Originally posted by TIM LOGAN • tlogan@post-dispatch.com on STLToday
Sometimes, what happens in Vegas doesn't stay in Vegas.
That was the case this week, when a scandal-plagued federal agency, still reeling from revelations about a lavish conference in Sin City, pulled the plug on an upcoming gathering here in the Gateway City.
Now 10 downtown hotels are left with a bunch of empty rooms and wondering if they will ever get paid.
The General Services Agency, which manages nuts-and-bolts federal purchasing, told St. Louis convention officials this week that they are canceling a big energy trade show scheduled for America's Center next month. It would have filled nearly 2,500 hotel rooms downtown for four nights, generating an estimated $6 million in hotel and convention spending, plus cab rides, meals and more. Now? Nothing.
"It's impossible to fill almost 2,500 hotel rooms for four or five nights in a month," said Kathleen "Kitty" Ratcliffe, president of the St. Louis Convention and Visitors Commission. "Those hotels are going to sit empty. Cab drivers won't be working. Restaurants won't be as busy."
The reason for the cancellation dates back to a regional leadership conference GSA held in October 2010 at the M Resort Spa Casino in Las Vegas. It hired a clown and a mind-reader and bought 1,000 $7 sushi rolls. All told, the bill topped $822,000 for 300 attendees, or $2,740 a head.
When an audit revealed this in April, official Washington was officially aghast. Heads rolled -- the GSA's director and several top executives were pushed out -- and new regulations were written to govern how GSA conferences would be run in the future.
That is what tripped up GovEnergy, the trade show that GSA booked here more than a year ago. After "rigorous review," GSA determined that the conference did not meet the new standards, agency spokesman Dan Cruz wrote in an e-mailed statement.
"There were many unanswered questions about how the conference was structured and there was not sufficient time to address the problems raised," Cruz wrote. "As a result, we felt it was best to suspend the program until those issues could be addressed."
That decision will likely leave a lot of downtown hotel rooms dark.
The Hilton St. Louis at the Ballpark, for instance, had sold a block of 250 rooms to the convention, said Bob O'Loughlin, chief executive of Lodging Hospitality Management, which owns the Hilton. Now it will have to find new buyers.
"It's a baseball weekend, so we hope we can pick up some business there," he said. "But on such short notice you just don't know."
Closer to the convention center, hotels may not have as many alternatives. The Renaissance Grand on Washington Avenue had booked nearly 900 rooms with GovEnergy, said sales and marketing director Dan Boyer. The cancellation will cost the long-struggling hotel $400,000, plus lost business at its restaurants and bars.
"Our ability to recoup those losses at this point is almost zero," he said. And that means the hotel will bring in fewer of its temporary staff to work that week.
"The ripple effect is pretty big," Boyer said.
Of course, conventions sometimes cancel. What's unusual in this case is the short notice -- just a month ahead of time -- and, Ratcliffe said, a move by GSA to invoke a "force majeure" clause in its contract that will absolve it from most of the hotel cancellation fees.
"It's supposed to be used for acts of god, or a war," she said. "But this is caused by changes to government regulations, that they themselves made."
Cruz declined to answer specific questions about the contract.
"We are working hard to make sure that all parties are treated fairly," he wrote.
Boyer and Ratcliffe said the hotels may be able to get some compensation through the company that organized the convention. But neither was optimistic they would see much. The best bet, said Boyer, might be for GSA to schedule a future GovEnergy convention in St. Louis. But that wouldn't be until at least 2014. Next year's is already booked in Tampa.
Ironically, in 2009, during the depths of the recession, some government agencies were shying away from Las Vegas as a convention site, worried the glitz might send the wrong message. The Wall Street Journal reported that the Agriculture Department, for instance, had an internal list of perhaps more modest cities that it encouraged for conventions. St. Louis was on it.
If only the GSA had taken the same approach, next month downtown might be a little busier.
Tim Logan covers economic development for the Post-Dispatch. He blogs on Building Blocks. Follow him on Twitter @tlwriter and the Business section @postdispatchbiz.
