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Puerto Rico promotes casinos
Hotel & Motel Management / September 15, 1997

By Larry Luxner

SAN JUAN, Puerto Rico -- The Puerto Rico Convention Bureau, in a bid to attract more meetings and conventions to the island, proposes to build Latin America's largest convention center on a spit of unused land along San Juan's Isla Grande waterfront.

The center, expected to cost $100 million, will be financed through a combination of casino earnings and an increase in the hotel room tax. It'll sit on a site measuring 30 to 40 acres, and will be part of a $1.2 billion waterfront project known in Spanish as El Triangulo Dorado (The Golden Triangle).

"The idea is to create a bayfront development, all inter-connected with water taxis," says Jorge Pesquera, executive director of the Puerto Rico Convention Bureau. "We're talking about one of the most ambitious urban development projects in U.S. history."

Groundbreaking for the San Juan Convention Center, as it's being called, should take place in 1999, with inauguration as early as 2001. "The new convention center will be large enough to meet our needs far into the new millenium. This could be anywhere between 300,000 and 500,000 square feet of meeting and exhibition space."

The Golden Triangle project represents more than 11 million square feet of new development valued at $1.2 billion. Proponents say the project could produce 49,000 direct and indirect jobs over the course of its construction, with over 15,000 permanent positions created.

On July 4, a new law took effect which raises Puerto Rico's hotel room tax by 2%. The law, supported by Puerto Rico's pro-statehood governor, Pedro Rossello, raises the tax from 7% to 9% for non-casino hotels, and from 9% to 11% for hotels with casinos. Pesquera says the measure directs 25% of the additional revenues toward marketing efforts for the planned Isla Grande Convention Center.

Income from the remaining 75% of additional revenues will go towards the convention center, if the government's General Fund can collect the $30 million earmarked from net revenues generated by slot-machine operations. Beginning in fiscal 2000, the entire 2% will go to the center.

In addition, the Puerto Rico Legislature has passed a casino law which, for the first time ever, allows 24-hour operation of casinos. It also permits hotels to offer liquor and live entertainment in casinos, and to advertise their casinos locally.

Most importantly, it allows hotels to own the slot machines and, says Pesquera, "to use their judgement in buying the machines that'll bring in the most revenue."

"The Tourism Company will continue to regulate the casinos," he said. "Inspectors will remain on the government payroll, but the attendants and technicians will now become part of the private sector."

Jaime L. Gonzalez, vice-president of the Hotel Development Corp., a subsidiary of the government-run Puerto Rico Tourism Co., says the Rossello government's focus on attracting group tourism and encouraging casino development is a relatively new phenomenon.

"The role of gaming has always been downplayed in Puerto Rico," he said. "Hotels were only built so that corporate executives would have a nice play to stay when exploring new investments and visiting their plants. Tourism was not encouraged." He adds that the island's new casino "will make the industry more competitive."

At the moment, Puerto Rico's tourism industry is doing extremely well, says Raul Bustamante, president of the Puerto Rico Hotel & Tourism Association.

"Business is booming," says Bustamante, who's also general manager of the government-owned Caribe Hilton. "This year, if we don't get any hurricanes, is going to be our best ever, at least by six percentage points. Right now, we're at 85% occupancy for the year."

In fiscal 1996, Puerto Rico's hotel bookings ran 34% ahead of the previous fiscal year. Room nights increased by more than 42%, and the group market registered $37 million in direct economic impact. In addition, 249 groups and 108,360 room-nights were booked at hotels around the island. Pesquera says a $1 billion-a-year meetings industry isn't far off, and to that end, the new convention center will cater not only to U.S. businesses but to Latin American customers as well.

"This will help position Puerto Rico as the meeting place of the Americas," says Pesquera, whose agency has 42 employees, a $4.4 million budget and offices in half a dozen cities. "No other city in Latin America will have a convention center of this magnitude" -- not even huge metropolises like Sao Paulo, Rio de Janeiro or Mexico City.

For years, Puerto Rico's only convention center of any size has been El Centro, located in the heart of San Juan's Condado hotel strip. But obsolesence and lack of interest forced El Centro shut earlier this summer, along with two adjacent hotels the government is also trying to sell: La Concha and the Condado Beach Hotel.

Gonzalez says El Centro should simply be torn down. "That property was misnamed from Day One. It was never a convention center, just one big meeting room."

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