Citywide Meeting Deals, Concessions Flourish
By Seth Harris
March 4, 2010
Planners negotiating for citywide events are garnering deeply discounted sleeping room rates, reduced or free convention center rents and a variety of other concessions as destinations work to fill the gaps left by 2009's spate of canceled and shrunken meetings.
Even smaller organizations that hold events that occupy rooms in multiple hotels and require convention center space find themselves able to sign deals with cities that previously would not pursue their business due to their smaller size and spending levels. Some planners are taking advantage of these opportunities by booking multiyear deals and signing letters of intent for meetings scheduled far in advance, even into the 2020s.
"It's pretty unprecedented for what the hotels are offering to try to get business on the books for six and seven years into the future," said San Diego Convention Center Corp. senior vice president of sales Andy Mikschl. "Planners see those deals from other destinations, so it's forcing all destinations to become that much more competitive."
As competition intensifies, cities and associations are scrambling to sign business, especially with top-tier destinations courting business historically relegated to locations with smaller convention centers and less hotel inventory.
"There is so much demand for the business that there is a lot of feeling out there that, 'we just want business on the books because who knows what is going to be out there if we don't get this one,'" said Mikschl.
Association for Career and Technical Education meetings manager Marguerite Leisham said cities that the organization had never done business with before because of the size of its Annual Convention and Career Tech Expo now are contacting her. The association just completed negotiations for the 4,000-attendee meeting in 2013, which will be held in Las Vegas. It resided at the Gaylord Opryland & Convention Center in Nashville in 2009.
Leisham said the association is trying to book ahead of the return of demand and subsequent rate hikes. "If we book out to 2014, we probably will have more opportunities for concessions than we will when the economy turns back up again," she said.
One concession won by Leisham and others, never before deeply discounted let alone free, is Internet access at convention centers, which Leisham said can run as high as $40,000 for the association's annual meeting.
Meetings management firm ConferenceDirect is recommending its clients at least sign letters of intent for space and room blocks in their desired destinations this year before demand rises, said COO Jerry Horan. The company's January bookings were up 32 percent compared with the same month in 2009.
Planners also are booking more multiyear citywide destination deals either on a rotating basis or for consecutive years. Some see the practice as a win for all parties involved, as planners get favorable rates and destinations, hotels and convention centers lock in business.
"Everybody is trying to help everybody," according to Joe Forster, president and COO of third-party site selection and meetings procurement company HPN Global. "The booking pace is still trying to catch up, and getting those future years is a good way to do it. Clients are very receptive to it, as everybody is looking to squeak every little value out right now."
Booking too far in advance, however, could lead to more convention center space and room nights than will be needed years down the road. Some planners who booked far in advance during the 2001-2002 downturn dealt with those pitfalls this year as attendance dramatically fell.
"That stark reality was a slap in the face to a lot of meeting planners," said Salt Lake Convention and Visitors Bureau vice president of sales Mark White. "As a result, planners and the boards took a very conservative perspective and said, 'We better not book out 10 years. We don't know what our attendance will be or what the economy will be like or if membership will go up or down. We should be safe and book only as far out as we need to get the kind of city and room block that we need.'"
Suppliers see citywide meetings, which tend to be hosted by associations, large marketing companies or exhibition organizers, as less fluid than the corporate sector, which books on a shorter-term basis, holds smaller meetings and still is weary from the economic fallout.
"Some destinations held out for too much corporate short-term business that never materialized," said Horan. "A lot of hotels and destinations are thinking to get association business on the books and then build from there on a short-term basis with corporate."
The Armed Forces Communications and Electronics Association this year has renegotiated with contracted hotels for upcoming events and in all cases garnered lower rates through 2013, even below government per diems, said events manager Pat Holmes. Its largest meeting, the LandWarNet Conference, is being held in Tampa this year and takes up 3,000 to 4,000 room nights on average.
Perhaps the largest available concession is free or deeply discounted convention center space. "Almost every large citywide RFP is now requesting highly discounted or waived convention center space," said White. "They don't care if it is waived by the municipality or the CVB has the funds to cover that or if hotels contribute to offsetting the rate. That won't go away soon, even as times get better economically. The thermometer is getting reset."
Some locations have expressed concern over the need to heavily discount or eliminate fees for convention center facilities. "It's a collective decision that any DMO or convention and visitors bureau has to weigh," said Christine Shimasaki, managing director of Destination Marketing Association International's Empowermint.com. "They're weighing the upside of the economic benefit to the region against the concessions."
"With more convention centers coming online, large hotels with convention center facilities opening and demand staying steady at best, it starts to set this reality of pricing for the center that is no longer a money-making endeavor," White said. "It is a loss leader to serve as the economic magnet to get the convention to town, and the community realizes revenue in other ways."Originally published March 1, 2010
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