One major East Coast convention center board decided yesterday to seek bids on privatizing, while the board of a smaller venue switched private-sector operators.
On Thursday, the Pennsylvania Convention Center Authority (PCCA) Board voted to seek proposals to privatize “certain functions at the convention center” in Philadelphia.
The same day, the Capital Region Development Authority, the decision-making body for the XL Center in Hartford, Conn., gave its management contract to Global Spectrum. AEG Management CT previously ran the venue.
The decision to seek bids to run the Philadelphia venue with more than 680,000 square feet of exhibit space may signal a concern that not enough future business is being booked following a massive expansion completed in 2011.
PCCA Chairman Gregory J. Fox says, he is “particularly concerned” about lagging future bookings. “We need to look to the future and fulfill the economic promise of the newly expanded center for our industry partners and taxpayers,” Fox says.
Two years ago, the convention center completed a $787 million renovation and expansion project that increased the space available for events by about two-thirds.
Last year, however, Philadelphia Convention & Visitors Bureau Chairman Nick DeBenedictis said he was “thrilled” that the bureau’s staff was able to exceed its goal for 2012 by more than 23,000 room nights for a total of more than 833,000 room nights in the coming years.
At the time, DeBenedictis pointed out that the bureau had booked the National Urban League 2013 for an $8 million economic impact and rebooked Rheumatology 2022 and 2028 ($112 million economic impact), RIMS ($49 million) and Educause ($24 million).
Notably, collective bargaining agreements with unions that provide labor to the center are set to expire later this year. Last April, the convention center eliminated an 8-percent management fee for labor that officials hoped would appease exhibitor concerns about high drayage and labor costs at the center.
Thursday’s vote of the Philadelphia center authority board came on the heels of a report from a consultant it hired to review requests for qualifications. A request for proposals will now go out with a decision expected later this summer.
Meanwhile, the XL Center board in Hartford made the decision to shift from AEG to Global Spectrum in part because of contributions Global Spectrum committed to make for capital improvements to the building.
According to a report from the Capital Region Development Authority, Global Spectrum will commit $2.75 million to improvements when it takes over the building in September, followed by an additional $1 million each year after that. That will trigger close to an additional $20 million in bonding authority as well for improvements.
AEG’s proposed capital improvement contributions fell short of what Global Spectrum said it would spend.
Although the XL Center, with about 69,000 sq. ft. of available exhibit space, is primarily used as an arena for the Connecticut Whale minor-league hockey team and University of Connecticut basketball teams, it does host a number of consumer events, including a dog show later this month and a home show in March.