San Francisco’s convention industry slows down 

San Francisco’s convention business is expected to take a major hit in 2010, which could spell trouble for The City’s already-ailing budget and No. 1 industry: tourism.

Hotel bookings for conventions are down 16 percent from the average seen in recent years, according to Leonard Hoops, San Francisco Convention and Visitors Bureau vice president.

There actually are more conventions booked at the Moscone Center this year compared to last, but they are much smaller. This year, there are 54 conventions booked for a projected 787,000 room nights, compared to last year’s 52 conventions with 854,000 room nights, Hoops said.

Exactly how the decline will impact The City’s budget is unclear.

According to budget documents, San Francisco earned $162 million in hotel room tax revenue in fiscal year 2008-09, and it was expecting that figure to drop like a rock in the latter half of 2009. But while about $118 million was estimated for fiscal year 2009-10, hotel occupancy stayed strong through fall 2009, and that projection was revised to $145 million, which is still a decrease from the previous year but not as severe.

Hoops said he would be shocked to receive such a pleasant surprise in 2010.

“The Convention Council met last week, and to a person in that room, nobody was bullish on 2010,” Hoops said. “I don’t think anybody’s expecting 2010 to be better than we’re hoping.”

His job is to convince organizations to bring their members to San Francisco despite the recession.

“We’re out there shaking trees and looking under rocks for as much business as we can get, and all of our hotels are lowering their room rates and meeting costs to an extent they would not have considered a few years ago,” Hoops said.

The economy is probably the biggest hurdle to convincing conventions to come to San Francisco, but the ongoing labor dispute between hotels and their employees is not helping, he said. Hoops said the last labor dispute several years ago did have a dampening effect on the convention market, including some cancellations.

This time around, he said no convention has canceled at Moscone Center, but a handful have backed out from smaller venues in hotels. Hoops wasn’t sure whether any of those cancellations were directly related to the labor dispute.

Projections for future conventions look pretty dim for 2011 and 2012, he said, but after that, things look up.

“In 2013, it looks like the sun comes out and the trees are blooming; there’s a lot of bookings already for that year,” he said. “So there is a light at the end of the tunnel, but this tunnel looks awfully long.”

Moscone expansion still on table

The convention industry may look a little dry for the next few years, but that’s not putting a damper on The City’s desire to expand the Moscone Center.

A feasibility study conducted for the San Francisco Convention and Visitors Bureau about the proposed expansion is currently in draft form and won’t be released until mid-February. But bureau Vice President Leonard Hoops said the preliminary analysis he’s seen shows that an expansion could bring many of new conventions to The City — and make a lot of money over time.

“The preliminary numbers that we’re looking at say it’s kind of a no-brainer,” he said. “So now it’s a matter of how do we line up financing and manage the logistics of doing an active underground expansion under a busy street.”

The visitors bureau has proposed expanding the center underground eastward across Third Street. The 150,000-square-foot expansion would allow the center to accommodate larger conventions. As it stands, the center struggles to accommodate the massive Oracle World, which draws some 40,000 people each year.

The soonest the expansion could happen is 2017, by which time the current recession should be history, Hoops said.

— Katie Worth

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