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March 12, 2015

Middle East: A Wise Investment

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The far-reaching and long-term economic benefits that convention centres provide make a compelling case for governments to invest, said AIPC President Geoff Donaghy. 

It has recently been calculated that AIPC’s 172 member convention centres in over 50 countries around the world represent a collective capital investment of more than US$60 billion. This investment provides an additional measure of the economic impact these facilities generate in their host communities, as it is typically repaid by the incremental tax and operating revenues generated by the events they attract from a variety of markets. 

The analysis, produced by Sentis Research, takes into account investments made in centres over their lifespan, including secondary investments made for the purposes of upgrades, renovations and facility expansions. 

As an industry, we have long focused on the economic impact generated by the events that our members host rather than the stimulus that the initial construction, as well as upgrades, creates in a host community. What this study shows is that, even in the development stage, centres are already generating jobs and spending in the local community, all of which will ultimately be paid for largely by the users of the facility. 

When you add these impacts to the ongoing business and tax revenues a centre will continue to generate throughout its operating life, you begin to realise just how important our member facilities are in their respective communities. 

Governments often engage in public facility development as a means of economic stimulus but when that investment is in a revenue-generating facility such as a convention centre, it keeps paying long-term dividends back to the community. 

A government investor has multiple ways of capturing the benefits arising from a centre beyond what comes in by way of direct revenues. They also reap the benefits of the additional taxes that accompany the spending by organisers and delegates, all of which makes it a profitable investment for the government. 
These taxes are largely paid by non-residents, due to the nature of the convention business, which also means that locals are benefiting from government services being paid for by visitors. These are not just one-shot investments, however. In today‘s highly competitive market, centres need to keep improving their products and adapting to the rapidly changing expectations of clients and delegates. Our members maintain a close watch on industry developments in order to ensure they can deliver what event organisers want and need in a time when those requirements are evolving quickly. 

The third component of the value proposition for convention centres is the role they play in helping communities address their economic, academic and community development priorities. Along with the stimulus surrounding construction and the ongoing revenue benefits, savvy government investors can leverage a convention centre’s power in attracting events that help profile and address their own policy priorities. Taken together, these three factors make a powerful economic argument that is driving centre development throughout the world today. 

Geoff Donaghy is AIPC President, CEO of International Convention Centre Sydney and Director Convention Centres AEG Ogden. 

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