CVB Budgets: Some Up, Some Down

By Margo McCall -- Tradeshow Week, 3/27/2006

Las Vegas, Orlando, Reno, Nev., and Hawaii remained the top spenders last year among convention and visitor bureaus. But Los Angeles, Miami and New York are catching up.

Of course, no CVB was within a long shot of catching up to the Las Vegas Convention & Visitors Authority, whose $227.8 million budget for 2005 equaled those of 11 of its closest competitors combined. In fact, according to statistics gathered by the Chicago Convention & Tourism Bureau, the $37.4 million addition to the LVCVA budget last year was almost equivalent to Reno's total budget of $36.1 million.

More than half of the 25 biggest CVB budgets registered increases between 2004 and 2005. The budgets of seven CVBs showed declines, while five remained flat, according to the statistics, which will be part of the CCTB's upcoming annual competitive analysis.

Even with spending flat at $20.8 million, Los Angeles — where a convention center hotel is currently under construction — rose a notch to the fifth-biggest spender. With the $5.7 million boost to its $20.3 million budget, Miami rose to sixth place, from 10th the previous year.

In New York, where an expansion of the Jacob K. Javits Convention Center is underway, NYC & Co. succeeded in adding $1.4 million to its $14.6 million budget.

Salt Lake City added $3.4 million to its budget in 2005. An expansion of the Salt Palace Convention Center is slated for completion in August. The addition of 150,000 square feet of exhibit space will give the venue more than 500,000 sq. ft.

Nashville saw its budget rise by more than $3 million as a result of new members and strategic partners, as well as an increase in tax revenue. "And we expect the same for next year," said Butch Spyridon, president of the Nashville CVB, adding that the windfall would be put right back into marketing.

Community members are considering whether to fund a $455 million downtown center to replace the Nashville Convention Center, which offers 118,675 sq. ft. of exhibit space. The new center would provide a 375,000 sq. ft. exhibit hall, a 60,000 sq. ft. ballroom and 100 meeting rooms.

"The majority of the meetings are tracking in the direction of flexible space and breakout rooms," Spyridon said.

Slight budget trimming was the order of the day at CVBs in Atlantic City, Orlando, Philadelphia, Reno, San Diego and San Francisco. Atlanta suffered a larger hit, though, having $900,000 cut from its budget between 2004 and 2005.

Reint Reinders, the outgoing president and CEO of the San Diego CVB, supports changing the way CVBs are funded to prevent budgets from being raided by finance-hungry municipalities. Most bureaus are quasi-public entities overseen by city or county governments and funded by bed taxes applied to visitors' hotel room rates.

"There are just not enough fences around these hotel taxes to keep them dedicated to the purpose they were intended," said Reinders. "Over the years, and today more so than ever, local governments are in deep trouble. It's just very difficult to compete with police and fire and street repair and all the things the budget has to pay for."

In San Diego, Reinders said, a campaign is underway to freeze the CVB's current share of bed taxes and begin adding a 2-percent marketing fee to every visitor's hotel room tab. A majority of hotels and the City Council would have to approve such a fee.

Some CVBs previously among the top 25 spenders disappeared from sight in 2005. One was Kissimmee, Fla., last year's eighth-biggest CVB spender. One possible explanation: The local government there has tabled plans for a proposed convention center until after an audit of the Kissimmee-St. Cloud CVB's use of tourist tax funds.

New Orleans CVB spending also plunged in 2005. In 2004, it ranked 17th among top spenders. Last year, it didn't make the top 25.