Convention Center Follies. Heywood T. Sanders
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success of McCormick Place in hosting the largest national events also came at a price. The dominance of these large events on McCormick’s calendar led to a “feast or famine” impact on Chicago’s hotel and restaurant business, with a surge of demand from a major show followed by a downswing, as exhibits for one event were moved out and another show moved in. The public authority owner of McCormick, the Metropolitan Fair and Exposition Authority, sought both to accommodate growing major trade show events, and also to fill its schedule with the “mid-range exhibition market segment” that would reduce the feast or famine cycle. The authority’s consultants thus recommended a new, adjacent exhibit hall with more than 600,000 square feet of exhibit space.2
The promise was that the new North Building would boost the annual convention and tradeshow attendance at McCormick Place from one million in 1983 to 1.5 million, with a $275 million annual increase in new visitor spending. But even with the completion of “North” in 1986, the authority was far from finished. In 1989, the reconstituted Metropolitan Pier and Exposition Authority (renamed after adding Chicago’s Navy Pier to its responsibilities) proposed yet another expansion.
The “Long Range Marketing Study” consultant KPMG Peat Marwick (led by Charles H. Johnson) presented to the authority in 1990 was far bulkier than its 1982 predecessor, but it very much paralleled the assessment of the earlier analysis. Johnson and his KPMG colleagues described Chicago’s “pre-eminent status in the tradeshow market,” having attracted “the largest events held in the United States, resulting in extraordinary margins in attendance over its nearest competitors.” But if Chicago was to remain dominant, it needed to be “aggressive.” And the key element in an “aggressive” approach was “adding new exhibit space, adding meeting space, offering an enhanced environment…. and improving service and marketing support in order to compete more effectively.”3
The KPMG consultants portrayed a national convention and tradeshow industry with demand for exhibit space “growing at a rate of eight percent per year,” driven by “individual event growth was well as more new events.” Convention attendance was consistently growing as well, averaging 6.47 percent a year from 1971 to 1988. And, KPMG predicted, “Future growth is expected to continue,” supporting the need for more space at McCormick Place.4
The Long Range Marketing Study called for yet another major expansion, adding another one million square feet of exhibit space, more meeting rooms, and an adjacent domed stadium (then proposed for the Chicago Bears) as well. The new exhibit hall, exclusive of the stadium scheme, was forecast to solidify McCormick Place’s position in hosting major tradeshow events, while increasing its appeal for “large and mid-sized conventions” that would help alleviate the fluctuations in hotel demand generated by major shows. With more space and a better planned “campus,” the new McCormick Place was forecast to add some 18 annual conventions and tradeshows, boosting attendance by a total of 320,000.5
The Metropolitan Pier and Exposition Authority embarked on a $987 million expansion effort in 1992, completing the new South Building, with 840,000 square feet of exhibit space and a larger volume of meeting rooms than the other exhibit halls, and a companion effort to renovate the original McCormick East facility, all aimed at attracting “the medium and large convention segment of the meetings market…. [and] to meet the expanded need for meeting space by the trade show segment.” If all went as promised, the new building would yield a steady flow of new convention delegates, yielding a 30 percent increase in the center’s annual economic impact, or more than $1.1 billion.6
The new South Building opened in 1996. But as South added more space, the MPEA was planning on yet another major investment to boost McCormick’s appeal to mid-sized events. The authority had acquired and demolished the one hotel adjacent to the McCormick Place complex in 1993, and unsuccessfully sought a private developer for a new “headquarters hotel.” With its commitment to attracting medium-sized conventions, MPEA officials asserted there was a critical need for adjacent hotel rooms; in early 1996, the authority issued some $133 million in bonds for a hotel that it would finance and own. The new 800-room “Hyatt McCormick Place” opened in June 1998, with the promise from consultants Coopers & Lybrand that it would support luring three new major “Tradeshow 200” events each year (for a total of 26) and nine additional conventions and tradeshows, boosting attendance and hotel demand.7
The new Hyatt hotel was soon joined by another set of bond-funded projects designed to increase the competitive appeal of McCormick Place. At a cost of $100 million, the MPEA added a new six-level parking garage and a conference center to the complex, and constructed a dedicated busway from the downtown core to McCormick Place, all designed to make the center more competitive.
The Hyatt had barely opened when the MPEA leadership and Chicago city officials began another call for expansion and more exhibit hall space. A March 1999 Chicago Tribune article quoted MPEA CEO Scott Fawell as saying, “Some of the bigger shows that come to Chicago would like more space,” and “For the future, you’ve got to [ask], ‘Do you want to stay in the forefront of the industry?’” Mayor Richard M. Daley chimed in, “You have to look ahead.” The assessment that McCormick Place should be expanded again was buttressed by a report from the PriceWaterhouseCoopers consulting firm that concluded that the convention complex would lose market share and cost the state millions in economic impact if it failed to grow.8
With the political backing of Mayor Daley and Illinois governor George Ryan, the state legislature ultimately approved the construction of “McCormick West” in July 2001. The authority sold the $1.1 billion bond issue that financed the addition of 460,000 square feet of exhibit hall space in June 2002.
The development of the new West Building maintained Chicago’s preeminent position in convention center space. It also provided a set of lucrative contracts that Authority CEO Scott Fawell managed to manipulate. Fawell, Ryan’s former chief of staff, ultimately pleaded guilty to federal charges of bid rigging in connection with the McCormick expansion, in a wide-ranging corruption investigation that ultimately convicted former governor Ryan. Expanding McCormick Place could obviously generate construction contracts that were open to political manipulation. But what was not obvious was the real economic payoff from the investment of over $2.3 million in public revenues in the continuing expansions of McCormick Place and associated facilities like the publicly financed Hyatt.9
In 1983, McCormick Place had hosted 27 of the convention and tradeshow industry’s “150” largest events, with a total attendance of just under 645,500. The center dominated the largest events, with eight of the top fifteen. Its total convention and tradeshow attendance that year came to one million. And consultant estimates had pegged the impact of expansion—the construction of the new North Building—as yielding a 50 percent increase in business, a total annual attendance of 1.5 million. But in 1995, after the North expansion and before the opening of McCormick South, total attendance came to just 1,015,456—not much more than a decade earlier. The Chicago center’s apparent dominance of the largest conventions and tradeshows also appeared less secure, with just 24 of the top “Tradeshow 200” largest events in 1995.
The development of McCormick South was also supposed to yield increases in attendance and economic impact, with an added boost from the construction of the publicly financed Hyatt. But where Coopers & Lybrand had forecast 26 of the very large events by 2000, that year’s total came to just 21. It was much the same with total convention and tradeshow attendance. The expanded McCormick Place hit a peak attendance of 1.44 million in 2000. But in the wake of 9-11 and the tech bust of 2000, attendance dropped to 812,337 (with a possible additional 84,000 from meetings). And the 2007 opening of the new West Building did not have a very substantial immediate impact. Total convention and tradeshow attendance for 2008 came to 960,183. The next year, 2009, saw just 893,068 attendees. The attendance total then fell to 850,329 for 2010, and dropped farther in 2011 to just 768,685—less than half the convention and tradeshow attendance McCormick saw in 2003.
McCormick Place has also seen a continuing decline in the number and total attendance of the largest conventions and tradeshows each year, the “Tradeshow 200” events. For 2007, McCormick Place housed just 17 of the “200.” It managed 18 of these big events in 2008, with attendance