Though the vast majority of convention facilities are publicly owned, a few are private, and a growing number of public facilities are managed by private entities. Understanding how ownership impacts the negotiability of convention centers' space and amenities will give you a leg up in the contract game. Read on to find out how.
Public property
"[Convention centers] want you to think everything is set in stone," says John Foster, Esq., CHME, of Atlanta-based Foster, Jensen & Gulley, a firm that specializes in legal aspects of meetings, conventions, and expositions. And it's true that rent for convention space is often set by law, which limits negotiability. But check out a center's operating policies before entering negotiations. Some public convention facilities are more aggressive, depending on how profit-oriented they are, and how the governing body chooses to operate its center.
"We generate revenues through the sales taxes that are generated by delegate expenditures, as well as through the hotel and motel taxes that are generated by overnight stays in the hotels," says Michael McQuade, director, sales and marketing for the Washington State Convention and Trade Center in Seattle. At this center, then, the sales staff when negotiating fees for use of the facility takes into consideration the economic impact of groups on the area as a whole. "If a group is generating substantial direct and indirect revenue to the facility, we'll work with them [on pricing]," says McQuade.
Public center, private manager
SMG, a Philadelphia-based facility management company, helps set contract policies for the 35 public centers it manages, including the Broward County Convention Center in Fort Lauderdale, Florida, which hired SMG in 1990. "Operating deficits were certainly a concern of the county at that time, but more important was the issue of [our] experience," says Nicki E. Grossman, president of the Greater Fort Lauderdale Convention & Visitors Bureau. "The county had no experience either building or operating a facility of this type."
At the centers SMG manages, even after rates are decided, "We encourage everyone involved to try to be as flexible as possible in order to be competitive," says Thom Connors, senior vice president of SMG. His company teaches public facilities to better understand not just rent, but all of the revenue streams coming in, including ancillary products such as F&B, telecommunications, and Internet access. "You've got to look at it as a total business deal," says Connors. This often improves a group's areas of negotiability.
Purely private
Operators of a private facility, such as AmericasMart Atlanta in Atlanta, Georgia, owned and operated by AMC Inc., are free to negotiate rates as they see fit. However, a privately owned facility must be profitable. That's its bottom line, its mission, and its operating philosophy. So when looking at a private facility, you'll find that the cost tends to be higher, says Steven Schuldenfrei, president of the Exposition Operations Society (EOS) in Framingham, Massachusetts.
When working with a purely private center, you may also find the facility is more willing to share liability with your group, says Foster. Public centers tend to push total liability onto the show currently leasing its space. (See "Indemnify Yourself," page 34.)
Putting it together
So which kind of center should you select? "It's a matter of knowing your group," says Schuldenfrei. Ownership probably won't be the deciding factor. But it certainly can play into pricing. As long as a planner knows the nuances of how ownership impacts the operating policies of a center, she can use that information along with her understanding of the group's needs to negotiate the right deal with the right center.