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Conventions Help Hotels, Study Finds

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The study, performed by Virginia Commonwealth University, attempts to find whether larger conventions downtown have a positive impact on Chesterfield hotels.

The study considered 640 days over the last two years, from Jan. 1, 2003, to Sept. 25, 2004. It found that on 12 occasions — during periods that range from a single day to a week — there were spikes in hotel occupancy that could be attributed to downtown conventions or other large events in metro Richmond.

Using hotel data from Smith Travel Research, D'Arcy Mays, associate professor and chair of statistical sciences and operations research at VCU, used a statistical model that tagged as "significant" the 12 periods wherein hotel occupancy surged past 90 percent. According to Smith Travel Research, the average mean hotel occupancy during the 21-month period was 63.84 percent.

Five of the 12 periods, Mays says, coincided with major conventions at the convention center that drew more than 5,000 people. The other seven days saw spikes thanks to such events as NASCAR races — four days that each drew 100,000 or more race fans — a drag-racing event in Dinwiddie County, and the week following Hurricane Isabel in September 2003.

"Clearly, when there is a big convention in the city of Richmond," Mays says, "it improves hotel occupancy in the county of Chesterfield."

Brad Armstrong, president and chief executive of the arts foundation, commissioned the study amid a growing debate over how and who should help pay for the performing arts center. A theory known as compression — that big downtown conventions or other events boost the hotel business throughout the region — has become the foundation's central argument in calling for a 1 percentage point increase in the lodging tax to help pay for a planned $168 million downtown arts center.

Armstrong's plan would allot 30 percent of the tax increase to marketing the convention center, but it first must be approved by all four jurisdictions: Richmond and the counties of Chesterfield, Henrico and Hanover.

Armstrong is happy with the results of the study. "I think it is the first ever completely independent study of what happens in Chesterfield when there are major events in the city of Richmond," he says. "And it's good news for everybody."

Some Chesterfield hoteliers have been the loudest critics of the lodging tax increase. They contend that the convention center does nothing to boost their business and are angry that they're being asked to foot part of the bill. (Room taxes already pay for the $170 million convention center.)

Anil Patel, co-owner of Horizon Hospitality, a six-hotel chain based in Chester, says the study affirms his belief that the convention center isn't working.

"That's great — 12 out of 640 days. What about the remaining 628 days?" says Patel, sarcastically. "Five days out of two years where the compression occurs doesn't even justify the convention center itself, let alone the performing arts center. Anybody in their right mind can see that."

Armstrong says the study shouldn't be taken as all or nothing. It was simply conducted to find out if compression is real and whether it can work.

"It should be made very clear that some of these events didn't have anything to do with the city," Armstrong says. "But some big conventions did. It's good news." — Scott Bass

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