ConVis Prepares To Take Back Marketing The Convention Center
July 10, 2012 1:07 p.m.
Joe Terzi, President and CEO of ConVis
CAVANAUGH: This is KPBS Midday Edition. I'm Maureen Cavanaugh. Today, the new booking entity for the San Diego Convention Center goes over a marketing agreement with the San Diego City Council. Earlier this year, the City Council removed marketing duties from the Convention Center staff to the private San Diego Convention and Visitors' Bureau, known as ConViz. It was a rather open quid pro quo arrangement, making hoteliers in the city more agreeable to tax themselves for the proposed Convention Center expansion. Whether the Convention Center, its worker, and the city will now be better off with ConViz booking practices is something that I'll be discussing with my guest. Joe Terzi is president and CEO of ConViz. Welcome.
TERZI: Thank you very much. I appreciate it.
CAVANAUGH: I want to ask just a couple of questions about this marketing agreement. Does it formalize ConViz's status as the booking agency of the Convention Center?
TERZI: Yes, it does. It actually segregates the booking for events and meetings in the Convention Center from what we call long-term, so 18 months and out, for anyone that wants to use the facility. That transfers to us, and the Convention Center maintains a short-term sales and marketing role for 18 months and in. So it's kind of a hybrid.
CAVANAUGH: Gotcha. And for how long is this marketing agreement with ConViz? How long is it valid?
TERZI: Well, the first term is a four-year term, and then there is some language in the agreement that after the first four year, there's two-year annual renewals.
CAVANAUGH: And this goes on in concept, I read, for about 30 year; is that right?
TERZI: Well, in concept, I don't know if there's any term to it. Conceptually it was really a discussion on changing the sales and marketing responsibility to the bureau to unify the sales and marketing with the understanding that it really is a -- in concert with the Convention Center expansion.
CAVANAUGH: Right. So why was it so important for hotel owners to get control of booking the Convention Center?
TERZI: Well, I don't know if you know the history, but the center booking all the way up to 2004 was actually done by ConViz. So it's reinstating what existed prior to 2004. And in 2004, there were some changes made, some challenges and the center at the time was able to convince the city that it would be better off having the marketing role returned to the center. And the community on a go-forward basis, when we looked at where the city was, and the opportunities to continue to look at expansions, and the opportunities to make sure the center was generating room night which is the principle focus of the building, felt strongly it was more appropriate to put it back into the bureau so we had one single selling effort. And I can tell you this is the standard in almost every destination.
CAVANAUGH: Eight years ago, ConViz lost the control of the center because of spending abuses. What if any safeguards have you put into effect to insure that won't happen again?
TERZI: Sure. I was involved in 2004, and I'm going to take exception to the reason you mentioned. There were challenges with the bureau from a leadership standpoint, the bureau had lost a significant amount of funding that actually came from the city, and there were all sorts of things that were happening at the time. So I can tell you that we have a contract with the center that requires us to produce a certain number of room nights and to continue to make sure the center is being utilized appropriately, and there are safeguards in the contract where they review what we do. And this was a negotiated discussion between our board and the Convention Center board. Hopefully to be approved by the city tomorrow when we meet in front of the council.
CAVANAUGH: So are you saying that there has been no changes within ConViz to make sure that those abuses as they have been referred to will not happen again?
TERZI: Well, I can't speak to a hypothetical abuse issue. I know we're very accountable. Our funding now principally comes from the tourism marketing district that was set up in 2008. And we don't have any city funding currently. So there is no money coming from the city to ConViz. It's all supported by private donations or private membership fees. And the support we get from the tourism marketing district. I can tell you at this point, we have more oversight coming to us than ever before. The tourism marketing district reviews and looking at every single penny we spend. It does go to the city after that. They also review it. So there's a lot of scrutiny on what we do today to make sure that we're spending our money on is appropriate
CAVANAUGH: If the city hadn't offered the sales and marketing contract, would hoteliers have approved a tax hike for the Convention Center expansion?
TERZI: Well, I can't speak for hoteliers. My role is to run the bureau as effectively as I possibly can. There have been discussions not just over the last year but over the past year, is it more appropriate to have the sales and marketing for the destination unified versus segregated? And as I said, it's really the standard in the industry, with the exception of maybe two major destinations. And I think the industry looked at that and continues to look at that and some of the concerns that have been expressed over the last number of years about segregated efforts and about maybe some duplicative efforts in cost and came to the conclusion that it was more appropriate to ask for that to be unified again.
CAVANAUGH: I'm going to ask a lot bit of a convoluted question. What if a court decides that the City Council cannot legally create a special financing district so that hotel owners can raise taxes for the expansion? And a tax hike has to go before all the voters of the city? Does ConViz still keep the booking contract for the Convention Center?
CAVANAUGH: Okay. So it's a win for ConViz either way?
TERZI: Well, I think it's a win for the destination. It's a win for the city. The city is the major benefactor of all the effort we have. And we generate over $150 million in transient occupancy tax. The city funds none of that. So there's no losers in this. Of it's not a we won versus somebody losing. This is a continued effort to make San Diego as competitive as it possibly can be, as efficient as it possibly can be, and yield more return for everyone, more jobs more POT tax to the city, more overnight stays for the hotel economic, and more economic impact for the destination. So I can't find any losers in this. And those who are pointing to this is a win and a loss I think are uninformed.
CAVANAUGH: Now, if voters in the City of San Diego said no to a Convention Center expansion, do you think ConViz could increase bookings for the present Convention Center? Could you keep the Convention Center in the black just the way it is?
TERZI: Yeah, I think the center has done a really good job. I've said this publicly, it's probably one of the best run centers in the country. They do an exceptional job, the quality of service is exceptional, and they've done a good job selling the building. I think there's an opportunity to improve the sales and marketing of the building. But it's a strong task to improve it significantly because I think they've done a really good job. This is not a short-term play. That building, if you look at availability in that building, it's pretty well maxed out for the next 5-10 years. So the opportunity is to look forward with the expansion and say how can we make sure if this expansion happens the day that we're selling it, we're doing it differently, we're smarter, we're focused on how many room nights can that building generate? And I think the other things will come. The profitability of the building is important, but that's not the overriding issue that we have. The overriding issue is generating more hotel nights out of that building every single day of the year.
CAVANAUGH: Can you share with us some of these plans that you're developing about how to increase the number of nights that people stay here?
TERZI: Sure, yeah, well, we have guidelines that are given to the sales team, how to use the building more efficiently. We have a minimum number of room nights to be produced. And that's all part of our agreement with the city. Those are all outlined in our agreement before we go forward.
CAVANAUGH: So there isn't anything you can say like a big sort of master plan that you might have?
TERZI: Well, we'll have a sales and marketing plan, but again as I said, they've done a very credible job to date. I don't want people to think that we're here bashing their efforts. I do think there's room for improvement. And I think the building has an opportunity to produce more room nights as we go forward, and that's our objective.
CAVANAUGH: Now, there's a real concern that ConViz may give away cut rate deals on the publicly owned Convention Center facilities so private hotel owners can make a killing. Aren't hotel owners really your first priority?
TERZI: Hotels sold in the City of San Diego really is our first priority. That's the stated purpose of the building from our agreement with the city and with the center. So yes, our objective is to sell more room nights in the City of San Diego, No. 1 for economic impact, for the health of the economy, all of those things. So I don't want to apologize because we are going to be passionate about having that building generate more hotel room nights. Those that say that hoteliers are going to make a killing, recognize that 10.5 cents on every single room night sold or dollar spent in a hotel goes to the city. I would hope that the city would be very supportive of us selling more room nights and allowing us to do the right things to make sure that that $150 million goes to $200 million.
CAVANAUGH: Won't that money go to actually pay for the Convention Center expansion?
TERZI: No, absolutely not. The additional expansion dollars is on top of that. So the city gets currently the transient occupancy tax, which was originally put in place to promote San Diego as a destination, every single cent of that goes to the City of San Diego right now. That's what drives the $150 million plus. As we are more successful, we drive more business into the city, we have more occupied room nights, the city is going to be a major benefactor of that, as are employees and everything. Find me somebody that doesn't like this deal, and I'd love to argue with them why it's not a good thing for San Diego.
CAVANAUGH: Well, labor unions have opposed this plan, and they are afraid that ConViz will put up barriers against unions. And then one of the first things you wanted to put in your contract the with the city was an exemption from San Diego's living wage ordinance. Isn't that a troubling sign for workers?
TERZI: It is if you make that statement. But let me give you the facts. The only issue we had was that the language coming back to us from the Convention Center corp was that we had to comply with a living wage ordinance that the city has with the building. I had no problems with that. The problem I had is we have almost 80 volunteers that are elderly people that work with us on a volunteer basis that staff our visitors centers and work with the public. My concern was that if those 80 volunteers have to fall under the living age ordinance, we cannot continue to have them work with our organization. Of the I think it's about $13 an hour plus. We have no one in our organization that's working being paid to work that's making less than $20 an hour. So I have no problem with the living wage ordinance. The issue was how do we deal with those associates or volunteers that come to work one day, two-days a week, and work with our visitors to make sure that that wasn't a problem, and we got 30 from the city just yesterday or city that they were not covered under the living wage ordinance, and volunteers are okay, and we don't have to worry about that.
CAVANAUGH: So is also what you're saying is that you have no problem working with labor unions?
TERZI: Meaning what?
CAVANAUGH: In connection with the San Diego Convention Center?
TERZI: No, no, I mean the Convention Center is a union shop. If you think about it as roles, right? We have a marketing and selling role. We have nothing to do what happens from operations. Once that contract is signed with the consumer or the business that's going to use it, Comicon what's the contract is signed, we're negotiating on 2016 now, once that contract is signed I don't have anything to do with it. The building takes the responsibility to execute the agreement with the customer. Nothing changes in the building, nothing changes as far as I know with union representation and classifications or anything. Carol Wallace still operates the building as she does now.
CAVANAUGH: Let me ask you, if the Convention Center expansion goes through how will San Diego's Convention Center measure up with some of the other venues in the region, in Los Angeles and Orange County, that kind of thing?
TERZI: It's critical for the health of the downtown community. And when you think about hotel, it's not just hotels. Look at what's happened in the did the and the renaissance since I got here in 1995. It's a very vital engine for the community and the downtown area. If you think about San Diego, we're in the -- I would say the mid-upper tier, so from a size standpoint, we're not small, but we don't fit in the upper tier. With the expansion, that gives us about 750,000 square feet of exhibit space. If you think about one room being 750-square foot, that's pretty big. And that will give us the largest exhibit space on the west coast, more than San Francisco and LA. It will put us in the top tier. We'll probably be in the top 10 in the country. We can't match Orlando, Chicago. But those are destinations that we don't compete with much.
CAVANAUGH: I am out of time. I want to thank you very much. I've been speaking with Joe Terzi, president and CEO of ConViz am thanks for your time, Joe.
TERZI: Thank you very much, I appreciate it.