Austin News

The convention industry's future is bleak with so much uncertainty on travel and the economy due the to COVID-19 pandemic, one analyst says.

Heywood Sanders, a professor at University of Texas San Antonio, and author of the "Future of the Convention Industry," told the Austin News in a phone interview that the convention industry has yet to recover from the 2008 recession and the new threat from the COVID-19 pandemic holds many uncertainties for the industry.

Sanders said the after the recession of 2008, many cities dramatically decreased their rates to draw convention visitors and the convention industry. He also said the 9/11 recession and the dot.com recession had an impact but it was relative and matters got back to normal. 

"2008 had an enormous impact...and it has taken a very long time to get back to the pre -2008 levels," Sanders said. 

In fact, he said in terms of convention attendance, "it has not returned to pre-2008 levels." The 2008 recession created a "sea-change in terms of meeting attendance levels."

"We've seen remarkable long-term decline in convention attendance," Sanders said. "It's clear things have changed on the demand side and on the supply side things have changed as well."

Sanders' "Future of the Convention Industry" shows the massive decline in attendance levels across the country in every industry and Sanders said there are "a host of cities that have completed new centers and others are planning expansions." 

"There are lots and lots of people doing this, so on the supply side a lot more convention centers out there are looking to grow their businesses," Sanders said.

These expansions are coming against the pre-pandemic backdrop as the norm in the industry has become discounts, incentives and even free rent deals. With the pandemic it could take a very long time for the convention industry to rebound, perhaps easily a decade to return to pre-COVID-19 levels, Sanders noted.

Sanders also pointed out that bond rating agencies are even forecasting a very slow return of group meetings. He also said that tourism nationally may not return to pre-pandemic levels until 2023 and business travel, which will include for conventions, will take even longer to recover.

Austin had announced a $1.2 billion expansion of its convention center and now may not be a prudent time to move forward with the project.

"Austin, in this environment, knowing what we know about everything prior to the pandemic, what we know about rampant discounting pre-COVID, at the very least, that would suggest things would not be rosy for Austin if expanded," Sanders said.

He said virtual and Zoom meetings will continue if people can't travel again, and companies realize the high cost for having people travel for in-person meetings. 

As for the Austin convention center expansion, Sanders said, "What is the cost of waiting?"

He added, "There are other things you could use that money for ... there are other pressing public needs right now." 

He mentioned workers in numerous industries who are unemployed, adding, "Everyone out of work needs help and it's not clear if travel comes back, it's not clear when and it's not clear how." 

"There's an enormous amount of uncertainty," said Sanders, noting that Austin's project is "a lot of money with an uncertain return before, and more so right now."