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The board of the Pennsylvania Convention Center voted Wednesday to take what its chair said was “an important first step” toward stopping the downslide of the $1.3 billion facility — by hiring to a private management company to run it.
SMG, a West Conshocken firm that already manages 68 centers across the country — including in San Francisco, Chicago and Detroit — was given the job of running the 974,000-square-foot facility, which has been hurt by an exodus of convention clients.
The $780 million expansion of the center, which opened in 2011, was supposed to bring in 20 to 30 major conventions a year. This year, the center has 20 large conventions scheduled. But after that, the numbers drop off dramatically, reaching only eight conventions in 2016.
Using information supplied by sources, AxisPhilly first disclosed the center’s woes in a recent Publius column. The problem? Convention organizers complain long and loud about labor hassles and labor costs.
Gregory Fox, chair of the 15-member state board that oversees the center, admitted the center had “show floor problems” and said that hiring an outside manager would be part of addressing the issue.
Other board members were skeptical. Heather A. Steinmiller, Mayor Michael Nutter’s appointee to the board, said that the existing managers are not the problem, and that bringing in an outside firm does nothing to address the center’s real problems, which are labor related.
“Is this the change that will make things better?” Steinmiller said. “In my mind it doesn’t address our No. 1 problem, which is delivery of services on the show floor.”
Steinmiller was echoing the sentiments expressed by center consultant the PFM Group, which pinpointed the center’s major problem this way in a recent report:
“It is clear that the primary issue facing the PCC — past, current, and future — is its labor supply and their ability/inability to satisfy customer expectations,” said the draft report, a copy of which was obtained by AxisPhilly. “The issue was highlighted in nearly every interview PFM conducted with internal and external stakeholders.”
Fox acknowledged that getting a new manager will not magically solve the center’s image problem with the organizations that book and run conventions. “It’s an essential change, but only one step,” he said.
A second step will begin next week when the convention board starts negotiating a new Customer Service Agreement with the six unions that work in the center. The 10-year-old agreement expires this year.
For Philadelphia, much more is at stake than just filling the convention hall. Conventions generate thousands of jobs and millions of dollars in the city’s growing hospitality and tourism sector.
The vote to turn over management to a private contractor was 15-3. SMG will get a management fee of $400,000 a year, with incentives based on performance, Fox said.