Although all segments of the hospitality industry were hurt by the economy and the AIG effect, the recession of the last two years has been especially hard on North American conference centers, according to a new report by Colliers PKF Consulting USA.
Titled "Trends in the Conference Center Industry," the report shows that the average U.S. conference center experienced a 43.5 percent decline in net operating income in 2009, which compares to an average income decline of 35.4 percent for U.S. hotels.
"During economic recessions it is not uncommon to see associations and corporations cut their meetings budget," said Dave Arnold, CEO East of Colliers PKF. "However, never before have we seen the stigma attached to organizations that attempted to hold valuable training and planning conferences. With the average conference center occupancy level falling below 50 percent, the negative impact is obvious."
According to Colliers PKF, U.S. conference centers reported a 9.2 percent decline in revenue, with executive and resort conference centers suffering the greatest declines and college/university conference centers suffering the least.
"In 2008, conference demand accounted for 72.2 percent of the rooms occupied at the centers in our survey," Arnold said. "In 2009, this ratio dropped to 63.9 percent, meaning that conference centers relied on transient business to fill over one-third of their rooms last year."
In 2010, conference center managers expect occupancy to rise, but room and package rates to continue lagging. On average, Colliers PKF reported, they anticipate a 4.8 percent increase in occupancy this year and a paltry 0.5 percent increase in CMP rates.
"It is still a buyers' market in the short term," Arnold concluded. "This is good news for meeting planners, but still presents challenges for property owners and operators."