Friday, August 1, 2014
The latest census reports show that a number of second-tier cities are experiencing a wave of population growth, filching residents from the nation’s biggest urban areas. What could the boom mean in terms of meetings infrastructure for these cities —and could it help position them to outsell first-tier strongholds?
What’s bringing residents to these cities? Across the board, jobs and quality of life were the most-cited drivers of population growth. Raleigh, which earned the nation’s No. 2 second-tier city spot, has experienced a 3.7-percent increase in residents. “The job market created primarily through the Research Triangle Park and North Carolina State University’s Centennial Campus is an attractive part for those moving to the area,” said Greater Raleigh Convention & Visitors Bureau President and CEO Dennis Edwards.
Redundancy in terms of career options also is a plus. “When people are thinking about relocating, one of the things they think about is, ‘Okay, if I lose my job, is there another available?’” Edwards said. Prospective residents who do their homework will see that several companies with a great deal of commonality exist in each of Raleigh’s top job clusters, including advanced medical technologies, biotech, life sciences, software IT, smart grid, and data.
Oklahoma City owes its 2.6-percent population growth to the energy sector and to Tinker Air Force Base, the primary maintenance and repair facility for the U.S. Air Force. “Consequently, all of the major aircraft manufacturers have fairly large installations here,”said Michael Carrier, president and CEO of the Oklahoma City Convention & Visitors Bureau.
The military also plays a role in San Antonio’s growth, as does a significant Hispanic population. “Many ex-service members choose to retire here,” said Steve Clanton, vice president of sales and services for the San Antonio Convention & Visitors Bureau. “And many wealthy Mexican families relocate here, too, because San Antonio just has that Mexican feel.” Affordable housing, a Toyota plant, and the fact that Texas does not have a state tax also are contributing factors in San Antonio’s 3.2-percent population boom.
For Tampa, which has seen 1.7-percent population growth, the drivers are banking, finance, and tech, according to Visit Tampa Bay President and CEO Santiago Corrado. In 2012, Forbes ranked Tampa Bay No. 7 on its list of “Where the Jobs Will Be.”
Finally, Jack Berry, president and CEO of the tourism authority in Richmond, which has had a 0.9-percent population increase, cited the fact that six Fortune 500 companies call his city home, and that college graduates are now increasingly staying local, rather than moving away after getting their degrees. Why? It’s simple, Berry said: “Richmond got cool.”
In terms of meetings infrastructure — convention centers and hotel rooms — it’s not entirely clear what kind of impact the population migration will have. The CVB executives Convene spoke to all referenced increasing hotel-room numbers and convention-center expansions, whether in the works or on the horizon, but none could tie this precisely to population growth.
Hotel construction, of course, is due purely to growing visitor numbers. Tampa Bay is having a record-setting year in terms of visitors — and, by extension, bed-tax collections. “When the tax base is booming and bed-tax collections are moving in the right direction,” Corrado said, “then you are investing in your infrastructure, which means assets that draw even more visitors to your destination.”
Yet that doesn’t necessarily translate to expanded or improved convention assets. “It depends,” Corrado said. In Tampa Bay, for example, the convention center sits in a community-redevelopment area that has tax-increment financing (TIF). In TIF areas, projected future property-tax gains are used to subsidize present-day improvements — because the improvements are forecast to increase the value of the property.
“If we are drawing more visitors to that community-redevelopment area, it means that that tax-increment financing is a larger revenue source,” Corrado said. And with the debt from the existing convention center about to be retired, he said, “there is the potential for reinvestment in those assets that assist us in selling the destination for meetings and conventions.”
Other cities do things differently. Oklahoma City funds its infrastructure needs through what’s known as the MAPS (Metropolitan Area Projects) construction program, currently in its third 10-year incarnation. MAPS 3 is a 1-percent-sales-tax initiative (bringing the total sales tax up to 8.375 percent) that was approved by referendum, began in April 2010, and will run through December 2017.
The $800 million that the tax will generate is being used to pay for a new convention center (among other projects), which will break ground in 2016 and open in 2018. According to Carrier, the tax is largely paid by people who live in the Oklahoma City metropolitan area, and about 35 to 40 percent by visitors. It stands to reason that larger future populations would be able to generate larger sums more quickly, were a MAPS 4 project to be approved.
In Richmond, the convention center is paid for by the hotel tax, which means that an increase in visitors, rather than in population, is what drives funding for expansions and improvements. That said, as more and more people move into Richmond’s downtown area, more money is being spent on buildings and services in the neighborhood around the convention center. While nearby projects such as a new federal courthouse and a $350-million Altria research lab can’t really be considered meetings infrastructure, they do improve the experience that a meeting planner or attendee has when visiting the city. The same is true of more new restaurants, nightlife options, and attractions.
Raleigh, meanwhile, is experiencing its highest occupancy-tax collections and demand for hotel rooms on record, which is spurring hotel-room development, according to Edwards. “And we’re actually in preliminary conversations in terms of a convention-center expansion, … which would be funded through occupancy taxes,” he added.
But does population growth correlate to higher occupancy-tax collections? “Yes and no,” Edwards said. “Because of more residents, we are seeing a higher demand for leisure travel, but also for local corporate meetings, which is in turn driving demand for business travel.”
Another less visible aspect of meetings infrastructure is the quality and quantity of airlift. And a growing population leads to higher demand for air capacity and, therefore, more flights. “A lot of that demand is really driven by residents,” Edwards said. A byproduct of increased airlift is that it weighs in the city’s favor when it’s evaluated as a potential meeting destination by planners.
Finally, a local knowledge base is becoming an increasingly important piece of meetings infrastructure, and many of Raleigh’s companies and universities are “very involved,” Edwards said, in helping to procure speakers for area conferences. The more people who move to a city, the more potential locals there are who might be able to contribute something valuable to your meeting.
If the correlation between population growth and meetings infrastructure is somewhat loose, the same cannot be said of the tie between a booming population and a CVB’s ability to sell its destination to meeting planners.
One reason: Happy residents are a powerful sales tool. “With the popularity of people moving to Richmond, these individuals become our cheerleaders,” Berry said. “When people are here, they say,‘Hey! Bring our convention here!’ They are very proud of the destination.” When meeting planners are in town for a site visit, Berry said, they’re consistently surprised by the number of friendly people who speak to them on the street.
Tampa Bay’s Corrado agreed, noting how greater numbers of people living around the convention center “makes a huge difference,” he said. “When you come in to a destination and you’re staying in a hotel within walking distance of the convention center, you want to see that there’s life, that there’s activity: people eating at cafés, shopping, going to the performing-arts center, having events in our event park downtown — all of those lend [themselves] to a dynamic destination.”
The same goes for Raleigh. “More residents moving downtown,”Edwards said, “creates a more vibrant experience for meeting delegates.”
Population growth makes a place dynamic in other ways. Oklahoma City’s Carrier points out that, as resident numbers grow, a place becomes more likely to have a diverse citizenry in terms of professions and areas of expertise. And, he said, “One of the things meeting planners look for is, do we have some kind of a presence there? Most meeting planners want to be in a city where there are a sufficient number of people who understand their industry.”
It works both ways. The bigger the population, the more likely it is that any given association or organization will have a strong local chapter, be they — as Carrier quipped — “accountants, or attorneys, or pigeon-raisers, or quilters, or whatever.”
And while CVB executives are of course well-equipped to answer the technical questions associated with planning a meeting — about the facilities and services that are available — “what meeting planners want most of all,” Carrier said, “is an emotional connection to people in the city who know what their association is about.”
In fact, according to Carrier, most of the business that Oklahoma City books springs from residents who come to the bureau and say,“I’m a member of XYZ organization. What will it take to get my group to come here for a convention?”
Residents, of course, aren’t the only ones who are influential in bringing meetings to a city. The companies that are instrumental in driving job and population growth themselves generate more meetings business. “Toyota, for example, has brought several very large meetings to San Antonio,” Clanton said. “They also were the key sponsor for a couple of national conferences for associations that have come to town. The more you have industry come to your city, the more that they will spin that off.”
It all works together — jobs and population growth and meetings infrastructure and property values and convention business. “All ships,” Berry said, “are rising by a high tide.”