Do Tradeshows Help Midweek?

By Gary Tufel -- Tradeshow Week, 4/26/2004

When a convention center goes up near a hotel, common wisdom dictates that the hotel's midweek room occupancy will increase as a result. And when a convention center expands, one would also expect nearby hotels to benefit. Yet, few seem to have hard and fast numbers to support the claim that tradeshows help fill hotel rooms on weeknights, though most suspect it to be the case.

Chris Meyer, Las Vegas Convention & Visitors Authority manager of convention sales, said it's difficult to prove whether occupancy increases are due to more hotel rooms, the amount of exhibit space or the market – especially with 130,000 rooms in Las Vegas. But he pointed out that when Mandalay Bay Resort & Casino opened its convention center, corporate profits went up fivefold.

Meyer said the facility has had an enormous effect on the market. For example, the Promotional Products Assn. Intl.'s show wouldn't be in Las Vegas if it weren't for the opening of Mandalay Bay's exhibition facility, Meyer said.

"Las Vegas' occupancy has always been high, but there's no doubt that it's really increased since Mandalay Bay built the convention center. And their business hasn't even matured yet; because of booking cycles, bookings are still in their infancy, and will only grow," Meyer said.

The Mandalay Resort Group in 2004 reported an increase in hotel revenues of $82.1 million, or 14 percent, compared with 2003, according to its annual federal filing. The company attributed the gains to its Las Vegas Strip properties. REVPAR –daily room revenue divided by the number of rooms –grew by 14 percent at these properties, which accounted for 20,000 of the company's 28,258 total rooms.

Mandalay Bay was the most significant contributor, generating an increase of $53.9 million, or 27 percent, driven by a 17-percent increase in REVPAR. With the opening of the convention center and the hotel, the report stated, the property has increased its emphasis on the business and convention segment of the market, which has traditionally been willing to pay a higher rate for midweek rooms.

In fiscal 2004, approximately 30 percent of Mandalay Bay's room nights were sold to the convention segment, compared with about 22 percent in the previous year, and it is expected that this percentage will rise.

John Piet, senior research analyst for the LVCVA, said the most recent year-to-date figures as of February showed that midweek occupancy, at 81.4 percent, was up 0.4 percent from last year, while weekend occupancy, at 94 percent, was up 11.8 percent. Although it's difficult to quantify how much of the weekday percentage is from meetings and conventions, Piet said there's no doubt that midweek is the heaviest time for convention business.

Determining how much tradeshow business helps hotels is simple, said Rich Heller, president and general manager of the Sands Expo & Convention Center, which is attached to the Venetian Resort Hotel Casino. Using a formula of 1.5 attendees per hotel room, Heller extrapolates that a 10,000-attendee tradeshow translates into 7,500 guestrooms. At a 2,000-room hotel, for example, such an event would leave 5,500 rooms for other nearby hotels to pick up.

Hotels nearest to the convention center will pick up virtually all the business, he said. However, there's a proviso. "If a hotel is counting on a nearby convention center to fill its guestrooms, it's in trouble, because you can't fill rooms during move-in and move out, unless you have another event filling in," Heller said.

Sands tradeshows are considered the cornerstone of the Venetian's business. Still, when a three-to-four-day tradeshow takes up 10 days, including move-in and move-out time, guestrooms have to be filled in the hotel while the exhibit hall is unavailable.

Heller said the Venetian's strategy for keeping occupancy high is to first go after its base business – meetings and conventions – then fill in the gaps around the shows.

Although he wouldn't break out weekday and weekend occupancy, Heller said the facility's overall average rate is 97 percent. Heller said Las Vegas is in a unique situation, since it can fill hotel rooms regardless of whether there's an event in town.

In Orlando, the Orange County Convention Center late last year opened a major expansion — growing from 1.1 million square feet of exhibit space to just over 2 million square feet — and saw an attendance increase of 88 percent in January 2004 over the prior year. Daryl Cronk, senior economist for the Orlando/Orange County Convention & Visitors Bureau, said that it's difficult to say how much the expansion contributed to hotel occupancy.

Data from Smith Travel Research showed that in August 2003, just before the expansion was completed, Orlando hotel occupancy was 67.4 percent. In October, the first full month after the expansion opened, occupancy was still at 67.4 percent. But by February 2004, the most recent month for which statistics were available, occupancy was at 75.4 percent, compared with 62.2 percent one year earlier.

But for some of the individual hotels, this growth isn't reflected in weekday, versus weekend, occupancy. Tim Swan, director of sales and marketing for the Orlando World Center Marriott, said he sees no distinction between the two types of business. "If we have a group in, our occupancy is higher. If we don't, it's lower. Day of the week isn't really a determining factor."

As a full-service resort, the Marriott appeals to leisure travelers, but its focus and best overall results are connected to conventions, Swan said. "In our case, as with most large hotels, conventions are our top priority … Clearly, when we have a convention in-house, we are achieving our goals in many areas, such as rooms, food and beverage, event technology, destination management, recreation, etcetera."

The hotel is planning to add more than 100,000 square feet of carpeted, column-free exhibit space to its existing 214,000 sq. ft. convention center.

Orlando, like Las Vegas, is unique in its own way. Perceived as a family destination because of Disney World and other amusement parks, the city encourages conventioneers to bring their families and stay over the weekend. This creates an overlap between business and leisure, weekend and weekday, travel.

Warren Breaux, vice president of sales for the Gaylord Opryland Resort & Convention Center in Nashville, Tenn. said that more than 80 percent of the business there is from meetings and conventions. He said average occupancy is about 10 percent higher on Friday and Saturday nights.

"Our exhibit hall is a major driver of our occupancies over both periods, since just as many groups meet during the weekend as on the weekday," Breaux said. "Our preferred arrival-departure pattern is Wednesday through Sunday or Sunday through Wednesday, which reduces the likelihood of holes or gaps in our occupancy."

The downside of this, Breaux added, is that on days when the hall is not available because of move-in or move-out, it is more difficult to fill the hotel.