'Build Us More Space, Or We Are Outta Here!'

Everybody's heard the industry lore about a couple of top-10 shows demanding that former general manager Tom Smith add the South Hall to the Las Vegas Convention Center quick, or else.

You've also probably heard the spin from cities insisting they would never build a publicly funded center without ample evidence of the billions of dollars it will bring them in the long run.

Somewhere in the middle lies the truth about convention centers expanding to keep major tradeshow clients happy. The question is: Does it make good business sense?

"In every place, it's somewhat different, but it's a good problem," said Barry Strafacci, Global Spectrum vice president of special projects and general manager of the Harborview Center in St. Petersburg, Fla. "If events are so successful in your destination and facility, you're part of that, and nobody is such a poor business person that they make a decision based only on one or two shows."

On the other hand, Strafacci, also current chair of the Intl. Assn. of Assembly Managers' Convention Centers and Exhibit Halls Committee, ticked off a half-dozen cases over the past two decades where facilities had expanded in response to customer demand.

Specifically, he recalled an example from 1985, when he was working in Louisville, Ky.: "We had some of the largest tradeshows, and the RVIA (Recreational Vehicle Industry Assn.) kept saying we had to expand. The manager who was there then, Jeff Blosser (now in Oregon), couldn't get any support, and the show went to Atlanta."

That wasn't the end of the story. Strafacci said the loss of the huge show helped Blosser convince the governor of Kentucky to support the expansion. The governor flew to the RVIA show in Atlanta to announce an expansion to the Kentucky Exposition Center. The RV group moved back to Louisville, where it remains today.

In cases like that, Strafacci said, show and convention center management both get what they want.

Chris Gahl, spokesman for the Indianapolis Convention & Visitors Assn., said the current expansion of the Indiana Convention Center falls into the same category. According to Gahl, the ICVA has declined the opportunity to bid on 150 events over the last few years, because it didn't have enough convention space or hotel rooms to accommodate them.

Local newspapers have reported that the expansion was brought on by the Performance Racing Industry Tradeshow's departure for Orlando in 2005, as well as several other major events, such as Gen Con and the Natl. FFA Convention, being venue-bound.

"We're in a multi-year conversation with (Performance Racing)," Gahl said. "Seeing them grow, and growing with them, it was evident that we would have to do it or risk losing them."

But, he added, "there was no demanding on either side."

Instead, in 2004, the authority hired PricewaterhouseCoopers to conduct a feasibility study that found the city not only needed a bigger convention center, but more hotel rooms too.

Indy's getting both. By 2010, the ICC'S exhibit space will double, to 747,000 square feet, and the downtown hotel room inventory will rise by 2,200 rooms, to 8,000.

Gahl said occupancy rates for both the center and hotels are currently hovering around 70 percent.

At least one case in recent memory raises the question whether customers can be a little too pushy, though: that of then-VNU Exhibitions in Salt Lake City. In 2005, with its semiannual Outdoor Retailer bursting at the seams, VNU (now Nielsen Business Media) told Salt Palace Convention Center management that the facility would have to be expanded or the show would be forced to move.

VNU went even further, setting a deadline of a little under two years for an expansion to be finished as a condition to signing future contracts in Salt Lake.

"It was a total shocker to sit down with a client and hear them say, 'You need to expand, or we can't stay,'" recalled Scott Beck, Salt Lake Convention & Visitors Bureau president and CEO. At the time, Beck was president of the Salt Valley Lodging Assn. and represented the hotel industry in the situation.

Working together, the various stakeholders succeeded in completing a $58 million, 217,000 sq. ft. expansion to Salt Palace in 22 months, soup to nuts.

The speed was impressive, but did have its drawbacks, Beck said. "We did a drive-by feasibility study. We just had to go with it. There wasn't one done in the context of what I know one is now. We increased our convention center by 40 percent, but there was no strategic analysis done on the elements needed to support it."

Beck added, however, that there wasn't a "We're building this no matter what" mentality. Developers had added hotel rooms (downtown now has 6,800) and other amenities to Salt Lake for the 2002 Winter Olympics, so those involved knew Salt Palace could support some increase in business without more infrastructure. And the county did hire Convention Sports & Leisure to recommend what the expansion should include.

"We did build the right center, based on the changing demographics of the convention industry," he said.

And the economic impact of OR isn't exactly chump change. The SLCVB estimates that this year's summer and winter markets will have a combined direct impact of $38 million, compared with $33 million before the expansion.

Beyond that, Beck said, he has come to see the investment in Salt Palace as symbolic of Utah's commitment to the outdoor industry in general. Companies like Black Diamond and Specialized are moving facilities and corporate meetings to the state.

Still, Beck admitted, if he were faced with a similar situation, "We'd look at it in terms of long-term sustainability."

So far, 32 citywide events are booked at Salt Palace for 2007. That number is usually in the upper 30s, although Beck said it's not uncommon to pick up two or three major events in the same year that they take place.

"I don't think facilities are at the shows' mercy," Strafacci concluded. "It's the business model. Shows are good for centers that are successful. If they outgrow them, they have to make the best decision for their members, and the facilities have to expand responsibly or do their job to replace the one that's left with another up-and-comer."