Understanding the $1.5 Billion Dollar Austin Convention Center Expansion

COVID combined with industry shifts to hybrid and online events have changed the economics of the convention center industry - an industry that has never recovered from the Great Recession and where supply will continue to outstrip demand. So why are some City officials and staff pushing to spend $1.5 Billion on a demolition and expansion?

The Convention Center Boondoggle

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The Convention Center currently brings in fewer than 3 percent of Austin tourists. Austin simply is not a Convention Center destination. Ultimately we would be spending a great deal of resources chasing after proportionally few tourists.

Dying Industry

The Convention Center industry never recovered from the Great Recession and took another beating during COVID. Technology and other shifts like the move to hybrid and online events have also impacted the industry's viability.

Goals Unmet

The Convention Center has never met it's projected attendance and room nights that consultants promised. In it's best year we only achieved 73% room nights. In fact, roughly half of convention center attendance is a single event: SXSW.

Multi-Generational Ponzi Scheme?

The Convention Center Capital Fund only generates about $20M/yr. Without some other funding mechanism - like another general revenue bond - it would take dozens of years to pay down a $1.5B expansion.

A Better Way

The Convention Center expansion is really a contest over how to best spend our Hotel Occupancy Tax (HOT) dollars. This is revenue generated by tourists who visit Austin and must be spent on activities that promote tourism. Currently the City gets 11 cents per dollar, of which 8 cents goes to covering Convention Center operating losses, paying off the prior 2002 expansion, and the Capital Fund for new projects. The remainder goes toward Tourism Promotion, Historic Preservation, and Live Music and Cultural Arts Funds.

However, there are many ways to both promote tourism AND help support Austin priorities. HOT dollars can be spent supporting local artists, musicians, and venues. They could also be spent on public safety (making downtown safe for tourists) or mobility (anything that moves tourists, as well as residents).

Rather than considering these alternate uses, the hotel lobby and a handful of city officials and staff instead want to plow forward with their $1.5 Billion demolishment and rebuilding plan.

Get Informed!

CAP studied and published a 2022 Convention Center Facts report and has shared this and other information with Council Members, their staffs, and other civic groups and leaders. We encourage you to review the report if you're interested in learning more! It covers additional topics like how Austin has not yet paid off the prior 2002 expansion and how industry supply has been increasing even as demand has dwindled - thanks to a "cottage industry" of well-connected consultants who peddle expansions to city after city.

Ultimately the only way to arrive at Convention Center plan that meets the needs of both the public and the tourism industry is to make your voice heard and ultimately work together to build something that everyone can agree on. Rather than an expensive demolish and rebuilding process, it is possible to renovate the existing structure for substantially less investment while still creating a useful facility in the heart of downtown - all while making sure local artists are supported, and downtown is safe and accessible.