Convention Center Sales and Marketing Issues

Background: In 2004, City Council consolidated the sales and marketing of the San Diego Convention Center under one entity, the San Diego Convention Center Corporation. The move was made to increase accountability, remove duplication, increase efficiencies and save taxpayer money. ConVis, which had a shared role in marketing the facility prior to 2004, was removed and the City of San Diego reduced funding to ConVis, requiring the Corporation to absorb approximately $2.5 million in sales and marketing costs. Since that time, the Corporation has exceeded annual sales goals (see chart on page 2) for future hotel room nights, something ConVis failed to do consistently before 2004. Despite a narrowing of their mission to focus on single hotel meetings and leisure travel, ConVis is still unable to meet sales goals (see second chart on page 2). As discussions about funding the expansion of the Convention Center have begun, some members of the hotel community and ConVis have begun a push to transfer sales and marketing back under ConVis. Shifting sales and marketing of a public asset to a private entity funded and controlled by the hotel industry will allow the hotels to use the facility to maximize their private revenues while undermining the operations of the Center. The Convention Center Corporation is a public-benefit corporation accountable to the City Council, Mayor and taxpayers. ConVis is a private membership organization controlled and funded by the hotel industry, accountable only to their member organizations and funding arm, the Tourism Marketing District. Taxpayers will be at greater risk for absorbing operating shortfalls in the future as current revenues used to sustain the operations are shifted to private hotels or are significantly diminished. Because the Corporation handles sales, marketing and operations, it can provide flexibility in meeting clients constraints while ensuring the positive revenue to the operations of the Center, minimizing taxpayer subsidies. The legality and future funding stream created to fund ConVis, the TMD, is in question and unless it is renewed by City Council, will expire in December 2012. Placing the sales and marketing of the facility under the control of ConVis, based on the unanswered questions regarding the future of the TMD, is risky and could threaten future TOT revenues and raise questions/concerns with the Bond Underwriters of the Convention Center Expansion bonds.

ConViscontinuestobe unabletoperform,despite receivingahugefunding increase,ofwhich$17.18 isfromtheTMD.

$24.4M

$14.7M

FY08

FY10

Why would policy-makers shift sales and marketing away from the Convention Center Corporation that has a consistent track record of success to one that continues to miss goals despite a budget that has almost doubled? The Convention Center Corporation has exceeded their annual sales goals every year since assuming control of sales and marketing despite 1

ConVisFundingComparison

absorbing more than $1 million in annual funding reductions. (ConVis only met its future hotel room sales goals three times in the five-year period prior to the Corporation assuming sales and marketing). ConVis continues to fall short in meeting their own sales goals for hotel meetings, only making their sales goal once since 2006 despite a huge boost in their budget.