Risky Strategy Pays Off

These days, it seems like every convention center construction or renovation project you hear about includes the addition of meeting space, meant to lure more corporate events.

But it wasn't always so. Way back near the turn of the millennium, a pioneer, San Francisco's Moscone Center West, blazed the more-meeting-space trail.

“We were really the only ones doing it,” recalled Julie Burford, assistant general manager of the facility, “and there was a lot of skepticism in the industry about whether we would succeed.”

Four years after Moscone West's opening in 2003, Burford and her cohorts at the San Francisco Convention & Visitors Bureau are having the last laugh. According to fiscal year statistics for the twelve months that ended in July, the facility is running at 82 percent occupancy. Nearly one-third (32 percent) of that business is corporate events.

The best part is: It's all going according to plan.

Lisa Lewin, managing director of the San Francisco CVB's convention division, said there were a few currents of thought feeding into the conception of Moscone West.

First, the existing Moscone North and South halls were operating at occupancy percentages in the 70s, but had a low meeting-to-exhibit-space ratio. Combined, the two halls have 442,000 square feet of exhibit space and 160,000 sq. ft. of meeting space. So, while tradeshows were moving in and out of the building, not much else could happen there, leaving hotel rooms in the surrounding area empty.

Second, CVB and convention center management take Moscone's role as a public facility - built to serve the hotel community and funded through bonds to be paid back with bed taxes – seriously.

“Part of the thought process was, add this new building and don't sell it as part of the North-South package,” Lewin said. “Keep it as its own little world, and try to stack business so that when there isn't a show in North-South, you can have something happening in West to offset the hotel business.”

Something ... but what? The facility's unusual design reflects the intention to attract the kind of customers that wouldn't be interested in North-South to begin with.

“Because of the footprint (one city block), in order to get the amount of square footage we needed, we had to build vertical,” Burford said. “Convention centers are typically horizontal, so we broke the first rule of convention center construction.”

Moscone West has three levels of flexible function space, plus one underground floor for freight entrance and loading docks. Each of the top three floors has approximately 96,000 sq. ft. that can be configured as one to three large rooms, 19 small rooms or any combination in between.

Each floor also has 28,000 sq. ft. of lobby space. With floor-to-ceiling glass walls that allow views of the City by the Bay, the pre-function areas naturally lend themselves to special events.

“We put all the emphasis on flexibility,” Burford said. The convention industry was coming full circle, she added, returning to its original emphasis on networking and education after going through an exhibit-driven phase in the 1990s.

No sector is more representative of this trend than corporate events. “They may have some exhibit function, but the driving force behind them is the meeting component. We wanted to provide the kind of space they were looking for,” Burford added.

The strategy worked like a charm. Burford said the building had “some real strong repeat users who love the building and feel it's perfect for their uses. Apple is one of them. They're with us multiple times each year.”

Not surprisingly, because of its proximity to Silicon Valley, the building is popular with the tech sector.

The West building is a draw for other kinds of clients as well, Lewin added, because of its location downtown, within walking distance to many of San Francisco's attractions, eliminating the need for shuttles.

But high usage by corporate clients in particular is altering the overall facility's ratio of trade-to-corporate business. “We used to have about a 70-30 split, associations to corporate,” she said. “Today it's more in the 60-40 range. In the last four years, we've seen a whole new life in the corporate events arena.”

Lewin said the West building has been an easy sell, because it answered pent-up demand.

“We're in a position where, because of our limited availability, we work to ensure that we're securing the right business to put in our space,” she said.

By that, she was referring to the CVB's booking guidelines, which dictate that a meeting must have a track record for using a certain number of room nights before reserving the facility.

“It's not that we're not going out to find business; we do,” she added. “But we have a large volume of business that's coming to us. We have to make sure when we're layering business to offset what's going on in North and South, we find the best fit for our hotel community.”

Corporate clients that can show a history of room-night usage are increasing, Lewin said, and booking in ever-shorter windows, making them good business.

Still, Burford said they can be demanding: “They spend three days moving in, three days up and running and two days moving out. During that time, it's not unusual to have 100 changeovers, even 200.”

And after four years, the building's audiovisual technology is due for an upgrade.

Lewin went further, pointing out that Moscone is already in need of another expansion. “We're to the point where West is now selling up and we need Moscone East,” she said, adding that the CVB was working with the city to find viable space nearby.

It's not clear whether it would be geared toward corporate events but, in any case, the growth of the sector isn't expected to slow down.

According to Michael Hughes, TSW associate publisher and director of research, by 2012, Fortune 1,000 companies will invest more of their event budget in stand-alone corporate meetings than in exhibitions. Furthermore, 22 percent of exhibitors have increased spending on corporate events, while 15 percent have increased spending on tradeshows while decreasing that of corporate events.

Burford agreed there will be more than enough business for Moscone West. “For the foreseeable future, I think it (Moscone West) will work great,” she said.