After several years of continued venue construction but lagging space rentals, the convention center market has reached a stage of maturity characterized by aggressive competition, according to a study released last month by HVS International.
"Cities can no longer just build convention center space and expect to get their fair share of demand," said Hans Detlefsen, director of the conventions practice of HVS, in Chicago. "There is not enough business to go around."
According to HVS, while both CC supply and demand are growing slowly, the amount of space actually rented has been at very low levels for about four years. Just 16.5 percent of all exhibition space available in the U.S. and Canada was rented in 2007, virtually unchanged since 2004 and the lowest since 1986.
While the picture painted by HVS looks discouraging, the consultancy still is comparably positive versus the near-catastrophic picture offered in 2005 by Heywood Sanders, professor of urban studies at the University of Texas, San Antonio, who argued that the proliferation of new and expanded convention centers didn't make economic sense.
Detlefsen argues that the situation is complex. "The industry isn't ready to go away," he said, "but the winners will be those that keep their centers up to date and offer other competitive advantages such as tourist attractions or an increase in [the number of hotels in their markets]."
Further, Detlefsen said a convention center "doesn't have to make money" in order to be a winning proposition. That is particularly so for large centers that serve as drivers of economic activity in their large metro areas, filling hotels and restaurants with business tourists. Detlefsen sees winners continuing to emerge among so-called third- and fourth-tier cities that work to be profitable businesses. He cited the Tinley Park Convention Center, south of Chicago, among the players that successfully target price-sensitive smaller expos, consumer trade shows, religious assemblies, and sports events.
For a more in-depth view of the HVS study of the convention center market, on the Internet, go to www.meetingnews.com/HVS32408.
Originally published March 24, 2008