Center in Philadelphia drawing mixed reviews After three years, boosts seen in tourism, but not in city's larger economy

September 02, 1996|By Jay Hancock | Jay Hancock,SUN STAFF

Philadelphia's Pennsylvania Convention Center, 3 years old in July, is surpassing expectations, luring a million visitors annually.

The center has been booked solid. It has defied predictions by boosting hotel occupancy rates even as the number of rooms has grown.

When a huge, 1,200-room Marriott hotel opened in Center City last year, "I fully expected that it would draw new demand to the city but not enough to keep occupancy from decreasing," said Peter Tyson, a Philadelphia-based hotel consultant. "I was wrong. Demand went up more than supply, which is incredible."

The half-billion-dollar convention center is drawing so many visitors that big shows regularly fill Center City hotel rooms and push luckless conventioneers into the suburbs, or even New Jersey.

New downtown hotel projects are planned. Blighted city blocks have revived. Restaurants are prospering.

"It seems to me that it's bringing more people into the city," said Cindy Burgess of the City Tavern, a restaurant in Philadelphia's historic district. "When there's a large convention in town, my business is better. We'll see more walk-in customers rather than people making reservations."

But for all its buoyant effect on the tourism business, the &L convention center, with 440,000 square feet of exhibit space, hasn't had much discernible impact on the larger Philadelphia economy, local analysts say.

Economic growth missing

The city is still shedding employment. Jobs spawned by the convention center have been mostly low-paying. And its boosters worry that convention bookings will drop after Philadelphia's novelty factor wears off and competition from cities such as Baltimore and Atlantic City heats up.

"It's good for tourism," said Celia Chen, a senior economist with Regional Financial Associates in West Chester, Pa.

"It's good for the retail sector and some other sectors as well. There's a lot of positive things going on. Unfortunately, it's not really showing up in terms of economic growth right now," Chen said.

Philadelphia has lost 100,000 jobs in the past eight years, as factories moved elsewhere and mergers gobbled up white-collar employers. That's 13 percent of its 1988 total and the same proportion that employment has declined in Baltimore during the same period.

No one disputes the idea that the center has helped Philadelphia. But people disagree about the degree of benefit and whether it has been worth the price in taxpayer dollars.

The million-odd annual convention center visitors pump $120 million into the city economy, says the Pennsylvania Economy League, a nonprofit organization that conducts economic research.

The center has created some 3,000 jobs and generates $28 million annually in city and state tax revenue, the league said.

But the center's debt service is projected at more than $20 million annually, paid by city taxpayers. And some claims about convention spending and other economic echoes are doubted by some.

Numbers difficult to track

"A lot of the assumptions and assertions made by people are not backed up by any numbers," said Maureen Greene, an economist of the U.S. Bureau of Labor Statistics in Philadelphia. "You really can't track additional money brought in by these conventioneers."

The center hasn't arrested Philadelphia's downward economic slide, either. The city has lost 10,000 jobs since 1993, when the convention center opened. And Philadelphia still has a lower-than-average proportion of tourism-related jobs, compared with other cities.

The center's fans say that, like other convention facilities, it never was expected to earn a profit.

And they say that its deficit will shrink and its economic benefits increase after current blueprints for more Center City hotels become steel and concrete. New hotels are expected to lure bigger shows and spawn more jobs, spending and tax revenue.

"Convention centers by themselves lose money, but the economic impact is tremendous for the region," said L. Clarke Blynn, a hospitality consultant in Conshohocken, Pa.

Center City Philadelphia has only one-third of the new hotel rooms that originally were planned to accompany the convention facility. While that has sent lodging business to the suburbs and hurt the economic spinoff for the city, it has meant boom times for hoteliers.

Hotel occupancy up

For the first half of this year, Philadelphia hotels were 73 percent full -- a huge increase over a dismal 59 percent occupancy rate in 1991, said Dana Ramus, vice president in the Philadelphia office of PKF Consulting, which specializes in lodging. Philadelphia's score also was higher than the national average of 68 percent for urban hotels.

And hoteliers have been able to raise rates, from an average of $104 last year to $115 now.

But Philadelphia needs more.

"Tourism is creating jobs; they're just not generally high-paying jobs," Chen said. "It remains to be seen whether tourism can pull Philadelphia out of its slump right now."

Pub Date: 9/02/96

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