Leaders push McCormick Place to lower costs.
After two major conventions last month ditched Chicago in favor of other locales, the city is undergoing a top-to-bottom review of its costs and value proposition to meeting planners as it seeks to cultivate a reputation as an affordable convention destination. That mission has found urgency in the upper reaches of city leadership, putting pressure on city officials, the McCormick Place exhibition center and local unions—which combined are cast as the triumvirate of inflated convention costs—to make Chicago conventions more affordable.
The Society of the Plastics Industry last month announced that it would host its next National Plastics Expo in 2012 at the Orange County Convention Center in Orlando, shunning its decades-long home at McCormick Place. SPI said NPE is one of the top five manufacturing trade shows in the country, and attributed the "dramatic shift" to cost, noting that after a "a systematic comparison of possible venues" it determined that the venue change would net $20 million in savings to the event's planners, exhibitors and attendees. Just days before SPI announced its expo location switch, the Healthcare Information and Management Systems Society selected Las Vegas as the host city for its 2012 Annual HIMSS Conference & Exhibition, beating out second-place contender Chicago.
"The current economic environment was top of mind when HIMSS conducted a thorough examination of potential sites to host the anticipated attendance and needed exhibit space in 2012," HIMSS president and CEO H. Stephen Lieber said in a statement last month, claiming that the city of Las Vegas, the Sands Expo Convention Center and area hotels "provide our members and attendees with a productive and economical experience."
Chicago Mayor Richard Daley publicly has pinpointed the problems to include convention center costs, fee structures and labor work rules. "We have to look at everyone, put everything on the table and say, 'What is happening here?'" said Daley, according to several media outlets. "If we keep raising the cost here, McCormick Place will be an empty shell."
Trade groups have cited the high cost of putting on shows in Chicago, and Daley has called on unions and others working at the convention center to change fee structures and work rules so Chicago can better compete for major shows.
John Gates, chairman of the board of the Metropolitan Pier and Exposition Authority, which owns and operates McCormick Place and Navy Pier, in a statement said, "We get it, we understand our customers' concerns and we are going to be aggressive in finding a solution together."
A task force comprising leadership of the MPEA, the Chicago Convention and Tourism Bureau, union representatives, show contractors, hospitality industry professionals, representatives from the Illinois governor's office and Daley has met several times since formation last month amid the fallout to discuss solutions.
Tim Roby, president and CEO of the Chicago Convention & Tourism Bureau, said he expects binding solutions to result from the ongoing review by the end of the first quarter of 2010. He would not share specifics on proposals discussed in task force meetings, but said stakeholders are on the same page when it comes to the overarching mission: "Find ways to lower costs and improve the experience as far as McCormick Place is concerned," Roby said. "Everybody understands that it is a fiercely competitive market, that as far as the trade show industry is concerned, a lot of shows have taken financial hits, lost some of their business and can now fit in other destinations."
Chicago is competing not just against other leading convention markets, Roby said, but other cities that can offer more bang for the buck to cost-averse planners.
While the loss of a few big shows accelerates the mission, Roby said a review on how to cut costs at McCormick has been ongoing for more than a year, which has resulted in a consolidation of office space and a reduction in its workforce from 700 to 400. Roby said more such operational changes are in the works.
Jon Kaplan, a spokesperson for MPEA, this month said the task force members are "playing cards close to the vest" in regard to specific proposals, but said there is a sense of urgency.
"It's safe to say there will be some substantive changes that will keep us competitive and keep us as a destination that people want to come to. Believe me, there are very many shows that come here perennially and are very happy coming here," Kaplan said. "They should have something sooner versus later."
According to SPI analysis, moving NPE from Chicago to Orlando saves 48 percent on utilities for booths, 19 percent for onsite exhibitor hauling and rigging services, 23 for attendee lodging and 11 percent for travel.
"The lower costs, simpler work rules, and more flexible logistics at the Orange County Convention Center will cut costs dramatically as well as enable SPI to build a more dynamic show experience by attracting new participants and encouraging bigger and better exhibits," said John Effmann, chairman of NPE2012 and director of sales and marketing for ENTEK Manufacturing Inc.
The show is the largest in the country when it comes to "weight density and power draw by equipment operating on the show floor," leaving planners with few potential host options that "could even accommodate a trade show as demanding as NPE," said Jim Murphy, president of Davis-Standard, chair of the NPE2009 Operations Committee and vice chairman of NPE2012. "Our conclusion was that only Chicago and Orlando could readily meet our requirements for contiguous exhibit space, electrical capacity and hotel availability."
Planners went beyond the logistics of the venue. "In our comparative study of venues for NPE, Orlando demonstrated a greater range in pricing than Chicago for hotels and restaurants and lower costs for incidental expenses like cabs to and from the airport and convention center parking," Murphy said.
Originally published Dec. 21, 2009