Professor Bogdanski's recent post on the renascence of the proposed headquarters hotel for the Oregon Convention Center caught my eye last week, not so much for his views on the hotel (long negative) but for the financial data in the report to which he linked.
Metro operates three visitor venues: the Oregon Zoo, the Oregon Convention Center, and the Expo Center. Metro also operates a collection of performing arts spaces under the umbrella name of Portland Center for Performing Arts (PCPA): the Schnitzer, Winningstad, Newmark, and Hatfield theatres, and the Keller Auditorium. Each year Metro commissions a study of the economic impact that the three venues and PCPA bring to the area. It's the numbers in the study that fascinated me.
In fiscal year 2010, the Convention Center lost $10 million, the Zoo lost $5.4 million, and PCPA lost $3.5 million. The Expo Center made $244,000. The outside economists figured that the Convention Center supported 4,260 jobs, the Zoo supported 760 jobs, PCPA supported 640 jobs, and the Expo Center supported 380 jobs. These include not only the people who work at the facilities (direct jobs), but also people who work at hotels, motels, restaurants, and suppliers (indirect jobs).
So (I asked myself), what does each job cost Metro? It's a simple calculation: divide Metro's loss on each venue with the number of direct and indirect jobs that the venue creates. It turns out that each job created by the Zoo costs taxpayers $7,105, each job created by PCPA costs $5,468, and each job created by the Convention Center costs only $2,347. The taxpayers actually make a little money on each job created by the Expo Center.
When last discussed, the public subsidy for a headquarters hotel was estimated at $160 million. Assuming a capital cost of 5%, that equates to an expense of $8 million/year for the carrying cost of the subsidy. If that $8 million/year will be as efficient as the current subsidy to the Convention Center and generate 1 job for every $2,347 of annual cost, then it needs to create 3,408 permanent jobs. A 600-room full-service hotel will itself employ around 400 to 600 full- and part-time workers, leaving about 2,800 to 3,000 jobs to be created by enticing more conventions to town.
If the Convention Center creates 4,260 jobs now, then to create another 2,800 jobs (not counting the headquarters hotel) it will need to increase its visitor count by 2,800/4,260, or about 65%, if the new visitors have the same spending habits as the current visitors. The Convention Center had 548,260 visitors in fiscal year 2010, so to attain this increase the headquarters hotel will need to attract an additional 360,000 conventioneers a year, or about 1,000 every day of the year. That's a lot of people to squeeze into a 600-room hotel.