Pittsburgh, of course, has a letter of intent from Loews Hotels, the luxury hotelier, to build swanky lodging at the David L. Lawrence Convention Center.
But that’s more than a bit misleading, given that Loews’ skin in the game is a mere one-third ($135 million) of the total cost of the $418 million, 500-room facility. Jane and John Q. taxpayer will pick up the tab for the balance, in one form or another.
The fundamental imprudence of that equation speaks for itself. Taxpayers have no business being skinned for hundreds of millions of dollars to offset the risk to Loews, a quite profitable hotel giant. One dollar would be a dollar too much.
And the risk that this new hotel will fail is great, given the state of the demographics of the convention business.
As trade show guru Chris Kappes noted in a January column (reprinted this month in Exhibit City News), “The workforce that has filled convention centers for decades is changing in size and composition. And that has significant implications for the event industry and billions being invested in convention infrastructure.”
And that, by natural extension, would be applicable to large, tony hotels built to “bolster,” supposedly, traditional convention center business.
“The Baby Boomers who have filled convention halls for the past 40 years are retiring,” Kappes reminds. “Generation X, their successors, represents a smaller cohort. Millennials are now in their prime working years, but the numbers don’t quite add up to a one-for-one replacement. Gen Z is smaller still.”
Kappes concedes that walking through any tradeshow floor today, attendance looks strong.
“Industry analysts predict the market will reach $17.3 billion by 2028, with most exhibitors optimistic about the future,” he says. “But 2028 represents a high-water mark rather than a new baseline. The trajectory after that is concerning and warrants attention.”
Kappes says the 2028-to-2032 window is where demographic trends become more apparent in attendance patterns. “This four-year period could mark the shift from 50 years of growth to a period of significant contraction,” he cautions.
“By 2030, with a quarter of Americans over 65 and labor force participation projected at 60.4 percent, attendance patterns are likely to shift. Regional shows and second-tier events may see the impact first—analysis suggests attendance declines of 10 to 15 percent as corporate travel budgets tighten and companies become more selective about which events to attend.
“By 2032, the trend line becomes clearer. Demographic-based projections suggest attendance could decline 15 to 25 percent from peak levels. This would trigger consolidation, with shows merging or restructuring to maintain viability,” Kappes says.
And Pittsburgh and Allegheny County taxpayers would be stuck with not one white elephant (the David L.) but two? The second being that brand-spankin’ new hotel for which Loews offloaded significant risk.
Now we know why?
Again, demographics happen. And, as has become par for the course, Pittsburgh and Allegheny County, touting that they are being “proactive” and “ahead of the curve,” instead are likely miscalculating that curve and are headed for an embarrassing — and expensive — crash.
Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).
