Conference Space: Less Room at the Inn

By Margo McCall -- Tradeshow Week, 4/18/2005

During the post-Sept. 11 travel slump, hoteliers were grateful for any business they could get, including conferences with adjoining exhibitions.

But these days, conference organizers have a lot of competition from tourists, returning business travelers and those holding personal celebrations. And with occupancy levels on the rise, rates are starting to hit the roof, particularly in the Northeast.

"It's very competitive. The business is so good in the East, that hotels don't want to have a conference for three days, because they can make more money having a different event every day," said Vincent Caprio, event director of Penton Media's NanoBusiness. "We're not competing with other conferences, we're competing with the world at large. We're competing against weddings and bar mitzvahs."

Caprio said his room rates for this year's NanoBusiness, to be held May 22–25 at the New York Marriott Financial Center, have gone up considerably. Caprio secured a room rate of $199 right after the Sept. 11 attacks, and has tried to hold the rate to $219. This year, however, Caprio was quoted a rate of $269. He eventually negotiated $239 per room — a rate that prompted complaints from attendees until they were greeted with rates of $349 per night when they checked outside the block.

"I have people complaining, but the reality is my hotel is completely sold out except for the room block," Caprio said.

The higher rates aren't unexpected. After two years of losses, hotels only returned to profitability in 2003, according to the American Hotel & Lodging Assn. In addition, at the same time demand is going up, a dearth of new hotel construction has kept a lid on the supply.

And although the costs of air travel and meals are also expected to be up slightly this year, the Natl. Business Travel Assn.'s annual travel cost forecast predicted hotel-room hikes of 7.5 percent.

However, that projection pales in comparison to JP Morgan Chase analysts' recent forecast that room rates would increase by 29 percent in New York this month, and more than 20 percent in Atlanta and Los Angeles, compared with April 2003.

Consequently, Caprio isn't the only hotel conference organizer experiencing sticker shock. "We've certainly noticed that rates are going up," said Russell Flagg, president of Flagg Management, a producer of financial and accounting conferences at hotels in New York and Los Angeles.

Flagg said the room rate at one of his events this year jumped to $229, up from $179 a year ago. The company's dozen or so events are held in Los Angeles at the LAX Hilton Hotel, and in New York at the Hilton New York, Marriott Marquis and Roosevelt Hotel.

"They are doing very well in room occupancy. When they get up to 99 percent occupancy, the next person who walks in off the street is going to pay $400 a night," Flagg said. "But I think the hotels so far have been benevolent."

Hotel meeting space is a popular choice for events just getting established, as well as those that cater to niche audiences. The ballrooms can be used for plenary sessions or conference seminars, and the meeting rooms for tabletop exhibits. In addition, hotels' lush and carpeted interior decors can lend an upscale feel.

Many of MediaLive Intl.'s new and fledgling technology events are held in hotels. The company's inaugural West Coast VoiceCon is slated for the Manchester Grand Hyatt San Diego this fall. New Seybold Seminars events are scheduled for San Francisco's Palace Hotel in late November and Chicago's Hyatt Regency McCormick Place in September. Web 2.0, launched in 2004, is being held at San Francisco's Argent Hotel.

Eric Faurot, senior vice president and managing director of MediaLive's technology media group, said convention center space wouldn't be suitable for an event such as Web 2.0, which has a big helping of conference sessions and a small tradeshow component. "We want an intimate, nice atmosphere," he said.

Still, Faurot acknowledged, securing hotel exhibit space isn't as easy as it once was. "Hotels have a lot more power than they used to have," he said.

But with a little effort, the company was able to find meeting space midway between heavily booked hotel space and the cavernous Jacob K. Javits Convention Center.

For MediaLive's inaugural Collaborative Technologies Conference, spun off from a conference track at the company's NetWorld+ Interop tradeshow, Faurot said space was secured at Pier 60 of New York's Chelsea Piers June 19–24. The unconventional space along the Hudson River will allow a boat to pull up to the conference for an evening reception — a feat that wouldn't have been possible at any of the city's major hotels.

"We just found we got a better space deal in that situation. You've just got to be really creative," Faurot said. "Interestingly, New York is a unique challenge: You go from hotels to the Javits."

For the time being, Caprio said NanoBusiness will stay put at the same dates in its current location at the New York Marriott Financial Center. With the currently high occupancy levels, the 4-year-old event doesn't have much choice.

"We went to 20 hotels in New York City, and we couldn't get dates. Once you have an event, you have to leave it in the same date pattern. We're busting out at the seams where we are, but we couldn't go to the Hilton, we couldn't go to the Sheraton," he said. "If I left, they would be able to get rid of my dates in a week."