Convention centers bounce back as cities borrow for makeovers

When it comes to convention centers in the United States, bigger isn’t just better—it’s necessary.

The travel industry is roaring back from a pandemic slump, putting pressure on local governments to ensure their cities are equipped with the best facilities to accommodate swanky concerts, sporting events and conferences.

Nationally, convention attendance rose 20% last year to more than 28 million and the industry contributed $90 billion to gross domestic product, according to the Center for Exhibition Industry Research. However, attendance still trailed pre-pandemic, 2019 levels by 14%.

Gen Con, a tabletop gaming convention, broke a record with more than 70,000 attending last year in Indianapolis and garnered almost $75 million for the city. The city’s largest annual convention, Gen Con re-upped its contract with Indianapolis last year to run through 2030. The event is a four-day gaming extravaganza that takes up the entirety of the Indiana Convention Center, with numerous other activities at Lucas Oil Stadium.

Indianapolis has been able to form long-term relationships with Gen Con and other convention clients because it has been able to provide the room they need to expand. The city is in the middle of its sixth expansion to the Indiana Convention Center, which will add almost 150,000 square feet of convention space and an 800-room hotel as soon as 2026. The city could take out more than $600 million in bonds to finance the project.

Growing competition

Nationally, the convention industry has forecast a full recovery in 2026, with almost 33 million predicted event participants.

“We have to stay competitive,” said Michael Heckman, CEO of Houston First Corp., the Texas city’s convention arm. “It’s time to modernize, it’s time to change with what convention-goers and meeting planners want for the future,” including a walkable campus and more green space.

Cincinnati is the latest city to respond to the uptick in convention attendance as it plans to sell $292 million in municipal bonds this week to refurbish its Duke Energy Convention Center. It follows others including Florida’s Broward County and major cities in Texas in tapping the muni market for their overhauls.

Milwaukee, meanwhile, is hosting the grand opening of its revamped $456 million facility this week, not long before it serves as one of the venues for the Republican National Convention in July.

“It’s a real arms race in an environment where attendance is still not back to where it was pre-pandemic,” said Heywood Sanders, an author on the topic of convention centers and professor emeritus at the University of Texas at San Antonio. “We saw a large number of cities that were offering incentives, including free rent, in order to get conventions and trade shows to come.”

The Cincinnati renovation, which will add features like a roof terrace and more flexible spaces, is scheduled to begin construction in July. Unlike most of the other convention center refurbishments, it’s not expanding its footprint.

The overhaul represents something of a reset after the demolition of the blighted adjacent Millennium Hotel in 2022. There are now plans to break ground on a new privately-owned convention headquarters hotel just south of the convention center in January, said Katie Westbrook, development director at the Cincinnati Center City Development Corp., known as 3CDC. The site of the former Millennium will become a public plaza.

While big companies like Procter & Gamble Co. and Kroger Co. are headquartered in the city, it’s not a tourist destination akin to Las Vegas or Orlando. Many of the recent events at the center were organized by in-state organizations such as Dayton Juniors Volleyball and Cincinnati Financial Group, according to the bond prospectus.

“We’ve had a harder time attracting the larger, more national conventions because of the state of the convention center,” including the lack of a headquarters hotel, Westbrook said in an interview. With walkable attractions like stadiums and restaurants already in place, “this has been the missing piece.”

Whether convention attendance rebounds fully doesn’t really matter for bondholders, Sanders said. “The bonds have no relationship with the performance of the convention center,” because debt is backed by broader revenue streams like sales tax. Nor do the best tourism spots necessarily make the best convention spots, if the venues aren’t located in an appealing area, he added.

“Sometimes these projects are a hope and a prayer that a city can be put quote unquote on the map as a convention destination,” Houston’s Heckman said.

And not every project sails through. The Los Angeles City Council this year voted to pause an expansion of the city’s convention center to gather more financial information.

Projects often fail to meet the rosy expectations touted in consultant reports, Sanders said, “but for the bond market and debt service, they don’t have to.” And even if attendance disappoints, Sanders said, the efforts are often funded by visitors via hotel or airport taxes, for example.

Thinking years ahead

Event organizers plan years in advance, meaning cities “are making the investments to win that future business now,” said Mary Tucker, a CEIR spokesperson.

That includes Houston, which plans to break ground on an overhaul of its George R. Brown Convention Center next year that will include more meeting space, while staying open for business. Gastech, an international energy conference, will be hosted there in September.

“The transformation of our convention campus and introduction of a new entertainment district has the capacity to generate billions in new revenue and create thousands of jobs for Houston in the years ahead, ensuring the continued vitality of downtown Houston and our city’s sixth-largest industry—the visitor economy,” Mayor John Whitmire said in an emailed comment.

Last year, Houston’s hotel occupancy tax revenue exceeded the previous record by 15%, Heckman said. And while there’s no final price tag on the expansion, about $2 billion in tax revenue will be available to work with over the next three decades, with groundbreaking and a bond issue expected next year, he added.

Other major cities in Texas have also jumped into the fray, including Dallas, where voters approved a $3.7 billion plan in 2022 to construct a 2.5 billion-square-foot center featuring outdoor event terraces overlooking the Trinity River, and neighboring Fort Worth, which began the first part of a 20-year planned expansion in December.

Austin plans to start construction next year on a $1.6 billion plan to nearly double its space and reopen in 2029, saying the project will add $285 million in annual economic activity.