Five Years From Today

Taking over an organization rocked by scandal, because the former leader — and one of your mentors — has been fired by the board of directors isn't most people's idea of a dream promotion.

That's essentially what happened to Richard Scharf, former executive vice president of the Denver Metro Convention & Visitors Bureau, when his boss Eugene Dilbeck left office in November 2003. The ouster came after some of Dilbeck's staff members were caught on camera entertaining prospects at a strip club.

Thrust into his new role as president and CEO of the organization, Scharf had little time to feel sorry for himself. The city was about to host the annual gathering of Meeting Professionals Intl. — attracting thousands of delegates who had the potential to book lucrative future business — and $650 million of expansion projects to enhance the city's convention infrastructure were underway.

Now that the near-300,000 square foot addition to the Colorado Convention Center has been open for six months, and the 1,100-room Hyatt Regency Denver across the street is about to be completed, Scharf can exhale.

Still, as he told Tradeshow Week Senior Editor Heidi Genoist, Denver hasn't yet reached its full potential. Hamstrung by a state with no funds for tourism development, the city is looking for ways — and money — to do the job itself.

Question: You took over in Denver in the wake of the scandal that forced Eugene Dilbeck out of office. How did you handle what must have been a difficult situation?

Answer: I worked with Eugene for 10 years — I was No. 2 — and I think situations like that either tear you apart like a cancer or bring you together as an organization. I found great solace in the fact that our team pulled together. What happened really hurt the feelings of a lot of our hardworking employees. We had to keep the staff focused on our core competency.

Q: How did you do that?

A: We understood that we had done nothing wrong and that we were a good organization, so we knew that would all play out. It was about communicating with the team and letting them know what was happening.

At the same time, our (office) lease was up, we were negotiating a new 10-year contract with the city, we had 10 new City Council members and we were getting ready for MPI (World Education Congress). So, we had to stay together, well-informed and focused.

Q: Did it work?

A: We came out of it with a great year. We got another 10-year contract with the City Council, and MPI had the second-highest attendance in its 36-year history.

Q: Who do you consider Denver's competition?

A: Unfortunately, we've competed with every city in the last few years. Four years ago, we were probably competing more on a regional level. We'd see groups that said, "We're going East, West and Central, and you're our West or Central."

Now, we're competing on a destination level. Groups are looking at places they want to visit and throwing them all into the hat.

Q: What are some of the destinations you come up against?

A: Those that are well-branded: Atlanta, New Orleans, Chicago — unfortunately, we lose to Vegas more than I'd like — San Antonio, San Diego.

Q: What sets Denver apart?

A: I think it's just purely an energy. We meet all the criteria people are looking for with costs and our product, but Denver offers a Western urban environment at the base of the Rocky Mountains. We have all the attributes of a big city, but we can offer small-town service.

Q: Denver Mayor John Hickenlooper recently has gotten some press for taking the initiative in convincing conventions to come to Denver. Is this helpful, or is he stepping on the CVB's toes?

A: Actually, it's just the opposite. We're the ones that make the calls to have him show up. We have a mayor who served on our board for 12 years, and headed the largest brew pub in the world, so he understands the industry and the importance of good service. Having him show up gives the meeting planner the feeling they have top-down support.

Q: Why is that important?

A: Nowadays, you better have a good airport, convention center, affordable hotel package, be safe. Then there are the intangibles: Do you have a vibrant downtown? Do people really want to go there? If the infrastructure is there, that's the differentiating point.

If we can't hit on all cylinders, I'm sure a meeting with the mayor wouldn't matter, but if we do, it's one more way to let customers know we're interested in their business.

Q: Is that part of Denver's strategy for booking groups?

A: It's not what you book, as far as conventions go, it's what you rebook. There's a limited amount of business to begin with, so you have to get people to come back. As you have more competition, it becomes even more important.

Q: The Brookings Institution report from January used Denver several times as an example of what's wrong in the convention center space race. How do you respond to the author's assertion that it doesn't make sense to expand during a time when occupancy is falling?

A: Nobody's listened to him (author Heywood Sanders) in the last 10 years, and now that the travel industry is devastated he's gotten a lot more traction than he deserves. Our industry is cyclical. People look at the feasibility of these projects, and then they ramp up.

Q: The 1,100-room hotel being built across the street from the convention center will be publicly funded, but managed by Hyatt, a private-sector player. Why this arrangement?

A: The Coopers Lybrand study done in 1997 for the (convention center) expansion suggested that it would mature faster and give us a higher return on investment if we had a 1,100-room hotel with it. And we did a study where 30 percent of meeting planners said they needed a hotel near the convention center to complement the downtown hotels.

Back in 1998, we had a developer that petitioned the city to build a hotel across from the convention center, and as time went on his financing fell by the wayside. We found that the financing to build a 1,100-room hotel wouldn't work out for a private developer.

So, it made sense for us to do it. I can't imagine where we'd be right now if we didn't have the hotel.

Q: Where are you, with the proposed hotel and rental car tax increase that the CVB hopes to get on the November ballot?

A: Last November, our board asked for a proposal. Most organizations are about a cause, and ours is to bring in more conventions and travelers. So we identified where we want to be and analyzed the gap between there and where we are in terms of taxes. To close that gap, we came up with a 1-percent increase in hotel and 1-percent increase in rental car taxes.

Q: How much are you hoping to raise?

A: About $2.8 million for hotel and $2.8 million for rental car (annually). If we don't go for both, we won't be able to do everything. We have to cover the $650 million investment.

Q: Do you mean the cost of the convention center expansion and new Hyatt hotel construction?

A: Yes.

Q: What is your total budget right now?

A: About $8 million. We get $5 million of public money. We raise about $3 million in private dollars. In the last 10 years, we've doubled the private dollars, but our public money has remained constant.

Q: About how much of what you hope to raise would go to marketing conventions?

A: About 35 percent would be focused on the convention side, because most of our operation today focuses on that. The balance would be on the tourism side.

Keep in mind that destination appeal has become a big consideration in site selection. We feel that getting the word out on what's going on in Denver on the leisure side is going to help us on the convention side. We believe people will meet in places where they want to go anyway. Vegas is a great example of that.

Q: What do you think of efforts by CVB leaders like Greg Ortale in Minneapolis and Reyn Bowman in Durham, N.C., who have commissioned outside audits of their own performance?

A: That's not something completely new in our business. Some cities — those two cities are alike — have gone to the next step and brought in a third party, and I commend them for it.

Q: Does Denver do anything like that?

A: We regularly get together with our advisory groups of hoteliers and look at our systems, to make sure they're credible and showing what our stakeholders want to see. When we had an audit of our finances last year during the negotiation of our city contract, that was a public process. We have a very engaged hospitality community, and all our info is out there.

We've also incorporated all the best practices that were recommended by IACVB (the Intl. Assn. of Convention & Visitor Bureaus). I think that's the best thing that has happened in our industry. As bureaus go along, we're learning.

Q: Your CVB peers have described you as representative of a new breed of bureau executive. What do you think they mean by that?

A: I might be more open to change. I think — because I come out of the convention business — five years from today is my tomorrow. I see the business that way. We have to be looking to the future of our CVB and our world.

Wayne Gretzky skated where the puck was going to be instead of watching it on the end of the other team's hockey stick. I might be from the next generation to look down the road and see how we can have an impact.