Friday, May 09, 2008

Healthcare: The Next Bubble?

Imagine, medical conventions are now the prized catch of the convention industry:
"Medical events have attracted long-staying, high-spending visitors … so everybody wants them, and any number of cities, including San Diego, New Orleans, Boston and Chicago have proclaimed themselves to be the natural home of such meetings."

"Whether there is enough business to go around is a seriously open question, especially with the market overbuilt as it is," Sanders said.

Chicago's newly opened $882 million McCormick Place West Building is among the facilities aiming to attract a bigger slice of the medical meeting business. So far, its sales force doesn't appear concerned about the Cleveland project.

"The competition across this industry is fierce," acknowledged Meghan Risch, a spokeswoman for the Chicago Convention and Tourism Bureau, which books the hall. "But we're not going to speculate on a project that, up to this point, doesn't have a design plan, tenants or even the ability to book future business."

Chicago was the No. 2 site for medical meetings in the U.S., behind Las Vegas, in 2006, according to the most recent data posted by the Healthcare Convention Exhibitors Association. Cleveland, which has an outdated, underutilized convention center, did not make the association's list of the top 20 host cities.

Still in early planning stages, the Cleveland project is expected to cost about $400 million, with the county picking up most of the tab, and will include 100,000 square feet of showroom space, 300,000 square feet of trade show space and a conference center. A downtown Cleveland location is expected to be selected this summer. One front-runner site is owned by Forest City Enterprises, the Cleveland-based co-developer of the Central Station mixed-use project in Chicago's South Loop
Increasingly, our economy has become dependent on healthcare as its economic engine:
"Fifty thousand people in a population of 1.3 million (in Cleveland) work in the medical industry, so it's now the GM of an old industrial community," said Timothy Hagan, a county commissioner. The three county commissioners approved a sales tax increase to finance the project.
And despite the glut of convention space nationally and with Medicare looking at financial insolvency in the not-so-distant future, we are left to wonder...

... will healthcare be the next bubble to pop?


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