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Sat. Jul 20th, 2024

Richmond’s often empty convention center needs hotel

By Vaseline May26,2024

About 35,000 guests swarmed the Greater Richmond Convention Center for three days in March, dressed as video game characters Mario and Luigi, or creatures from Marvel movies. The keynote speaker was William Shatner.

The event, GalaxyCon, represented a big win for the region, as thousands of out-of-towners spent money at hotels and restaurants.

But for 19 days that month, the 700,000-square-foot, regionally governed complex on North Third Street was empty, according to its online calendar. A healthy convention center is used seven out of every 10 days, local leaders said. Richmond’s is populated just three out of every 10.

Local leaders do not think the problem is a lack of interest. There’s plenty of that. It’s that the convention center lacks a big, close hotel with hundreds of rooms available as a bloc.

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“The desire is there,” said Lincoln Saunders, chief administrative officer for the city of Richmond, who sits on the convention center authority’s board. “What’s holding us back is the hotel.”

That’s why the city, as part of its redevelopment of the Coliseum, is asking developers to pitch a 500-room hotel.

But the hotel would have a negative impact on competing hotels when big events don’t come to town, one hotel general manager said. When the convention center sits empty, it soaks up hotel taxes that pay for the complex, denying the localities revenue they could otherwise receive.







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The Greater Richmond Convention Center hosts GalaxyCon on March 15. For 19 days in March, the 700,000-square-foot, regionally governed complex was empty, according to its online calendar. A healthy convention center is used seven out of every 10 days, local leaders said. Richmond’s is populated just three out of every 10.




Brick Fest Live, Unicorn World

It began more than 20 years ago, when the city of Richmond came together with Chesterfield, Hanover and Henrico counties to build the complex, which opened in 2003. Hotel taxes from the four localities pay off the bonds that funded the $170 million project.

In fiscal 2023, the convention center hosted 218 events and attracted 381,000 visitors. Those numbers are still lower than the pre-pandemic peak, as business meetings still have not returned to form, said Katherine O’Donnell, executive vice president of Richmond Region Tourism, which books the large events.

In fiscal 2024, in addition to GalaxyCon, the convention center welcomed a national ceramics convention, a Lego event called Brick Fest Live and Unicorn World, an immersive unicorn experience for kids.

On March 2, former President Donald Trump held a rally at the convention center ahead of Virginia’s presidential primary, which also shined a spotlight on the venue.

Generally, the convention center is attracting fewer events but more people, O’Donnell said. And that’s a good thing, because larger events bring an economic impact, as opposed to small, local church groups that meet once a week.

When visitors stay at most hotels in Richmond, Chesterfield, Hanover or Henrico counties, they pay an 8% tax that goes to the convention center.

The convention center does not generate a profit.

In fiscal 2023, it collected just over $738,000 in lease payments and food and beverage sales, while its operating expenses totaled $4.3 million, according to its annual report.

But it will never be a money-making operation, local leaders say. Its true value is bringing new people to greater Richmond.

When the tax revenue exceeds convention center costs, some of that money goes back to the localities. Of the $35 million generated in hotel taxes last year, nearly $21 million went back to the four local governments, a sign that the hotel industry is doing well here.







030224-rtd-webtrumptwo

People stand in line outside the Greater Richmond Convention Center before former President Donald Trump’s rally on March 2. Generally, the convention center is attracting fewer events but more people, said Katherine O’Donnell, executive vice president of Richmond Region Tourism.




2 nearby hotels aren’t enough

There are two hotels across the street that service the convention center — the 413-room Marriott and the 250-room Hilton. When the National Council on Education for the Ceramic Arts brought 5,000-plus people to Richmond in March, they were split into five or six hotels.

This isn’t preferable for conventions, which often want their members in one hotel within walking distance. Often the Marriott and Hilton cannot accommodate them.

In the past five years, Richmond’s convention center has lost 160 meetings because of its inability to offer a single hotel, O’Donnell said.

A hotel is “the missing link to maximize the potential of this building,” O’Donnell said.

Richmond already competes against other cities with comparable amenities and populations, including Columbus, Ohio, and Providence, Rhode Island. And the competition is mounting. Raleigh, North Carolina, is expanding its convention center, and a company called Kalahari Resorts & Conventions plans to open a massive hotel and convention center in Spotsylvania County in 2026, complete with 900 suites and an indoor water park.

That is why the city put out a request for proposals to redevelop the Coliseum and asked for a 500-room hotel that can dedicate a bloc for the convention center years in advance. Saunders said there are four developers vying for the contract.

The 8% tax paid by hotel guests is a “necessary evil,” said John Cario, general manager of the Hilton Richmond Downtown, which is across East Broad Street from the convention center. Guests don’t seem to mind it.

The idea behind the tax is that the convention center is a tide that lifts all boats. When a large group comes to downtown Richmond and stays in nearby hotels, it pushes other visitors to the next closest hotels, and the ripple effect is supposed to extend into the suburbs.

An additional 500 hotel rooms just blocks from the Hilton will help bring more events to town, Cario said. But it will cause “extreme difficulty” for doing business when there aren’t large events booked.







Trump rally

Former President Donald Trump speaks during a rally at the convention center on March 2. The center will never be a money-making operation, local leaders say. Its true value is bringing new people to greater Richmond.




Chesterfield a middleman

If the convention center did not need to be funded with tax dollars, localities could use the money themselves. And if the complex brought in more revenue, more of that money would be rebated to the localities.







Joe Casey

Casey




But Chesterfield Manager Joe Casey said he does not consider the money Chesterfield’s to begin with — the county is a middleman between the hotels and the convention center authority. When the county receives a rebate, it invests the money back into tourism.

John Vithoulkas, Henrico’s manager and chairman of the convention center authority, declined to comment.

When guests stay in most Richmond-area hotels, they pay more than 8%. Last year, hotels added a 2% assessment on top of the 8% tax. The 2% is referred to as an assessment, because the money doesn’t go to a government — it goes to Richmond Region Tourism to pay for tourism advertising.

Add in the state’s 6% sales tax, and a guest at a Richmond hotel pays about 16% in addition to the cost of the room, a number comparable to other cities, said Cario, the Hilton general manager.

Why wasn’t a hotel built in the first place? O’Donnell said the timing and the economics of a hotel have not worked. Planners originally envisioned putting a hotel in the John Marshall Hotel site, but that plan failed, and a new hotel needs to be part of a larger city-led or regionally led initiative. The latest initiative, the Navy Hill development, fell apart in 2020.


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The best cities, such as San Diego and Nashville, are in an entirely different league, Cario said. They repeatedly draw meetings large enough to fill hotels around town, known as citywide events, which can attract more than 50,000 visitors. Richmond is far from that, Cario said. Whether a new hotel will fill the convention center’s open dates and avoid negatively affecting the nearby hotels, he’s unsure.

Despite the frequency at which the convention center sits empty, O’Donnell does not see the number of events as a poor figure. She called it “a good number, but not the best that it could be.”

The convention center has helped transform its Broad Street neighborhood, which in recent decades received a federal courthouse, a flurry of biotechnology businesses and a redevelopment of the Miller & Rhoads department store that became the Hilton.

“It’s a much bigger picture,” O’Donnell said. “The whole neighborhood is completely different than when the building opened in 2002 and 2003.”

Cario said the convention center “has led to the rebirth of downtown basically. … Otherwise, we wouldn’t be as strong as we are.”

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