Convention Center Rates Rise, Yet Deals Are Aplenty

Over the past couple of years convention centers have been offering a barrage of deals to entice groups — and yet, somewhat illogically, it would seem, rental rates have climbed noticeably during the same time period.

In reality, observers said, it's not as much of a contradiction as one might think. Rental fees are going up — and then, in many cases, discounts are being offered from the new higher rates.

"If you think about it, convention centers are raising prices then offering discounts to give planners the perception that they're saving money," said Annette Hicks, director of meetings and expositions, Texas Petroleum Marketers and Convenience Store Association.

In a new MeetingNews survey, almost 60 percent of meeting planners who have used a convention center in the past two years said they have seen rental fees increase during that time. Less than 4 percent said they have seen lower fees.

At the same time, almost a quarter of planners said they've seen more offers of financial incentives from convention centers lately, compared with only 6.5 percent who said they've encountered fewer such offers.

Still, that means far more planners are observing rates going up than are seeing the prevalence of incentives increasing.

Some said discounts are happening mostly during destinations' off-peak times, and of course, such dates are not viable options for all groups.

"You can't come to Palm Beach in February and expect discounts, but if you come in August, you're going to get a lot," noted Marsha Rimokh, president of Aquarius International, a Delray Beach, Fla., conference management company with corporate clients.

Added John Kaatz, director of CSL International, a convention center consulting firm in Minneapolis, "Convention centers are beginning to have a more targeted approach to discounting. Instead of giving discounts year-round, they now offer a series of incentives only during their slow periods. So, many planners who are seeing an increase in incentives are probably planning their conventions during the off-peak season."

Asked what types of incentives are most enticing, planners pointed first to free meeting space (see chart, this page).

Corporate and association planners didn't concur on the second and third-most-popular discounts. Corporate respondents were split between free or discounted food and beverage and free exhibit space for their second choice. Free or discounted AV was next.

"Corporate meetings tend to use more meeting rooms than exhibit space," Kaatz said. "They also have high-end food and beverage and use a lot of AV."

Association planners were mostly interested in space concessions. Free and discounted exhibit space were the second and third favored incentives.

"I tend to plan three to nine years in advance because I need so much exhibit and meeting space," said Hicks. "Corporate planners may not be as interested in discounts on space because they have much less time to plan their meetings."

Rimokh had a contrasting opinion: "What difference does it make if I get a room discount or AV discount? If I set a budget for a meeting, I don't care which service is discounted. If a convention center can't offer me a deal on meeting space, but can reduce my food-and-beverage bill, than what does it matter? It's the total cost of the project that counts."

Planners showed little interest in personal gifts or benefits as valuable incentives. Only 10 percent said they assign considerable weight to such itemsfor attendees, and 8 percent said the same about gifts or benefits to themselves.

"I don't feel comfortable getting gifts because I've done business with somebody," said Hicks. "I'd rather they have a more focused approach to good service."

While convention centers are typically thought of as being mostly for conventions and trade shows, 41 percent of the planners who said they've used a convention center in the past two years plan corporate meetings.

Said Kaatz, "Prior to 2000, a lot of corporations were using convention centers. But with the economic downturn that began in 2001, corporations cut back on their use of centers. Now we're starting to see that return a bit, especially with pharmaceutical and technology companies."

Contact Antoinette DeNise at adenise @meetingnews.com.