the hotel. There were only about five of us in the elevator, but even with that modest weight, the thing wouldn’t ascend the last couple floors; the hotel sales person got off and walked up the stairs so the elevator could take the rest of us, the visitors and potential buyers of convention facilities, up to the offices.

Today, the U.S. Grant is the city’s Grande Olde Lady, expansively refurbished and expensively priced ($299/night for this year’s Con). And looming over the city like a whited sepulcher is the remnant of another storied Con site, crowned by its name in red cutout letters, El Cortez, once a hotel now permanent housing for the elderly.

With its forty-first convening this year, the Con itself is on the cusp of becoming elderly, but it shows no signs of advancing decrepitude although its growth, by leaps and bounds in recent years thanks to the Hollywood presence, has been stalled for three or four years by the capacity of the meeting site, the San Diego Convention Center (SDCC). For safety sake, the city’s fire marshal has dictated a cap of 125,000 attendees for the facility. And with only 500,000 square feet of exhibit space, the SDCC has also stymied the Con’s expansion in exhibit booth sales.

I heard very little discussion about the future site of the Con, but it lurked, albeit silently, over the week. Two other cities, Anaheim and Los Angeles, are bidding for the Con, forcing San Diego into a more competitive posture.

The Comic-Con, which is the city’s largest convention, represents a vast economic resource in these shaky times. In California, the San Diego Business Journal reported (July 26), 478 hotels were in default or foreclosure at the end of June; in San Diego county, 40 hotels are in default, and seven have been foreclosed (including one of the Con hosts, W Hotel, which is nonetheless still operating and charged $305 a night as part of the Con’s housing package). The Comic-Con represents a substantial life-line to the community.

A study commissioned by the SDCC and recently completed estimates that the Con has an immediate economic impact on the city of $163,000. That includes hotel room rent and the accompanying tax revenues for the city, plus spending on souvenirs, transportation within the city, and meals at restaurants. But the direct of effect of an infusion of $163,000 in “new money” (money not in the local economy before) into the city is only part of the Con’s economic payoff.

In the convention industry, the value of any such revenue multiplies four times: every one of those dollars is spent again and again. Workers hired for the duration of the convention, for instance, have money to spend in local grocery stores and gas stations, money they wouldn’t otherwise have. This kind of spending goes on for weeks after a convention has left town. The ultimate result of the direct spending by Comic-Con attendees has an over-all economic clout of $625,000.

Jim Durbin, president of the San Diego Hotel-Motel Association, says the Comic-Con has an impact upon the city’s hospitality industry that rivals a Super Bowl.

Understandably, San Diego is eager to keep the cash-cow Con in the city, and it is doing what it can in three problem areas: transportation, availability and cost of hotel rooms, and exhibit space.

The city’s bid for the Con for the years 2013 through 2015 includes an outright budget supplement of $100,000 to help defray the cost of shuttling attendees between hotels and the SDCC.

The city will also double the number of hotel rooms from 7,000 to 14,000, and hotels have offered to “cap” room rates at $300/night.

(The cap is meaningless unless its hitched to inflation. Only 6 of the 38 hotels on this year’s list charge as much as $300/night, so only 6 would be “frozen” at the cap’s rate. The rest of the hotels could, unless inhibited by an inflation factor, jump their rates immediately to $300/night and still be within the letter of the new agreement. But if the cap includes an inflation factor—no hotel can raise its 2010 rate by more than, say, 5 percent a year—then the rates are effectively capped.)

The SDCC is also actively looking for financing to expand exhibit and meeting space. And not just for the Comic-Con: other large conventions (the Biotechnology Industry Organization, for instance, the Golf Course Superintendents Association of America, the Healthcare Information and Management Systems Society and several medical meetings) have complained in recent years about the limit that the SDCC imposes upon their growth.

According to the San Diego Business Journal (July 26), “the Convention Center can no longer accommodate key growth industries and shows in its 500,000 square feet of exhibit space.”

Said Carol Wallace, the SDCC corporate president and CEO: “We needed to expand 10 years ago. Every year, we turn away an average of a year’s worth of business. Those are room nights [nights occupied at hotels] that could come to San Diego—and room revenues and room taxes that could go to the city.”

Clearly, the city has every good reason to expand the SDCC, and the mayor has been stumping for the expansion since 2007.

The SDCC opened in 1989 with 250,000 square feet of exhibit space; the expansion, dubbed “Phase Two,” doubled the space when it was completed in 2001. “Phase Three,” now in the planning stages, will increase the space by a third, to 750,000 square feet—plus more meeting rooms and a big ballroom.

Financing Phase Three may not be as much of a problem as it seems: Phase Two cost $216 million, which was bankrolled by the Port of San Diego ($90 million; the Port had paid for all of the original 1989 building) and by increasing hotel room tax by a penny.

With a 30-month construction window, Phase Three’s completion date is anticipated for 2015, which would be the last year of the city’s proposed new contract with the Comic-Con (2013-15). That may be too late to prevent the Con from moving: it effectively prolongs the attendance limit for another 4 years, another 4 years of lost revenue.

As of this writing (August 2), the Comic-Con management has made no decision about the Con’s future location. Although they expected to make an announcement before this year’s Con, discussion dragged on, resulting in numerous modifications to the bids by the competing cities, and in the last analysis, the Con management elected to put aside further deliberation in order to concentrate on staging the 2010 Con.

David Glanzer, Comic-Con’s director of marketing and public relations, thought they’d resume discussion after the 2010 Con and perhaps announce a decision in a week or so. By the time you read this, the announcement may have been made.

My guess is that the Comic-Con will stay in San Diego. Quite apart from sentimental historical reasons, neither of the other two cities under consideration can offer the kind of amenities one can find in the area immediately surrounding the SDCC, chiefly the Gaslamp Quarter with its numerous restaurants and nightclubs. “You’re not going to get that neighborhood feel in those other cities,” Durbin said. And I agree.

There is no “neighborhood” in the vicinity of Los Angeles’ giant convention center; and the “neighborhood” in Anaheim is spread all around Disneyland. And I doubt that Anaheim will do much to match San Diego’s hotel room rates. The summer months in Anaheim are the year’s biggest attendance months for Disneyland with families arriving in vast quantity: why should hotels lower rates to attract the Comic-Con at a time when they are already running as full as they can and at the highest rates of the year?

In my view, the only advantages Los Angeles and Anaheim offer over San Diego are the size of the convention facility and their proximity to the film industry, which, presumably, would result in more movies and more movie stars attending the Con. But as one wag put it: “Why shouldn’t those people shlep their stuff down to San Diego? We all do.”

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