Author: Peter Gorman

FM Issue: Leadership and Operations 2014

By all accounts, the great convention center downturn that followed the recession is on the upswing. People are spending more freely again and that has a lot of meeting and event professionals breathing easier.

“Touch and go there for a while,” says one insider, asking that his center not be named “because it might just jinx us and bring back the bad luck and we don’t want that at all.”

There was a lot more than jinxing involved when the U.S. and most of the world’s economy took a heavy hit in 2008 and 2009, and nearly six years later things are not back to normal. But they’re better than they were a few years ago, when the CEOs of CVBs were wondering how to put fannies in their convention center seats.

It turns out that a lot of those CEOs and their staffs came up with some interesting ways to get through the lean times: Some offered fantastic incentives to potential clients; others offered free space, cheaper hotel accommodations or guaranteed booking rates. Still others found themselves going after groups they’d never previously gone after, things like large weddings or sporting events.

“You do what you have to do,” says Jacques Drury, CMP (MPI Ottawa Chapter), senior manager or national convention sales for the Ottawa Convention Centre in Ontario. “Some business is better than no business.”

One of the things that Drury did was launch the Great Rate Freeze in February of this year, which will freeze all rentals made in 2014 to this year’s prices for convention events through the end of 2020.

“We can’t compete with some of the destinations that are offering free or deeply discounted space rental, so we’re freezing the prices instead,” Drury says.

He and his staff are also maximizing the business value of meetings in Ottawa.

“Let’s face it, we’ve been and still are in a period of constrained event budgets,” Drury says. “So every meeting has to have a business objective these days. And we are working harder than ever to make sure that we’re in partnership with our clients, to customize our approach with each of them to make certain that their event is going to successfully meet their business objectives.”

Everyone in the business had to get creative to make things work, says Nancy Williams (MPI Sacramento/Sierra Nevada Chapter), senior sales manager at the Monterey Convention Center in California. She only joined the Monterey team two years ago, but was in the industry throughout the drought.

“One of the keys to success in a buyer’s market is personal attention,” she says. “That is always true but particularly so when things are tight.”

Williams says that both at past venues where she worked as well as in Monterey, the downturn has caused people to negotiate harder.

“Could a client get by with less space to save money? Could we help with rental materials, in lowering hotel rates? We wound up working with every aspect of a client’s event,” she says. “We’d talk to restaurants to get better prices and we’d explain that some business was better than no business and the hotels and restaurants got that. It was an interesting balance.”

Williams says that the current year has been amazing for the Monterey Convention Center, attributing that at least in part to the location’s appeal.

“But it’s still a buyer’s market and our clients are not going to let us slough off now that they’ve learned how much we can help when we really put our minds to it,” she says.

Rémy Crégut (MPI France-Switzerland Chapter), general manager of the Montreux Music & Convention Centre, notes that the recession even hit Switzerland—but fortunately, not as long as in other European countries. Specifically, he saw that the hardest hit were in international events.

“There was a drop in both the number of events and the numbers of participants for those, so we had to work around that,” he says.

To that end, Crégut began to focus on diversifying his client base.

“We hosted more local cultural events, more national congresses and more local assemblies,” he says. “Anything that didn’t require the expense of travel.”

For international and repeat clients, Crégut proposed long-term agreements with guaranteed rates and extra services.

“Now, even though we are back to regular business here, we are ready for the next crisis and prepared to react immediately,” he says. “That’s something we learned this time.”

While Crégut went local, Marco Tani (MPI Italia Chapter) says Fiera Milano Congressi (MiCo) went the opposite way: The conference center was enlarged to become one of the largest in Europe. And since the economic downturn continues in Italy, Tani decided to look to the rest of Europe and the U.S. for business.

“We used the natural draw of Milan as a world-class destination, and then we reached out to other countries—which has been a win for us,” he says. “Our targets have always been the big events and they still are even though their budgets are often lower than they were in the past.”

Tani says that attention to detail, real event details, has provided insight into where a client can save money.

“It is something that works for them and for us as well,” he says. “The client gets a more customized proposal, one that goes to the heart of what they need without losing time and money for providing something not important to them. That effort on our part, along with having kept our rental rates at MiCo at the same level for the past few years, has encouraged clients to see the value of coming to Milan, even in these distressing times.”

Also reaching out to the international market has been Amsterdam’s RAI convention center. Communications Manager Katelijn Wilhelmy says that part of RAI’s strategy is to push for multi-day international events.

“It’s a changing world and we have defined our strategy as one that connects physical and virtual meetings, linking the new economic superpowers in Europe,” she says. “International exhibitions have been increasing, so we are focusing on them. And integrating virtual components into live events allows organizers and exhibitors to exceed expectations.”

RAI has also made changes to their facilities that encourage clients to make the effort to get to Amsterdam. They began construction of a multipurpose conference/office building with a first-class restaurant in 2013. The RAI Amtrium venue will unite exhibitions, conferences and office functions in one place and is set to open in May 2015. The Amtrium will also include the extraordinary feature of a vertical greenhouse for urban farming, with the crops grown used at the RAI canteen.

“Much of the building utilizes sustainable technologies and when it’s finished it will be the first conference center in the Netherlands to receive the seal of approval from the Dutch Green Building Council,” Wilhelmy says, noting this will add value to clients looking for a greener conference. “The world of events is changing, and we want to be innovators, not followers.”

Kathie Canning, executive director of the Orange County Convention Center (OCCC) in Orlando, Fla., cites the ever-present value that convention centers provide.

“Even in bad economies, convention centers are economic engines for their communities and clients,” she says. “Associations and trade shows still want to meet on an annual basis.”

But in the Orlando market, the recession really took a toll on food and beverage spending, as well as non-essential items. And meetings and events saw decreased attendance.

“We added new initiatives, improved technology and increased customer service training,” Canning says. “There was also an increase in the number of hybrid meetings we had, where virtual elements were added to the face-to-face meeting.”

In the long term, the OCCC is working on a $187 million capital improvement plan, allowing the facilities to be upgraded and revitalized, from facility restrooms to added digital capacity and the construction of a new ballroom.”

Canning says this revitalization is already producing results.

“In the past year we’ve seen more corporate events on the books, food and beverage revenue has increased and attendance numbers are getting stronger,” she says. “We had 55,000 attendees at the 2013 Premiere Beauty event. That’s strong.”

One of the most interesting studies comes from the Irving Convention Center. Irving, just west of Dallas, has had a CVB for 40 years, but only opened its convention center three years ago.

“We began the project in 1999 and went through a lot to get the building done,” says Maura Gast (MPI Dallas/Fort Worth Chapter), executive director of the Irving CVB. “We definitely knew what we were getting into from an economic point of view. The center, located adjacent to DFW International Airport and surrounded by 75 nearby hotels, certainly has location going for it. But breaking into the tough world of convention centers is no easy task.

“The building itself will always lose money, but then they nearly all do, which is why the private sector doesn’t build them,” she says. “Still, the CVB can only subsidize the building so far and even in a high-water market you either squeeze the revenue or squeeze the expenses down. In the current market, that goes double.”

Gast says the CVB went out of its way not to overbuild and her groups tend to run between 800-1,200 people.

“We’ve definitely benefitted from some of the larger corporate meetings having been broken into smaller regional meetings during the recession,” she says. “But you can’t force corporate America to do things, especially in an economic downturn. You try to make [your venue] as attractive as you can—we built in plenty of breakout space and lots of outdoor spaces where programming can be conceptual or organic, for example, but you still need to deal with reality.”

To get her building and the surrounding hotels and restaurants filled, Gast took an unusual look at the event market.

“Weddings and amateur sporting events are recession proof,” she says. “And while we didn’t envision being in the market for those sorts of things, well, they’re now staples for us. We’ve had large weddings, judo events and gymnastics competitions. We recently had a wheelchair motocross event. We aim to build weekend demand for our hotels and restaurants.”

The Irving CVB has also streamlined access to the center.

“In our system, negotiations with the CVB, the building and catering are all done in a single conversation,” Gast says. “So if a group doesn’t want to pay rent but will do a huge amount of catering and fill up a sufficient number of hotel beds, well, we are going to make that event work somehow.”

She says those situations are manageable in Irving because the CVB, convention center and F&B act as a single unit rather than three separate entities.

“Let’s face it, it’s been a buyer’s market for a long time and if driving business to the community is what you want to do—and that’s what we’re all here for—then you take what you can get and make it so memorable that those people will want to come back,” Gast says. “Because at the end of the day, people love meeting. The dynamics of how we communicate and the pulse of the economy may be changing, but people still like to meet in person. Our job is to make that happen.” FM

This article was originally published in The Meeting Professional, a strategic content partner with Facility Manager.