Once upon a time the federal government regulated the price of air travel. Airlines had to file their rates with the Civil Aeronautics Board and show that their proposed fares were high enough to earn a profit. It was hard to lose money in the airline business, because there was little price competition. Airlines could, however, compete on schedule, service, and comfort.
Western Airlines, a carrier based in Los Angeles with the cheerful slogan "The o-o-o-only way to fly!", tested the limits of CAB regulation by offering free champagne to every adult passenger, differentiating itself from its competitors and elevating its image to the traveling public. Its competitors complained, but they quickly figured out that although they couldn't compete on price (the CAB did not start to lose its ratemaking authority until 1978), they could compete on freebies. Soon everyone was offering something extra: alcohol, playing cards, maps, junior pilot wings, and so on.
Western's champagne came to mind today when I read something about the ongoing battle over whether the public should subsidize a hotel across the street from the convention center. The argument went like this: we needed to expand the convention center because other cities were expanding their convention centers. We need a headquarters hotel because other cities have headquarters hotels. We need X because other cities are building X.
The result is that after all the cities have expanded their convention centers and built headquarters hotels, they are all in the same place, relative to each other, as they were to begin with. It's a zero-sum game. Building more hotels in 200 convention destinations doesn't create more conventions, and it shuffles them only slightly from city to city. Like Western and the champagne, if one offers it, then the others have to offer something to, resulting in everyone spending more money but no one getting more business.
Here's a method of analysis I'd suggest to the convention center boosters: Identify the 100 most significant convention cities in the United States. Rank Portland as honestly as possible on that list. Now assume that Portland has a convention center hotel of 600 rooms. How many places up the list does Portland move? If the answer is smaller than 10, then the hotel will be a waste of the public's money.
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