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Old Posted Apr 17, 2009, 4:07 PM
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Consol Energy Center bookings could be affected by economy

Pittsburgh Business Times - by Kris B. Mamula

Although interest in booking events at the new Consol Energy Center has been brisk, the success of the arena will hinge on how well the region’s economy picks up by the time it opens next fall.

Efforts are underway to fill the arena outside the Penguins’ 41-game regular season, including NCAA men’s and women’s basketball games, which promises to boost the number of visitors to the city. Consol Center General Manager Jay Roberts declined to discuss a schedule of events, saying only: “Everybody wants to be part of the new building opening.”

Consol Center is expected to generate between 20 percent and 30 percent more revenue than Mellon Arena, while boosting the value of the Penguins franchise by 40 percent or more.

But the condition of the overall economy will determine what kind of an impact the 18,087-seat arena will have on the region, according to Dave Synowka, director of sport management at Robert Morris University. Attendance at arena events depends on discretionary income, which hinges on employment numbers and overall economic vitality.

The souring economy has cost sponsors for nearly all major sporting events, including NASCAR, PGA and professional basketball, Synowka said. Ticket sales also have been soft.

“You’re dealing with a completely different environment with this economy,” Synowka said. “It’s not the same (as) when PNC Park or Heinz Field opened.”

The economy is “a huge factor right now,” he said.

Robert Morris is among the groups trying to attract the Frozen Four, an NCAA hockey playoff event, which is the kind of thing that may ultimately boost the number of visitors to the city. Between hockey and other events, the new arena will draw an estimated 1.5 million visitors a year, according to the Sports and Exhibition Authority, which will own the arena with Allegheny County.

The size and configuration of the new facility will allow between 20 and 25 more nonhockey events to be scheduled annually than at the 16,940-seat Mellon Arena, according to Hank Abate, senior vice president of West Conshohocken, Pa.-based SMG, which will manage the new facility.

“Concerts will play a big part,” he said. “We can also go back in the hunt for the NCAA events,” including wrestling and men’s and women’s basketball.

Those kinds of events are important because they can attract people from outside the region instead of simply moving existing fans from one facility to another, Synowka said.

Hotel occupancy will probably be the best indicator of the arena’s economic impact, an area where Pittsburgh has done well in recent years. Between 2004 and 2008, the city’s rate of hotel occupancy growth was second in the country, trailing only New Orleans, according to Craig Davis, vice president of sales and marketing at VisitPittsburgh.

“Our local banks and other institutions are still faring very well, and business travel is strong in the city,” Davis said. “With the new facility, I think you would get a bump in visitation.

“A brand new facility allows us a lot more marketing opportunities.”

During 2007, the most recent year data is available, Allegheny and the surrounding 10 counties had 9.7 million overnight stays by visitors, according to state data prepared for Visit Pittsburgh. That’s up slightly from 9.6 million visitors in 2005, the last year the survey was done.

Lodging revenue is expected to decline this year because of the recession, but the losses for the Pittsburgh region are expected to be smaller than other parts of the country, according to a study released last month by Atlanta-based PKF Hospitality Research.

Revenue per hotel room is expected to fall 13.7 percent nationwide this year and a turnaround is not expected before the first quarter of 2011, according to the study. Between 70 percent and 80 percent of a hotel’s performance is linked to the local economy, but the room revenue decline for the Pittsburgh market in 2009 was expected to shrink 6.8 percent, one quarter the decline of New York City and the lowest of nine markets surveyed.

“Occupancy in the city is down, but we’ve fared comparatively better than a number of other destinations,” Davis said. “In 2010, we’re at the whim of the rest of the economy.” | (412) 208-3825
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