Centers on the Rebound

By Rachelle Crum -- Tradeshow Week, 3/7/2005

Convention centers are showing "significant improvements ... despite recent controversial claims to the contrary," according to the 2004 PricewaterhouseCoopers convention center report, the company's 20th annual survey.

Exhibit hall occupancy levels were higher in 2004 than in the previous year. The industry saw a 9-percent increase in space demand and a 14-percent rise in attendance, when comparing the convention and tradeshow performance of centers that reported results in both 2003 and 2004.

The controversial claims the report refers to, a recent study by the Brookings Institution, asserted that the tradeshow industry was in poor condition and convention center construction and expansion was unnecessary.

Rob Canton, director of PwC's convention and tourism service, said the scenario described in the Brookings report, authored by University of Texas at San Antonio professor Heywood Sanders, is far from the truth.

"The tradeshow industry, and the travel and leisure industry in general, are seeing a rebound," Canton said. "I would challenge any industry in America, short of the defense industry, to show a difference. The convention and tradeshow industry has, for the past 20 years, tracked close to the economic conditions."

Judging from PwC's report, being small has its advantages. Although gateway (or first-tier) destinations have the highest occupancy rates when compared to second- and third-tier cities, looking at 2003 and 2004 reports together shows that smaller centers in smaller cities saw the most improvement in facility utilization.

The study defines gateway destinations as those with 30,000-plus hotel rooms, national destinations as those with 15,000 to 30,000 rooms, and regional as those with less than 15,000 rooms.

Occupancy at convention centers in third-tier cities was up substantially when compared to the previous year's study. Total exhibit hall occupancy for these centers (for conventions, tradeshows and consumer shows) was 34.8 percent, 8.7 percent higher than the previous year. However, when the occupancy figures for conventions and tradeshows are broken out, the increase in exhibit hall occupancy is less significant — a 3.3-percent increase to total 18.7 percent. (The report indicates that practical maximum exhibit hall occupancy rate is approximately 70 percent.)

Venues with less than 100,000 square feet of space had an average total occupancy of 35.7 percent, 9.7 percent higher than the previous year. Occupancy for centers with more than 500,000 sq. ft. was 53 percent in 2004, on par with the previous year's 53.9-percent rate.

Although the smaller, regional centers appear to be doing well, these facilities need to increase their competitive edge more than ever since "larger venues are competing more for smaller business," Canton said.

This trend has become increasingly apparent over the past year, with several major centers' expansions designed specifically for smaller shows. For example, Canton said, the construction of Chicago's McCormick Place West building and the recently announced renovation of the Las Vegas Convention Center are largely meant to attract smaller shows and meetings without exhibitions.

These venues have established a trend, Canton said, "that's not going to go away."

Ballroom occupancy was a new measurement category introduced in the 2004 report. Gateway destinations and the largest facilities had the highest rates, with 48.9 and 52.1 percent, respectively.

Another significant industry trend, Canton noted, is the increased number of new convention centers entering the market. According to Tradeshow Week research, seven centers have opened over the past five months and six new centers will open by October.

Canton said, "There are progressively more venues out there that are splitting up the pie," adding to the increased fluctuation among the 2003 and 2004 reports' statistics.

Ed Riggs, director of sales for the Charleston (S.C.) Area Convention Center Complex, couldn't agree more. Since new regional venues like the nearby Columbia (S.C.) Metropolitan Convention Center have come online in the past year, competition has been amplified for his center. "We do have to roll up our sleeves in going after new customers," Riggs said.

Regional venues also fared well in other ways, including in total attendance measures.