With the number of events in North America holding steady while more meeting space is available, cities have to work harder than ever to attract conventions by renovating their venues, offering incentives, and building hotels—even at a time when other priorities are raiding their marketing budgets.
At CEIR Predict, an event hosted by the Center for Exhibition Industry Research at the Waldorf-Astoria in September that looked at the future of the exhibition industry, the mayors of four big convention destinations—Baltimore, Dallas, Houston, and Orange County, Florida—talked about the importance of meetings and conventions to their cities and how they are trying to win business in a competitive market. Dave Whitney, president of Destination Meetings Online and former president and C.E.O. of the Dallas Convention and Visitors Bureau, moderated the panel, and the mayors also answered questions at a press conference.
"It is a buyer's market now," Houston Mayor Annise Parker said. "We are all very competitive with each other." Sometimes that means offering incentives to lure big conventions, but she said not every event will merit concessions.
"No business can stay in business if you give away your product for free every time," Parker said. "For a convention or conference of such magnitude that it will significantly increase the revenues of the overall city, we of course will sweeten the pot. You have to do that with some of the major sporting events, and we coordinate with the state of Texas to decide whether it is of sufficient magnitude to do it."
Timing also plays a role in how much municipalities are willing to negotiate—a bigger discount for slower seasons, for example—but the mayors said there's a limit to the largesse.
"Let me remind everyone, on most years, we subsidize the operation of our convention center," Orange County, Florida, Mayor Teresa Jacobs said. "So when we have a convention that comes in and says, 'Will you subsidize us?' what they're not aware of is, we already are. That's built into our pricing … Generally speaking we subsidize every convention by subsidizing the convention center operation."
Mayors also have to make the case to their constituents when the amount of public investment in convention facilities and infrastructure can seem disproportionate, especially during difficult economic times. The public can feel left out when so much money is dedicated to facilities that they rarely use. In Orange County, the convention center used to host high school graduations, but now the cost of turning away bookings for local events is too high, Jacobs said.
The mission to use big events to boost economic development is so clear that the mayors said they were surprised when New York Governor Andrew Cuomo announced that the Jacob K. Javits Convention Center would displace five trade shows in favor of the New York Boat Show.
"To displace a show that's bringing in true revenue, we don't go there," Jacobs said. "I'm very careful that I don't allow political pressure to interfere with the operation. You have to draw that pretty hard line."
Added Baltimore Mayor Stephanie Rawlings-Blake: "It was as shocking to me as it was to you, the industry."
Another public pressure is safeguarding the money intended to market cities to meeting planners. Some cities have raided the hotel occupancy tax, which often pays for marketing efforts, to fund other government priorities. The mayors saw those moves as short-sighted.
"You don't mess with your marketing money because you're taking away the ability of the tourism bureau and convention center to bring in business," Rawlings-Blake said.
Another non-negotiable expense is investing in facilities. Serious convention cities have to upgrade their buildings and create welcoming places for meetings and conventions, they said. Orange County added a green roof and is improving the wireless network in its convention center. Dallas wants to create more flexible meeting space. Houston is building a second convention center hotel. Baltimore is considering a convention center expansion that would add an arena and double the exhibition space.
"It's not optional," Rawlings-Blake said. "You're either in this industry or you're not. And if you're in the industry, you have to rise the standards and try to exceed them to be competitive. You have to try to find the most efficient and innovative model. We've just invested over $20 million in ways that we can make the space more attractive to planners and the industry. As soon as somebody raises the bar, you either go there or you relegate yourselves to get the crumbs."
Some cities have given up. After failing to draw enough business, the Reno-Sparks Convention Center in Nevada, for example, is using 300,000 square feet of space as a studio for television and film production.
"It's great when you win, but there are a lot of dollars that have to be put into this thing," said Dallas Mayor Michael Rawlings. "Like any category, this is going through a settling out, and you'll have people falling out. It's not so great for them. But we're competing not only for regional dollars, but national dollars and international dollars. To do that, the price of poker is high. Let's play. We think we'll win enough hands to make it pay off."
