Conventions as an economic driver (a letter to the mayor)

23 May, 2006

Mayor Jake Kimberley
City Hall
171 Main Street
Penticton, British Columbia
Canada
V2A 5A9

Dear Mayor Kimberley:

There has been much said in the local press about the potential for the SOEC as a venue for conventions. However, to this point, I seen nothing that addresses a very basic question: What is the potential marginal benefit of the SOEC to the convention industry in Penticton?

The idea of “marginal” benefit is critical because the SOEC only contributes to the local economy if two conditions are met:

1. The SOEC attracts conventions that otherwise would not be held in Penticton due to the lack of the type of space that the SOEC provides. We already have a convention center so using the aggregate value of conventions in Penticton is misleading.
2. The additional conventions in (a) occur when the main benefactors of conventions (hotels, motels, and restaurants) have excess capacity. Clearly, a large convention held when Penticton’s hotels and motel are full has negligible economic impact since the convention visitors simply crowd-out non-convention visitors. (This assumes that the non-convention visitors would have contributed a similar amount to the local economy had they been able to find accommodation in Penticton.)

With regards to the first condition, the following excerpt from the May 9, 2006, Penticton Herald is troubling:

Chesher, who retired in 2003 after almost 23 years as head of the convention centre, noted the facility has delivered economic benefits to the entire community over the years. […] "I don't believe our city has lost many, if any, conventions because of the size of our facility," he said. "The only reason we may have lost conventions is the (small) number of adequate, quality rooms adjacent to the convention centre."

I suppose Chesher’s comments are consistent with common sense. After all, the existing convention center is not undersized; it is the second largest in the province according to the city’s website. And I personally can only think of a handful of events that are suitable for the type of space provided by a 4,000 seat arena: car shows, boat shows, RV shows. (Of course, it is not clear that these kinds of events lead to overnight stays and economic spillovers.)

So my question is this: Is it true that Penticton will benefit in a significant way from additional car, boat, and RV shows held here in the shoulder seasons? If so, can this benefit be quantified and explained better in either the final economic feasibility analysis, the FAQ section of the SOEC website, or in the periodic updates in the Herald? At the very least, I would expect such an analysis to provide:

1. A convincing rebuttal to Chesher’s assertion that convention space is not a barrier to increased convention activity. Given that he ran the facility for 23 years, I think it is appropriate that his concerns be addressed head-on.
2. Some vacancy rate data to show that the new conventions will indeed fill unused capacity and not simply lead to one type of visitor being replaced by another type of visitor.

I thank you in advance for your efforts in clarifying this important issue.

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Dear Mr. Brydon,

Thank you for enquiry regarding the impact the proposed Event Centre will have on the local economy. Regarding Mr. Chesher’s comments printed in the local media, I would tend to agree with the points he made that to accommodate larger conventions by combining the present Trade and Convention Centre facility and the proposed Event Centre the city does presently lack the number of quality rooms that would be needed. However, if and when the Event Centre goes ahead as planned there are two private investors wanting and waiting to construct new hotels to accommodate that need.

To answer your second question I don’t think we’ll be replacing one visitor with another visitor, as stated, with the proposed construction of the proposed fairly significant large new hotels the city should be in a position to accommodate all visitors to the city, whether they are delegates to a large convention, involved in a sports event or our regular influx of tourists.

Further to your enquiry regarding what events can be held in the new facility, the whole push and promotion to have this facility to go ahead was to allow the city to host not just larger conventions or RV shows etc., it was to also accommodate the Olympic hockey teams practice games during the 2010 Winter Games, plus some touring variety shows and performers such as Kelowna is currently doing and doing very successfully, which will as suggested add a significant amount of employment and economy to the city and the outlying areas.

To have answered Mr. Chesher’s comments publicly would not have been appropriate for me to do because it would have caused public reaction and enquiry into the proposed hotels and put the developers/investors into the public eye, which is not my privilege at this time to anounce.

Again I thank you for your enquiry and hopefully I have answered your well put questions.

Jake K.