Business Improvement District comissions Conference Center feasibility study update

DURANGO, Colo. – To confirm the current state of the conference/meetings market and the economic viability of a Durango Conference & Events Center, the Durango Business Improvement District Board of Directors recently commissioned an update of the original feasibility study prepared back in 2000. The results are now in.

The 116-page 2007 update prepared by HVS International – which builds upon the 130-plus page original study prepared by Minnesota-based Convention Sports & Leisure International (CSL) – reinforces the potential economic benefits should a facility with approximately 28,000 sq. ft. of rentable space (which is considered “mid-sized”) be built; but the effort would come with a substantial price tag and is not without risk.

According to HVS, a mid-sized conference and events center, with a construction cost of approximately $10 million, would indeed address a current lack of large banquet, meeting and conference space in the area, and have several potential demand sources, including local businesses, a growing residential population base in need of event facilities, local and regional government organizations and state associations.

It is apparently common for facilities of this type to take up to three years for demand and financial operations to stabilize. For purposes of the report, that is 2012. Once stabilized, HVS projects annual gross revenue of approximately $2.9 million. This would be a result of an estimated 435 varied events and 87,000 attendees annually.

By the stabilized year, HVS envisioned the new facility would host 250 banquets, 5 civic events, 16 conferences, 4 convention/tradeshows, 150 meetings, and 10 “additional” events.

It is indeed the goal of the BID and the Durango Area Tourism Office for those conferences or tradeshows from “out-of-the-area” associations to be primarily scheduled in Durango’s shoulder season. During the summer, and to some extent the ski season, Downtown hotels are full. Spring and fall are perennially soft, and such a facility would give “visiting” groups the space they need to book their meetings in Durango during those months.

As CSL had estimated, beyond the direct revenue generated at the facility, conference and event visitor-related spending could generate approximately $2 million to $11.7 million in total direct, indirect and induced spending (presumably in the Historic Downtown), and overall, event activity could aid in supporting 50 to 270 full and part-time jobs in the Durango area, depending on the size of the facility built.

But facilities of this type almost always need to be subsidized. CSL reported this originally, and HVS echoed the sentiment. Specifically, HVS speculated that a 28,000 sq. ft. facility could expect operating expenses of approximately $3.1 million in a stable operating year. The result is an annual operating loss of approximately $160,000, which, because the center would be a city-owned facility, the city would need to absorb.

Depending on how one chooses to calculate the numbers, the increase in sales tax (collected by the city) to Downtown merchants/restaurants with the increased traffic during those shoulder seasons, could substantially help balance out the subsidy figure. Various other vehicles to help mitigate the operating loss are also available, with the bottom line appearing to be a net-net win for the community overall, should a center be built. A possible Lodger’s Tax increase would ostensibly handle debt payment for the construction of the center, plus help fund the marketing effort to secure bookings from out-of-area groups.

Regarding location of a potential center, HVS noted that a conference center’s ability to attract out-of-town groups depends greatly on the availability of adjacent or nearby hotel rooms, and the firm recommended that any such facility be built within close proximity to the DoubleTree Hotel or any new full-service hotel properties that may come on line.

The diverse supply of attractions and existing cluster of Downtown hotels provide, according to HVS, an advantageous package of lodging, dining and recreational offerings for conference delegates. Additionally, the lack of local competitive conference facilities of the size proposed would give a Durango Conference and Events Center a competitive and economic edge.

To review the full HVS conference center study update, visit, www.downtowndurango.org.

The Durango Business Improvement District was formed in 1997 with a goal and mission to support all types of businesses within the District by assisting with special event marketing, providing research on topics of concern to the District (facilities, special events, best practices), planning and development of new facilities, and providing capital budget for equipment that helps enhance business in the District. Board members include John Wells, presiding officer; Bob Allen, Karen Barger, Rod Barker and Tim Wheeler.