MCCA: Hotel Boom Leaving Convention Centers Out In Cold


bcec

Hotels from Braintree to Woburn filled up in June with more than 12,000 visitors for the American Society of Microbiology’s annual meeting at the Boston Convention and Exhibition Center.

It’ll be more of the same in November when the BCEC hosts Inbound 2016, HubSpot’s annual marketing conference, with reservations booked at more than 35 hotels in the city and suburbs.

They’re prime examples of the benefits that the BCEC brings to the region’s hotel industry. But David Gibbons, executive director of the Massachusetts Convention Center Authority, says a chronic shortage of room blocks close to the Summer Street event hall is dampening repeat business and sending industry events elsewhere in years to come.

“On the second turn, they’re taking a pass until we get this South Boston campus the way it should be,” Gibbons said. “They’re fighting for attendees, and if your attendees are stuck in Chinatown on a bus, it just ruins the whole thing.”

Convention center bookings are projected to decline from 6 to 41 percent between 2018 and 2021. A recent report by Beverly-based hotel consultants CHMWarnick placed part of the blame on meeting planners’ difficulty in assembling room blocks in South Boston, and the high cost of shuttling conventioneers from Back Bay and suburban hotels.

The MCCA estimates it needs another 2,000 hotel rooms committed to group business to maximize bookings at the BCEC and Hynes Convention Center.

Scant inventories of hotel rooms within walking distance of the 2.1-million-square-foot BCEC have been blamed for preventing it from fulfilling its potential ever since it opened in 2007. The shortage of rooms also hurts business at the Hynes Convention Center, as BCEC events gobble up Back Bay hotel blocks, Gibbons said. The CHMWarnick report pegged the lost economic impact at $163 million between 2012 and 2016.

During the recession, developers received property tax breaks from Boston to support construction of properties such as the Westin Boston Waterfront, Element and Aloft hotels. In exchange, the hotel operators were required to set aside room blocks for convention business, ranging from 61 percent at the 180-room Element to 76 percent at the 793-room Westin.

More than 500 hotel rooms have been built in the Seaport over the last five years, but only 50 have been set aside for convention center business. With hotel occupancy rates in Boston consistently topping 80 percent, hotel owners don’t have a financial incentive to make long-term commitments to the group business, Gibbons said. While room blocks can be reserved a decade or more in advance, most hotel developers’ investment timelines are approximately five years.

Two hotels recently built in the Seaport – The Envoy on Sleeper Street  and the Residence Inn on Congress Street – haven’t set aside any room blocks to the convention business. Neither has the 326-room Yotel scheduled to open next July on Seaport Boulevard.

Others in the pipeline – such as Harbinger Development’s proposed 411-room Marine Wharf hotel at 660 Summer St. – will contain a mix of extended-stay and limited-service accommodations, rather than the full-service facilities that meeting planners prefer.

That has Gibbons turning his hopes to the next phase of Seaport Square, where Newton-based WS Development has approvals for up to three hotels on 12 acres of parking lots that it bought last fall for $359 million.

Gibbons said he’s already reached out to Harbinger and WS Development to feel them out on commitments for room blocks.

Another possible relief valve is an estimated 500-room hotel that could be built in a mixed-use development on Massport’s parcel D-2 on Summer Street across from the convention center. Massport dropped plans for a 1,200-room “headquarters hotel” on the 2-acre site last year after Gov. Charlie Baker halted a $1-billion convention center expansion project. Massport received six proposals from developers this spring, but hasn’t made a selection yet.

David Gibbons, executive director of the Massachusetts Convention Center Authority, discusses more in the video.



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MCCA: Hotel Boom Leaving Convention Centers Out In Cold

by Steve Adams time to read: 3 min
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