Philadelphia hotel operators criticize slow Convention Center bookings

The Convention Center's size was almost doubled by a $786 million expansion. Center City hotels agreed to a boost in the hotel tax to help pay for the work.
The Convention Center's size was almost doubled by a $786 million expansion. Center City hotels agreed to a boost in the hotel tax to help pay for the work. (DAVID M WARREN / Staff Photographer)
Posted: June 11, 2012

The majority of Center City hotel operators have told the Pennsylvania Convention Center Authority that unless things change drastically on the labor front at the bigger Convention Center, the city will lose major group business.

In a letter dated May 22 and obtained by The Inquirer, the Greater Philadelphia Hotel Association criticized the slow booking pace for group business despite the 15-month-old, $786 million expansion that nearly doubled the size of the Convention Center.

"Although we have an impressive new expanded center, unfortunately, the past perception of Philadelphia from a cost, ease of doing business, and overall satisfaction perspective has not improved in the eyes of the decision makers," said the letter sent to all 15 PCCA board members. "Therefore, we must act quickly for the prosperity of the hospitality industry in Philadelphia."

The hotel association cited one group's recent decision not to return as emblematic of problems that have dogged the Convention Center since the original building opened in 1993.

True Value, the co-op of 5,000 hardware stores, held its first gathering here in September with more than 12,000 attendees and generated $23 million in local economic impact.

But True Value canceled plans to return to Philadelphia in 2015, and put a planned 2019 convention here on hold.

The reason: labor issues, ranging from complaints of discourtesy and slow convention hall setups to alleged theft of items ranging from power tools to lightbulbs during the group's three-day meeting. Union officials dispute these claims.

"We canceled 2015, and we are holding out for 2019, in hopes that before we sign on the dotted line, we will see some significant changes in the work rules and attitude of the labor force," said Susan Katz, True Value's director of corporate events and travel.

"I don't think there's any denying that the problem lies with labor," Ed Grose, executive director of the 87-member hotel association, said in an interview. "We're not getting the economic impact that was intended."

Hoteliers say they have a keen interest in the Convention Center's success because Philadelphia depends more on group and tourist demand, and less on business travel than East Coast cities with bigger corporate bases.

In addition, the downtown hotels agreed to a bump in the hotel tax in 2008, from 14 percent to 15.2 percent, to pay for debt service on bonds to complete the center's $786 million expansion.

In its letter signed by 26 of 44 Center City hotel managers, the hotel association says the booking pace for 2014, 2015, and 2016 conventions was "significantly behind target." It said the three years combined were more than 330,000 rooms behind targeted goals - the equivalent of 28 citywide conventions with a local economic impact in excess of $400 million.

In addition to True Value, the GPHA said key groups that came last year - including the Association of periOperative Nurses, APCO International, and the National Safety Council - are not returning because of labor problems. In addition, it says the Fairfax, Va.-based International Association of Fire Chiefs canceled its 2014 convention here over labor issues despite expensive cancellation fees.

The Association of periOperative Nurses and APCO International did not return calls on the matter. The National Safety Council's director of conventions and meetings said last week that her group was still weighing coming back to Philadelphia.

Grose said he was told by the Philadelphia Convention and Visitors Bureau that the fire chiefs group called the bureau about a month ago and canceled. Jack Ferguson, chief executive of the PCVB, declined to comment on the cancellation.

But Katz, from True Value, offered an explanation for her group. She blamed union workers for allegedly stealing from the exhibit floor as the hardware show was being torn down - items that were to be donated to the local Habitat for Humanity.

"We saw, at the end, that people were trying to steal things off the shelf floor," she said. "We found things stashed in corners, such as tools, electrical equipment, and lightbulbs.

"Frankly, it broke my heart," she said. "My CEO made it clear - we are not going back to Philadelphia until the labor rules and attitude changes are enacted."

The alleged thefts were denied by Ed Coryell, executive secretary, treasurer, and business manager of the United Brotherhood of Carpenters, and by Pat Gillespie, business manager for the Philadelphia Building and Construction Trades Council.

"I am unaware of any such incidents," Coryell said.

It is the Convention and Visitors Bureau that books groups for the Convention Center. Ferguson said he was aware of the hoteliers' letter but denied labor costs were driving away key groups.

"2012 is seeing a better success rate than 2011," he said Friday. "Most of the conventions listed in the letter and others are still considering Philadelphia for future years, as long as they see continued success and progress in the building."

Ferguson said the Pennsylvania Convention Center Authority board and the hotels group were meeting Wednesday to discuss the letter.

Ahmeenah Young, president and chief executive of the authority, did not return repeated calls for comment, but board chairman Gregory J. Fox said late Friday: "The hotel community in Philadelphia are our valued partners. They play a critical role in everything that the Convention Center tries to accomplish . . . and we are appreciative of what they do. So I share their concerns regarding bookings."

Fox said the current customer satisfaction agreement with the unions expires June 30, 2013, and a new one will take its place. Changes in work rules are being made now that will be part of the new agreement.

"The customer experience so far in 2012 has been an improvement over some of the disappointments of 2011," Fox said. "I have not given up on any of these shows as far as returning to Philadelphia at some future date."

Coryell, of the carpenters union, - which represents 17 locals with 12,000 members, mostly in the five-county Philadelphia area - disagrees that labor problems persist at the Convention Center.

"There have been no labor disputes or jurisdictional disputes that I am aware of," he said.

Meeting planners have long complained that union labor practices in Philadelphia drive up operating costs, which are passed along to the groups and shows that come here.

To make the city more competitive and gin up group business, the Pennsylvania Convention Center Authority in April agreed to eliminate an 8 percent management fee that was paid to the center's labor supplier, the Philadelphia firm Elliott-Lewis Corp.

"The elimination of this charge shows your commitment to making Philadelphia a great place to host a meeting or convention," said the hoteliers' letter to the authority board. "However, we hope that these efforts are only the beginning because we are very concerned about the sales booking pace of group business for the upcoming years."

So far, group business for 2014 was 64,405 room nights behind target; 2015 was 131,000 room nights behind target; and 2016 was 135,760 room nights behind target, according to the hotel association.

"We are not even matching pre-expansion performance," the letter states. "The most frequently cited reason is the high cost of doing business at the center."

Gillespie, of the Philadelphia Building and Construction Trades Council, which advocated and built the center, said it was unfair that labor got the blame.

"Since I've been on the board, there has been nothing but laudatory reports," he said Friday. Gillespie sits on the Convention Center Authority board as head of the trades council. "There are all sorts of reasons shows don't rebook. There are economic reasons.

"But to automatically say people aren't coming back because of labor and costs puts us in such a defensive position," Gillespie said. "We have taken major steps to make sure that the workforce at the Convention Center is as productive as can be."

But Grose, of the hotel association, said the unions were hurting themselves when big groups, like True Value, don't come back.

"The loss of room nights not only results in fewer hospitality jobs for Philadelphians," he said. "It also hurts ancillary businesses that benefit from conventions, such as restaurants and retail shops. There are also less construction jobs because fewer hotels will be needed and, of course, less work at the Convention Center."


Contact Suzette Parmley

at 215-854-2594 or sparmley@phillynews.com.

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