The Brookings Report: TSW Readers Have Their Say

Staff -- Tradeshow Week, 2/28/2005

A report on convention center construction and expansion issued in January by The Brookings Institution caught the attention of many in the convention and tradeshow industry. "Space Available: The Realities of Convention Centers as Economic Development Strategy," authored by Heywood Sanders, professor of public administration at the University of Texas at San Antonio, painted a grim picture of the value of exhibitions to cities.

Are Sanders' assessments valid? Is there an overabundance of exhibition space in the United States today? Contributing Editor Gary Tufel asked a number of industry members for their thoughts.

"I find it interesting that the opinion of one man, who clearly doesn't understand the industry, gets so much coverage in the national press, yet he doesn't seem to be stopping anyone from going forward with their building and expansion plans.

"Sanders skillfully uses a downturn in the economy, industry-generated data, inflated bookings and economic projections against the convention industry — and I include Boston in that criticism. The bookings projections of the mid-1990s made in support of building a new center in Boston were wildly exaggerated, but we would have built it anyway.

"I do not subscribe to Sanders' glass-half-empty view of the industry. However, I caution cities not to set expectations that may never be achieved and that Sanders will use to haunt them later — as he is me."

James E. Rooney, Executive director, Massachusetts Convention Center Authority

"Sanders made a couple of good points, and his underlying premise is correct. There is an arms race to build public assembly facilities.

"However, Sanders used flawed data by focusing most of his rationale on the Tradeshow Week 200, an incredibly small piece of the (meetings and conventions) pie. He rails that our industry doesn't have solid data like the automotive industry, as he fails to understand that the tourism/hospitality/meetings industry is the ultimate horizontal industry.

"Of course, that makes it easier for him to attempt to debunk our industry as only 1 percent of the workforce when he points to the hotel industry as the only beneficiary."

Bill Geist, President, Zeitgeist Consulting

"The report is more about facility over-expansion than anything. The cities having problems are those that are no longer competitive. Each city has its own negatives: poor hotel package, overpriced hotels, excessive room taxes, out-of-control work rules, poor air travel schedules and no 'wow' factor.

"Las Vegas is king of the hill right now, but escalating room rates could cause it to fall out of favor for some events in a down economy. Our shows are all experiencing attendance increases, contrary to the report. One thing for sure, producing and marketing tradeshows is a different animal from pre-dot-com, pre-9/11, and pre-industry consolidation. But those that do it right will ... have success."

Chuck Schwartz, Chairman, ConvExx

"Convention attendance is only one indicator of performance and, in reality, a weak and incomplete one. The success of a destination and its convention facilities is better gauged by hotel room demand, room revenue generated and visitor spending in the community.

"While these metrics may be more difficult to tabulate, they better represent the impact of a convention facility on the local community. It obviously takes much more than just the construction of a convention center to attract groups to a destination."

Nathan Smurdon, Meetings sales manager, Indianapolis Convention & Visitors Assn.

"I don't agree with the broad generalizations he made. Recent industry statistics will argue against his assumptions. Although I think that some venues may have overbuilt, I also think that other venues need to invest in more and better space to meet industry demand. If he had consulted other sources, such as (Center for Exhibition Research)-published statistics, I think he may have come to different conclusions."

David Korse, President and CEO, IDG World Expo

"Convention business is less robust now than pre-9/11, but is rebounding as the economy rebounds. No technology beats face-to-face interaction in business.

"There are some cities that have clearly lost their edge in the competition, such as Dallas. However, other cities are on the rise, such as Chicago, Las Vegas and Orlando, and need the retrofits, improvements, additions and amenities to remain competitive in the market as much as, or more than, the declining cities.

"Convention centers are loss leaders, and always have been. To stop building or improving convention centers for economic reasons is fallacious reasoning that will ultimately cost those cities much business."

Mary Upton, Vice president, tradeshow operations, The ASI Show!

"Sanders is taking a narrow view, focusing on the past five to seven years, which has been a down and recessive cycle, not just for the events and meetings industry but the economy as a whole. Take the long view; all business is cyclical.

"Convention growth in the last 20 years has been realized in Las Vegas, Orlando, San Diego and New Orleans, to cite some prime examples.

"It's true that certain cities will be losers in the short and/or long term. It's a competitive market. But other cities will be winners. Cities with major convention centers have a chance to lose, but cities without them will definitely lose.

"Attendance has declined for many major events, but other more targeted events have seen growth. Attendance will revive with a strengthened economy. Rumors of the demise of face-to-face marketing have come up during other down cycles. The events business always recovered — in a different form perhaps, but always as a vital and necessary platform."

Philip McKay, Group vice president and general manager, Gartner Vision Events

"The following sentence from the article says it all: 'And this is attributable to one thing: lack of standardized audits.' There is an audit committee from IAEM (Intl. Assn. for Exhibition Management) and SISO (Society of Independent Show Organizers) currently investigating a standardized system."

Lew Shomer, President and CEO, Shomex Productions

"It is my impression that Mr. Sanders has long been a critic of the convention business and once again has cited inaccurate or incomplete information to substantiate his position. His statistics are clearly contrary to surveys done by Tradeshow Week, CEIR (Center for Exhibition Research) and Trade Show Executive, and certainly do not reflect the experience of our company."

Don Freeman, Chairman and CEO, Freeman

"While the report's conclusions may ring true for some convention cities, that's not the case for San Diego. The strength of our destination and the expansion has allowed us to maximize our economic and fiscal impact.

"In fiscal year 2004 alone, the center generated $26.4 million in tax revenues for the city of San Diego. Even after the city paid $9.2 million in expansion-related bond debt and a $2.9 million operating investment, the city netted a tidy $14.3 million — a 218-percent ROI."

Carol Wallace, President and CEO, San Diego Convention Center

"The performance of the largest 200 exhibitions is meaningless, considering there are some 13,000 exhibitions a year. They are indicative only of those 200 events and not the industry as a whole.

"Convention centers that make a decision not to upgrade and stay technically up-to-date will lose business. That is why so many centers are expanding and upgrading at the same time. If they don't keep up, they will no longer be destinations.

"Convention centers by definition are loss leaders. They were built to be given away because of the benefit to the community the visitors bring."

Doug Ducate, President and CEO, Center for Exhibition Industry Research

"This report is a very narrow focus of a rapidly changing industry. We're in very different situation now than we were in the '90s."

Chris Bowers, CEO, Chicago Convention & Tourism Bureau

"Has anyone noticed that Heywood Sanders, Ph.D., failed to incorporate any of the research or statistical data that has been gathered for years by the leading industry organization, CEIR?

"Also, note that he based a disproportionate amount of reference on the TSW Data Book, a publication that is meant to be a general listing resource and not the definitive source of all things tradeshow. Data gathered here is from event organizers who submit their data more from a marketing presence rather than a true measurement."

Ray Verhelst, Vice president, Expo2.net