BOSTON—The lack of a major hotel that offers at least 1,000 rooms and an abundance of meeting space is costing the city millions of dollars in convention business each year.
A report commissioned by the Massachusetts Convention Center Authority by consulting firm CHMWarnick shows that while the city is undergoing a development boom, the lack of a major “headquarter” hotel that offers convention bookers one location with about 1,000 hotel rooms and considerable meeting space has hurt the Boston Convention & Exhibition Center, as well as its sister location the Hynes Convention Center in the Back Bay.
Ex hotelier David Gibbons, executive director of the Massachusetts Convention Center Authority, tells Globest.com that until such space is available in Downtown Boston and at the Seaport, it does not make sense to even consider a plan to expand the Boston Convention & Exhibition Center. In April 2015, Gov. Charlie Baker put the brakes on a planned $1-billion expansion of the Boston Convention & Exhibition Center. That November, the Massachusetts Port Authority scaled back its planned mixed-use project on Summer Street in the Seaport. The original proposal called for a 1,200-room hotel. The amended plan now calls for a minimum hotel of 250 rooms. Six bidders have responded to the RFP, but at present MassPort has not selected a preferred developer for the project. A Massport spokesperson says that the agency expects to select a developer sometime this summer.
Gibbons says that Boston is lacking a large full service headquarter hotel, which he describes as a facility that features at least 1,000 rooms with 100,000 square feet of meeting space. “All hotel rooms are not created equal. Investors in the past decade have really flocked to limited service hotels. They are easier to permit and put into the ground… They are not burdened with any full service expenses of the food and beverage, etc. While people say we have added so much (hotel) supply in the last few years, lots of 200-room hotels don't add up to anything for us.” He adds that meeting planners that are looking to book conventions five to seven to 10 years in advance require committable blocks in large full-service hotels and a significant amount of rooms in large full service headquarter hotels.
He says that to properly service convention and meeting business, a city must have a fleet of different hotel properties to choose from. “You need an air craft carrier, you need some battle ships etc. You can't survive with a fleet of PT-boats,” Gibbons says.
He adds that convention meeting planners also require a significant amount of hotel rooms being within a short distance from the convention center. Gibbons says that the authority has been forced to shuttle convention center guests from outside of the Seaport District and from across the city to its two properties. The report states that the lack of available hotels in the Seaport District that has resulted in high shuttle costs, accounted for 180,000 lost hotel room nights in 2015.
“It is supposed to be about the meeting, not about the obstacle course of having your meeting in Boston,” Gibbons adds.
The report, released last week, also notes that when the Boston Convention & Exhibition Center is committed to events requiring 3,000 rooms or more on peak nights, the Hynes Convention Center is not fully utilized. The report calculates the loss of displaced business from the Hynes will result in $163 million in unrealized economic impact from 2012 through the end of this year.
The Boston Convention & Exhibition Center features 516,000 square feet of exhibit space, 82 meeting rooms and a 40,000-square-foot ballroom. The smaller Hynes facility boasts 176,480 square feet of exhibit space, 28 meeting rooms, an auditorium with a 4,000-seat capacity and a 24,544-square-foot ballroom.
Other key findings from the report include:
• The BCEC ranks last among key competitive cities for the number of rooms within walking distance to the convention center. Less than 15% of Boston's total hotel rooms are committable within one mile of the BCEC, compared to almost 40% in Washington, DC.
• Only 60% of waterfront District hotel rooms contributed to BCEC room blocks. While room supply within immediate proximity to the BCEC has increased by 510 rooms in the past five years, committable room blocks have only increased by 50 rooms.
• Committable room blocks across the entire city declined from almost 8,000 rooms in 2011 to 5,655 rooms in 2015.
• With room rates in the city averaging $270 in 2016, hotels are yielding inventory to achieve the highest profit, and the BCEC is losing convention business to other cities with more competitive pricing.
Gibbons says that in Boston many investors are looking for a quick turnaround on profit and do not commit long-term to a headquarters hotel, which has considerable more expense on the development and operations sides He adds that these headquarters properties are successful, but must be shepherded through the first five years or so to achieve stabilization. Another major issue is there are few available development sites in South Boston where a major headquarter hotel could be built.
The report also points to declining business at the Boston Convention & Exhibition Center in coming years due to the lack of headquarter hotels. The report states that future booking pace is declining from 2019-20122—down 34% in 2019, 41% in 2020, 6% in 2021 and 28% in 2022. The report blames the difficulty in assembling requested room blocks, high hotel rates and future year pricing escalations as the chief causes for the projected booking declines at the two major convention centers in Boston.
“A lot of people came and tried it (Boston) and some tried it twice and now they are telling us, 'You have to build some hotels in South Boston or we are not coming back,'” Gibbons says.
BOSTON—The lack of a major hotel that offers at least 1,000 rooms and an abundance of meeting space is costing the city millions of dollars in convention business each year.
A report commissioned by the
Ex hotelier David
He says that to properly service convention and meeting business, a city must have a fleet of different hotel properties to choose from. “You need an air craft carrier, you need some battle ships etc. You can't survive with a fleet of PT-boats,”
He adds that convention meeting planners also require a significant amount of hotel rooms being within a short distance from the convention center.
“It is supposed to be about the meeting, not about the obstacle course of having your meeting in Boston,”
The report, released last week, also notes that when the Boston Convention & Exhibition Center is committed to events requiring 3,000 rooms or more on peak nights, the Hynes Convention Center is not fully utilized. The report calculates the loss of displaced business from the Hynes will result in $163 million in unrealized economic impact from 2012 through the end of this year.
The Boston Convention & Exhibition Center features 516,000 square feet of exhibit space, 82 meeting rooms and a 40,000-square-foot ballroom. The smaller Hynes facility boasts 176,480 square feet of exhibit space, 28 meeting rooms, an auditorium with a 4,000-seat capacity and a 24,544-square-foot ballroom.
Other key findings from the report include:
• The BCEC ranks last among key competitive cities for the number of rooms within walking distance to the convention center. Less than 15% of Boston's total hotel rooms are committable within one mile of the BCEC, compared to almost 40% in Washington, DC.
• Only 60% of waterfront District hotel rooms contributed to BCEC room blocks. While room supply within immediate proximity to the BCEC has increased by 510 rooms in the past five years, committable room blocks have only increased by 50 rooms.
• Committable room blocks across the entire city declined from almost 8,000 rooms in 2011 to 5,655 rooms in 2015.
• With room rates in the city averaging $270 in 2016, hotels are yielding inventory to achieve the highest profit, and the BCEC is losing convention business to other cities with more competitive pricing.
The report also points to declining business at the Boston Convention & Exhibition Center in coming years due to the lack of headquarter hotels. The report states that future booking pace is declining from 2019-20122—down 34% in 2019, 41% in 2020, 6% in 2021 and 28% in 2022. The report blames the difficulty in assembling requested room blocks, high hotel rates and future year pricing escalations as the chief causes for the projected booking declines at the two major convention centers in Boston.
“A lot of people came and tried it (Boston) and some tried it twice and now they are telling us, 'You have to build some hotels in South Boston or we are not coming back,'”
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