PwC Report: Big Centers Filling Up

Convention center exhibit halls in Tier 1 cities maintained efficient occupancy levels last year, but those in second- and third-tier cities continued to lag, according to the latest convention center report from PricewaterhouseCoopers.

Tier 1 destinations, metropolitan areas with at least 30,000 hotel rooms and at least 100,000 square feet of exhibit space, reported occupancy levels of 53.2 percent. That compared with 39.5-percent occupancy rates for exhibit halls in Tier 2 cities, defined as those with 15,000 to 30,000 hotel rooms, or less than 100,000 sq. ft. of exhibit space. Tier 3 cities, those with 15,000 or fewer hotel rooms, reported occupancy levels of 40.1 percent in the PwC report.

Large centers also had better luck in filling exhibit space than their small or midsized counterparts. Centers with more than 500,000 sq. ft. of exhibit space reported 52.1-percent occupancy, compared with 42.7-percent occupancy for centers with less than 100,000 sq. ft. of space and 45.4 percent for those with 100,000 sq. ft. to 500,000 sq. ft. of exhibit space.

A convention center attains maximum occupancy at 70 percent, while 50 to 60 percent is considered an efficient occupancy range, according to PwC. This year's report included responses from 100 venues, 10 more than last year.

Rob Canton, director of PwC's convention and tourism service, noted that the additional 1 million sq. ft. that came online at Orlando's Orange County Convention Center caused exhibit hall occupancy at all large centers to decline from 2004's 53 percent. Large centers hosted an average of 89 events last year, 54 of them conventions or tradeshows and 33 consumer shows.

Occupancy increased by 9 percent for midsized centers and 7 percent for small centers. The small and midsized centers each hosted an average of 103 events.

Throughout most of the past decade, exhibit hall occupancy at large centers has teetered around 60 percent. It began to drop in 2001, and hovered around the 50-percent level in 2002 and 2003. Only in 2004 did exhibit hall occupancy at large centers begin to show signs of recovery.

This year's PwC report also noted declines in space rental rates. Large center tradeshow rates were down by 11 percent and rates at midsized centers dipped by 17 percent. But rates at small centers were up by 7 percent.

Similarly, rates were down 18 percent at halls in Tier 1 cities and 11 percent at halls in Tier 2 cities. Tier 3 cities, though, posted rental rate gains of 11 percent.

Respondents in all size categories reported increases in attendance, although Canton warned that inconsistencies in reporting methods make attendance a difficult metric to benchmark. Large centers reported average attendance of 1.2 million, up 17 percent from the previous year. With average attendance of 517,000, midsized centers chalked up a 13-percent increase year over year. Small centers, meanwhile, reported a 38-percent gain, with average attendance of 187,000.