Headquarters Hotels: Do Connected Lodgings Matter?

By Gary Tufel -- Tradeshow Week, 4/18/2005

Sure, most tradeshow attendees would love to just stroll across the street from their hotel to the convention center. Even better: staying in a hotel that's directly connected to the center — especially when cold winds blow or the summer heat is blazing.

But is the convenience of having a hotel so close really that important?

Absolutely, according to convention and visitors bureaus, and in several ways: bringing in tradeshows that wouldn't have come otherwise; spurring nearby development (including more hotels); and creating jobs, direct spending and tax benefits for the cities.

CVB executives agree that having a headquarters hotel is virtually a requirement for cities today. Without one, they're at a serious disadvantage.

Houston's 1,200-room Hilton Americas, connected to the George R. Brown Convention Center, has been a boon in many ways since opening last December, according to Jordy Tollett, president and CEO of the Greater Houston Convention & Visitors Bureau.

Convention business accounted for about 426,000 hotel room-nights annually in the six years leading up to the headquarters hotel's opening. The number skyrocketed to 607,000 during the year the hotel opened, and could hit 700,000 room-nights from convention business this year, Tollett said.

Furthermore, hotel occupancy is forecast to increase from its current 65 percent to about 70 percent in 2007 and 2008. And the number of tradeshows is expected to grow from 14 to 18 per year before the hotel, to 24 to 28 by 2008, Tollett said.

He noted that several groups wouldn't have come to Houston before the headquarters hotel was built, including the Diving Equipment & Marketing Assn. and its DEMA Show, as well as the Natl. Rifle Assn., the American Clinical Chemistry Assn. and the American Medical Assn.

A little further north, Austin Convention & Visitors Bureau CEO Robert Lander said 57 percent of the 800-room Hilton Austin's room-nights in its first year were from groups new to the city. The 7,000-attendee Texas Library Assn. 2005 Conference, among others, came only because of the new hotel and expanded convention center, Lander said.

Austin spent about $15 million on the new hotel, which opened in January 2004 next to the expanded Austin Convention Center. Austin attributes many of its new group meetings and conventions in the past year to the hotel, managed by Hilton for owner Austin Convention Enterprises.

In 1998, the year that the 800-room Hyatt McCormick opened in Chicago, replacing the McCormick Inn, McCormick Place hosted 54 tradeshows. In 1999, that jumped to 84, according to Bill Utter, vice president of marketing for the Chicago Convention & Tourism Bureau.

Utter said Chicago significantly improved its competitive advantage with the construction of the headquarters hotel, which was needed in the marketing mix and has been a huge benefit to the convention center.

The Hyatt McCormick could someday expand. Original construction plans provided for construction of another tower atop its parking garage.

But Chicago's dedicated bus routes make other area hotels essentially headquarters hotels too, putting 30,000 additional hotel rooms within minutes of the convention center. "For convention centers on the edges of cities, there may be issues that necessitate having headquarters hotels. Here, we've always had unique logistics," Utter said.

Meanwhile, CVB officials in cities where convention center hotels are planned are eagerly anticipating extra business for their cities too.

Denver's 1,100-room Hyatt Hotel, set to open next December across the street from the recently expanded Colorado Convention Center, is already sparking inquiries. Richard Scharf, president and CEO of the Denver Metro Convention & Visitors Bureau, said the hotel, which will be ideal for overflow meetings from the convention center, is creating incremental demand. Both hotel and convention center are marketed cooperatively by the CVB.

"We can track specifically what hotels bring. This Hyatt is already the second-most requested hotel in the Hyatt chain," Scharf said.

Mark Liberman, president and CEO of LA INC., The Convention & Visitors Bureau, said there's no crystal ball that can predict the amount of new business that will come as a result of a proposed 1,200-room hotel near the Los Angeles Convention Center. Developers have already lined up a $150 million public assistance package and signed Hilton Hotels to manage the property. Groundbreaking is expected this summer.

"What we can predict is that the new hotel puts L.A. back in the hunt. It allows us to capitalize on the draw of the L.A. brand without asking a prospect to compromise on room availability," Liberman said. "It's hard to quantify the value of making one of the most desirable visitor destinations competitive to the convention market. But it's easy to imagine that new business will indeed be coming to town."