There is a simple logic behind why Louisville, Lexington and Covington are building, have announced or are actively planning more than $500 million in convention center expansions.
Convention business contributed $115 billion annually to the U.S. economy and $28 billion in taxes, according to a 2014 study released by the Convention Industry Council. It grew more than 9 percent from 2009 to 2012 while the overall economy sputtered.
The Events Industry Council, a Washington-based organization, found $330 billion in direct spending in 2016 connected to 1.9 million events – a spending figure representing an 18 percent jump in four years, according to a study made in partnership with Tourism Economics.
As they plan to meet current and expected demand, civic leaders in Kentucky’s largest convention cities are thinking strategically not only of economic opportunity but about how to make their downtowns more walkable and attractive to visitors.
Louisville: Remaking downtown for the meeting trade
Louisville was early to understanding that what is good for the convention and meeting crowd is good for local residents, too. For the past decade the city has been working to develop its downtown into a tourist-friendly, pedestrian-friendly business and entertainment center.
The Omni Hotel, a new 612-room luxury hotel, features 70,000 s.f. of meeting space; a speakeasy; bowling alley; spa; rooftop swimming pool; and a 20,000-s.f. fresh market and grocery. The downtown Marriott and Hyatt Regency hotels, long-time bastions of the local convention hotel scene, have each recently finished multimillion-dollar renovations as well.
“By the time the (Kentucky International) Convention Center expansion is completed this year, we will have 4,500 rooms adjacent to it,” said Stacey Yates, vice president of marketing and communications for the Louisville Convention & Visitors Bureau. “Within that footprint, we’ll have Whiskey Row, Museum Row and Fourth Street Live, all of which are major shopping, dining and attraction opportunities for visitors. And then one mile away there’s the NuLu district, which is rivaling Bardstown Road and Frankfort Avenue as one of Louisville’s best fine-dining districts. People coming to conventions are more discerning than they used to be. When they travel to a city for business, they want to feel like they are being surrounded by the culture of the place. We’re going to make sure we give that to them.”
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The centerpiece will be the expanded convention center itself, which is undergoing a $207 million renovation expected to be complete by August. It will grow KICC’s 146,000 s.f. of space to 200,125 s.f. of contiguous space, and a total footprint of 300,000 s.f., Yates said.
Kentucky Venues oversees space in the center and operates the 1.1 million-s.f. Kentucky Exposition Center at the Kentucky Fairgrounds. Sales staff working on landing new conventions estimate the expansion will allow KICC to go after an additional 25 percent of the business-meeting market, Yates said.
“The expanded center will be anything but the concrete box people typically associate with convention centers. It will have lots of glass and skylights for natural light. We’ll have mixed finishes like wood grain and copper detailing, to reflect our unique place in bourbon history,” Yates said. “And we’ve recently chosen Levy’s catering to handle our culinary needs. They’ll really be tapping into the culinary roots of our commonwealth, offering up unique interpretations of Kentucky’s foodways like burgoo and bourbon-flavored dishes.”
The nearly complete expansion already has doubled KICC’s business. In 2018, 14 groups are booked at the convention center, bringing 41,500 visitors to the city. In 2019, 28 groups are scheduled, bringing in an expected 83,500 attendees. By 2023, the expanded center will have hosted 67 groups with 319,607 attendees, bringing an estimated $145.7 million in economic impact to the city. And that’s only what has been booked so far.
Interest in the new convention center facilities has been “very high” according to Doug Bennett, senior vice president of convention development for the LCVB. “We expect to have a very high percentage of conversion for groups that are tentatively looking at Louisville,” he added.
Yates notes that Louisville’s success in attracting conventions is also tied to the Kentucky Exposition Center, which is 5 miles south of KICC and adjoins Louisville International Airport. Between the expanded center and the fairground facilities, Louisville can boast 1.3 million s.f. of meeting spaces, ranking it sixth nationally.
“A lot of people don’t realize that about Louisville,” Yates said, “but we’re competitive with cities much larger in size than us.”
This year, KICC will host the Trade Show News Network’s “Fastest 50” event, which brings together the event planners for the top 50 fastest growing conventions in the country.
Building regional business in Covington
When it comes to attracting convention business, Covington sees bigger sister-city Cincinnati just across the Ohio River as an ally.
“Cincinnati has its convention center and so do we, but we don’t consider Cincinnati to be part of our competitive set,” said Eric Summe, CEO of the Northern Kentucky Convention and Visitors Bureau. “The Northern Kentucky Convention Center competes with cities like Overland Park, Kan., or Richmond, Va.
“We’re part of a 15-county regional tourism network. Our hotel rooms and meeting spaces amplify Cincinnati’s convention capabilities and allow us to go after our own clientele as well.”
Northern Kentucky Convention Center’s current overall 204,000 s.f. includes 110,000 s.f. of meeting, exhibition and social function area and has been exceeding expectations. In 2017 it attracted 31 conventions with an estimated $8.5 million local economic impact.
But according to Summe, the facility is losing successful long-time events when they grow out of the space.
“To keep up with demand, the big centers really need to expand or renovate every five to 10 years,” Summe said. “You need new technology and fresh designs. It’s what’s necessary to keep the business you have and attract new business.”
Northern Kentucky’s local governments have taken action to get the center the financial resources it needs. Last year, meetNKY was successful in lobbying Boone, Campbell and Kenton County local governments to all pass a 1 percent lodging tax increase, which will be dedicated to fund an expansion for the center.
Details on what the new center will be are still very much on the drawing board. Summe said meetNKY is in the final stages of drafting a request for proposal for firms who can help them conduct a full market analysis. Summe hopes to have a firm selected and an analysis completed by later this year. Then the process of figuring out how, and in what direction to expand will begin.
“We’re situated at River Center Boulevard (just south of the Ohio River). We could expand south, into an IRS parking lot. We could expand east into a surface (parking) lot. Or we could expand west, into what is now the current IRS (Taxpayer Advocate Service) Center. No matter which way we go, there are substantial variables, which will all have to be analyzed to figure out the best course of action.”
The convention center will expand from its current location rather than move and start over with new construction, Summe said.
“We have a suitable facility that’s not that old and six hotels within three to four blocks. The IRS is getting ready to vacate its facility, which will bring 23 acres of land into play downtown that have not been allocated to a new use yet. It’s the right time to be talking about this expansion, and getting funding in place to complete it.”
Designing new possibilities for Lexington
Lexington officials had expected their $230 million expansion of the Lexington Convention Center to be under active construction now, but opted to delay it to search for a construction partner who fits their financial parameters.
When eventual construction does finish, the new convention center will be 49 percent larger, with a total 756,600 s.f. That includes 100,841 s.f. of exhibition space; 25,080 s.f. of ballroom space; and 14 meeting rooms. It will have 50,000 s.f. of hospitality club areas to be shared by Rupp Arena/University of Kentucky on basketball game days.
The latter element was an important part of an agreement UK recently signed to keep its college basketball games – which have among the highest average attendance numbers in the nation – at Rupp Arena for another 15 years.
The key tenant issue is now settled, but final design and budget details for the expansion are still being hammered out.
“By late December (2017) we began to see numbers, and we had a hard time aligning budget and cost,” said Lexington Center CEO Bill Owen. “The board made the difficult decision to sever our relationship with the design firm, and we opened up the process to competitive bidding again. We’ve just received responses to that RFP. By mid-June, we hope to be able to make a decision on the construction firm that will take us forward.”
In March, the Lexington-Fayette Urban County Government council pledged up to $20 million in funding for the proposed expansion and renovation, doubling a $10 million commitment it made in 2016. Lexington in 2016 also increased its hotel tax by 2.5 percent, committing the revenue from that hike to pay off $230 million in bonds – including more than $60 million the General Assembly included in the state budget it approved.
Other funding in the project’s capital stack includes more than $100 million that the 15-year lease with UK is expected to generate, plus naming rights for the convention center complex. Under the new lease with UK, the university may market the new facility’s naming rights – not including “Rupp Arena,” whose iconic brand name will remain.
Once budget-appropriate construction bids are secured and shovels break ground, Owen expects the project will take roughly three years to complete. Current plans are to demolish all the 1976 portions of the present Heritage Hall exhibition space. Some of the shopping center between the Hyatt hotel and Rupp Arena will be demolished or repurposed, including the food court.
The completed renovation-expansion will modernize the heart of Lexington’s downtown, Owen said, and improve the relationship between it and the facility.
“The goal is to make people who come to the convention center feel like they are interacting with the street outside, and vice versa. The building will have lots of glass-curtain (outer) walls and wood accents that will complement the greenways just outside. A pavilion in front will connect the building to the Town Branch Greenway. The new design will also free Rupp Arena, making it look more dominant from Main Street to Broadway. A catwalk will look down the grand stair between the Hyatt and the arena and into Triangle Park. And, of course, the new glass-fronted exterior of Rupp Arena will be a major facelift, taking it firmly into the new millennium. It’s an exciting time for us.”
Owensboro, Bowling Green also growing
The $40 million 92,000-s.f. convention center that Owensboro that opened in 2014 continues generating significant follow-on development, including a $15 million Holiday Inn Owensboro Riverfront that opened in 2015. Developers Matt Hayden and Jack Wells are now planning a $33 million hotel-apartment complex across Second Street from the convention center that will have 110 to 120 rooms and up to 160 apartments. An $8 million, 445-space city parking garage is slated to open in August just east of the complex. The $15.4 million International Bluegrass Music Center will open later this year a few blocks away.
Bowling Green has conducted a $1.5 million upgrade of its 60,000-s.f. Sloan Convention Center to keep it competitive with other facilities in its category. The lobby received sound-baffling flooring and walls, new lighting and furniture, and several custom art pieces. In phase two, the roof was replaced, landscaping was revamped and the parking lot re-striped.
Susan Gosselin is a correspondent for The Lane Report. She can be reached at [email protected]