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June 7, 2001

Hey, big spender! You’re wanted in Seattle

  • Last year, 111,333 out-of-state convention visitors spent $128 million in King County. The expanded convention center is expected to attract even more visitors who plan on leaving their money behind.
  • By BRIAN BAUM
    Washington State Convention & Trade Center


    Who owns the
    convention center?
    The Washington State Convention & Trade Center is a nonprofit corporation established in 1982 by the state Legislature to provide economic and civic benefits for the people of the state of Washington.

    The citizens of Washington are, in effect, the owners of a substantial profit-making property that is paid for by their out-of-town guests. The Legislature approves biennial budgets for the operation of the center. Taxes collected from visitors to large hotels in King County pay a major portion of the capital costs of the convention center.

    Situated in the heart of Seattle is the Washington State Convention & Trade Center, a state-of-the-art complex of functional and imaginatively designed buildings that welcomes hundreds of thousands of visitors each year.

    This unique facility has played a key role in the revitalization of the downtown core, is responsible for thousands of jobs throughout the region, provides a steady stream of revenue for regional businesses and government, is civically minded, reduces the tax burden for residents and yet costs those same taxpayers nothing to operate.

    The primary economic purpose of the convention center and its related hotel tax is to create jobs and business activity in the visitor industry. A secondary purpose is to help support the operation of state and local governments without imposing additional taxes on state residents.

    The construction of the convention center has spurred the strong growth of hotels and their acceptance of a tax on the occupancy of hotel rooms. Revenues from room taxes rise with increased occupancy whether due to business, vacation or convention visitors. Overall room tax revenues have continued to grow each year since 1988.

    NET ANNUAL CASH FLOW TO STATE
    (Dollars in millions)
    Source: WSCTC
    Includes all revenue sources after deducting all operating costs and principal and interest payments on debt.

    The net annual cash flow from the convention center to the state of Washington for fiscal year 2000 was $22.6 million, and since opening in 1988 the net cash flow to the state has exceeded $132 million.

    In a sales tax state like Washington, out-of-state visitors are the local taxpayers’ best friends. Convention visitors stay a few days, spend money in hotels, stores and restaurants, and pay sales taxes that go directly into state, city, county and Regional Transit Authority treasuries. Because out-of-state visitors do not place significant cost burdens on local governments, the taxes they pay effectively reduce the amount of taxes that would otherwise have to be collected from local residents to maintain current levels of governmental services.

    Cash flow throughout the state

    Metropolitan King County is the largest local government beneficiary of sales taxes paid by out-of-state convention visitors. From fiscal 1989 through 2020, the county will have collected an estimated $164,100,270 in sales taxes on convention delegate spending, $150.6 million of which flows into dedicated county accounts and $13.4 million that is available for general county purposes.

    The city of Seattle is a substantial investor in the facilities and operation of the convention center and it will also receive significant revenue ($76.1 million) in taxes generated by out-of-state residents who use the convention center.

    The Regional Transit Authority ($32.1 million) and Seattle School District ($21.4 million) are the other significant beneficiaries. Schools throughout the state also benefit indirectly because the state’s general fund receives the largest amount of sales taxes on out-of-state visitor spending and school support is the largest expenditure from the general fund.

    Who uses the convention center?

    In fiscal 2000, the center hosted 34 national conventions and trade shows with 118,440 attendees. Of these visitors, 111,333 were from other states and countries. These out-of-state visitors typically arrive by air, stay in downtown hotels, and walk to and from convention center meetings. About one-third of these visitors come with their spouses and families.

    Together, out-of-state delegates and exhibitors spent approximately $128 million last year, primarily for hotel, restaurant, and retail services. A 1999 convention income survey by the International Association of Convention & Visitor Bureaus reports that the average attendee at an international or national convention now spends at least $1,058 during a four-day stay and each exhibitor at these meetings spends at least $313.

    In addition to the high-profile national and international events, the convention center’s in-house marketing staff attracted 337 local and regional events with 280,149 attendees. The trend for future local and regional event business remains strong, as evidenced by the booking pace for small- to medium-sized conferences. These events range from 30 to 1,200 attendees, are booked a from a few days to a year from the program date, fit into available space around national conventions, and generate considerable ancillary food service, parking, audio/visual and telecommunication revenues.

    The size and flexibility of the meeting spaces in the expanded convention center facility (see related article on page 2) has increased demand from groups that have outgrown other regional facilities. Popular large-scale consumer shows such as the Northwest Flower and Garden Show and the Seattle Gift Show not only return regularly, but also have been able to substantially increase the size of their events with the convention center expansion.

    The road to profitability

    Estimated Cash flow to Local Institutions 1989-2020
    King County: $172,332,791

    City of Seattle: $95,815,082

    Arts and Culture Organizations (1997-2012): $14,920,724

    Seattle School District: $21,442,755

    Regional Transit Authority (1997-2020): $32,112,857

    The convention center has now become a significant earning asset of the state, but profitable operation took time to develop. In the early years of operation, it was necessary to borrow from the general fund to cover operating deficits and start-up costs. This borrowing has been gradually repaid in recent years from growing revenue. The final payment was made last year on this early borrowing and it now has been repaid in full with interest.

    Beginning in 1991, the revenues from all convention-related sources have totaled significantly more than the cost of operating the convention center and paying debt service on its bonds. One of these sources, sales taxes on delegate spending, is paid automatically into the general fund of the state or other local government levying sales taxes.

    Other sources of income for the convention center are derived from meeting room, food service, parking, and retail rental revenues. In fiscal year 2000, these sources generated nearly $9.8 million of the $14.7 million in operating revenues. The Washington State Convention & Trade Center continues to be a self-sustaining and revenue-generating engine for the state economy. With the added benefits of the newly expanded facility, the economic impact will become even more substantial.


    Brian Baum is community relations coordinator at the convention center.


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