Sunday, October 14, 2012

Cities Clash in Battle to Land Conventions

Weak Economy Heightens Competition; Venues Splash Out Sweeteners, Freebies

Wall Street Journal

The AABB, a medical-industry association focused on blood transfusion and 
cell therapy, holds an expo in Boston earlier this month.
BOSTON—Rivalry between cities isn't limited to sports teams.
Across the country, cities are duking it out like never before over conventions, vying to host everyone from the Barbershop Harmony Society to the American Academy of Cosmetic Dentistry.
Convention-center officials in Boston say they were on track recently to snag a green-building trade show when they got muscled out by Atlanta.
Atlanta lured the group for its 2019 show by offering free rent at its Georgia World Congress Center, said James Rooney, executive director of the Massachusetts Convention Center Authority. He estimated comparable space in Boston would have rented for about $500,000. "At the last minute, they swooped in," Mr. Rooney said.
Georgia's capital city won because it "presented the best value proposition," said Mark Vaughan, chief sales officer for the Atlanta Convention & Visitors Bureau. He added that he was surprised by Mr. Rooney's comments but declined to comment about sweeteners offered to the group, U.S. Green Build, which also is mum on the details. The Georgia World Congress Center also declined to comment.
The nation's slow-growing economy has hurt attendance. With budgets tight, companies and associations aren't holding as many conventions or sending as many employees or members to them. And a glut of convention space has sharpened the competition among cities.
"If you get one of these events, you're talking about $20 to $30 million in spending in the local economy," Boston's Mr. Rooney says.
Between 2000 and 2011, convention-center exhibit-hall space expanded by 35% nationally while attendance fell 1.7% in the same time, said Heywood Sanders, a professor of public administration at the University of Texas at San Antonio, and an expert on convention centers. Attendance is down 5% since 2007.
Douglas L. Ducate, president and chief executive of the Dallas-based Center for Exhibition Industry Research, has been in the business since 1968. "It's more competitive today than at any time in my career," he says.
Groups such as CEIR predict moderate growth over the next several years. But the European economic turmoil has hurt many U.S. exporting firms that often hold trade shows and conventions. And industries such as home-building, that traditionally host many shows, are still struggling.
City convention bureaus are undercutting each other with offers of freebies and incentives, such as free banners, breaks on rent and donations to a trade organization's charity. "It's been going on for years, but not at the magnitude that it is today," said Mr. Vaughan in Atlanta.
Some convention centers have added casinos or theaters. In Nevada, the Reno-Sparks Convention and & Visitors Authority is aiming to lure bowling conventions with its sprawling bowling alley only open to convention-goers. "We have the Taj Mahal of bowling," said Christopher Baum, the authority's president.
Mr. Ducate said conventions as a modern industry arose in the 1960s as highways and jet travel made multi-day gatherings economically feasible. The business model that evolved was to build large convention centers as loss leaders, paid for by local government bonds, which thenwere paid off primarily by hotel-occupancy taxes, Mr. Ducate said. The notion was that conventions would generate enough local business to eventually pay for themselves.
Deborah Sexton is president and CEO of the Chicago-based Professional Convention Management Association, an organization of about 6,300 meeting planners and convention and facility managers. "Many cities take this business for granted because it's been coming for years," she said. "It's only when you lose it that you realize its importance."
Business and leisure travel nationally has rebounded since the recession, but travel for conventions, trade shows and similar events, hasn't come back as strongly, said R. Mark Woodworth, president of a hotel market-research company and a member of the board of the Atlanta Convention & Visitors Bureau.
"In the past, where you might have two or three cities [bidding in] any given year, we're now up to four to six cities wanting to bid. It shows you the cities are hungry," said Dick Holmes, convention director for the American Legion. The group recently picked the Kentucky International Convention Center for its 2017 annual gathering after convention officials in Louisville offered free rent and free office space—and agreed to pay all costs for the organization's annual patriotic parade.
Louisville convention center officials declined to say what they gave the group, but Mr. Holmes estimates the perks add up to more than $300,000 in value. In return, he said, the city gets thousands of "guys and gals" who stay in hotels, dine out, take tours and "might have an adult beverage or two."
Mr. Sanders, the University of Texas professor, predicts the glut of convention space will only get worse, because a number of cities continue to push expansions. He blames cities' hired consultants, who he said predict "all these people are going to come and do wonderful things to your economy."
"But the problem is they aren't coming anymore, because there are lots of other convention centers ... that desperately want that business," he said. "So Atlanta steals from Boston, Orlando steals from Chicago and Las Vegas steals from everywhere."
Write to Jennifer Levitz at and Cameron McWhirter

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