The San Diego Convention and Visitors Bureau is poised to retake control of the Convention Center's long-term sales and marketing.
The San Diego City Council voted Tuesday to allow the San Diego Convention Center Corp. (SDCCC) to contract its sales and marketing responsibilities to a third-party entity. The SDCCC will now negotiate handing the marketing department and its $3.1 million budget and to the Convention and Visitors Bureau (ConVis), the only third-party in conversations to take over the tasks.
The addendum to the city’s management agreement with SDCCC passed 7-1, with Councilman David Alvarez voting against.
Once a contract is negotiated, ConVis will handle the sales, marketing and promotion services for all Convention Center events booked more than 18 months in advance. The Convention Center will continue to handle those booked within 18 months. Long-term pricing structures will be set by ConVis after consultation with the Convention Center.
Prior to discussion of the item, the city’s Independent Budget Analyst (IBA) said it couldn’t make a recommendation on the action because it needed data that either doesn’t exist or hasn’t been made available that would show whether the shift in responsibilities would be beneficial, or is necessary in the first place.
During his comment period, Alvarez addressed allegations that the transfer was a quid pro quo request from hoteliers in exchange for their support of a tax to fund the proposed Convention Center expansion project.
Hoteliers alone are scheduled to vote on assessing a $35.7 million annual tax on their guests that would cover 75 percent of the costs of the proposed expansion. Ballots are scheduled to be sent out by the end of the month and their votes would be due by late April. City Attorney Jan Goldsmith has said excluding the general population from voting on the tax increase is a legally questionable maneuver that will be decided by a court ruling.
Alvarez asked Stephen Cushman, Mayor Jerry Sanders' point man on the Convention Center project, whether giving promotional responsibilities to ConVis was a request from hotel owners who otherwise wouldn’t vote for the expansion.
Cushman said the arrangement was a reaction to the perception that the council opposed a request to give the industry greater representation on the SDCCC board of directors.
“I take the answer to that question to be ‘yes,’ then,” Alvarez said.
The item generated more than an hour of public comment with opponents led by area labor union leaders packing council chambers and hoteliers, developers and economic development groups speaking in favor.
Lorena Gonzalez, secretary-treasurer of the San Diego-Imperial Counties labor council, told the council that 10 questions asked by the IBA could be summed up as “What the hell are you doing?”
She said it hadn’t been made clear that the current system had a problem, or if this proposal was the right solution.
ConVis President and CEO Joe Terzi said bookings had stagnated in the latter half of the 2000s despite 100 percent increases in both Convention Center meeting space and downtown hotel rooms, evidence that there was room for improvement in the center’s sales and marketing. There were fewer rooms booked in 2010 than in 2005, he said. He did not acknowledge the different economic climates facing the country and the convention industry in those two years.
ConVis used to control the sales and marketing responsibilities for the Convention Center. In 2005 the city transferred the responsibilities to the SDCCC.
A series of amendments to the council’s action attempted to address some of the opposition.
The IBA was asked to deliver a fiscal analysis to the Economic Development and Strategies Committee, and ConVis was asked to deliver a business plan.
The IBA clarified it would need answers to its 10 questions from ConVis and the SDCCC in order to deliver such a report.
The timeframe for long-term projects was also stretched from 14 to 18 months.
The council also changed the allocation of annual operating surplus funds to be directed 75 percent in favor of capital projects and renovations on the center, with the remainder marked for new business development. The funds had been pegged to be split in half. The center currently has a deferred maintenance backlog of $16 million.
“Approving the addendum isn’t the end of the process and it certainly isn’t an agreement,” said Councilman Kevin Faulconer.
Councilman Carl DeMaio said the agreement allows discretion in the event that the IBA’s report shows harmful effects of the new sales and marketing responsibilities.
“This is the right strategy for market success,” he said.
Council President Tony Young praised the addendum as an example of compromise. “It’s a good deal for the city of San Diego and a great agreement that all of us can support.”