Shows Say to Venues: We Need Space

Ask 100 people to name two cities with similar problems, and 99 of them would be unlikely to say Anaheim and Detroit. Yet, as the two cities closed their biggest shows of the year, convention and visitors bureau executives from each worried the shows might go elsewhere if something isn't done about their inadequate convention center facilities – fast.

The Intl. Music Products Assn.'s The NAMM Show, held Jan. 17-20 at the Anaheim (Calif.) Convention Center, is bursting at the seams. And in Detroit, it's the the major event celebrating the industry that made the city famous, the North American Intl. Auto Show, that everyone's concerned about.

According to show manager Kevin Johnstone, The NAMM Show has more than 1,500 exhibitors and 88,000 registered attendees on a near-600,000 net square foot showfloor. That's a tight fit in the Anaheim Convention Center, which has 815,000 sq. ft. of exhibit space. In fact, Johnstone added, the showfloor is so over-packed, exhibitors are forced to use converted storage rooms and electrical closets for exhibit space.

“We're filled to the walls and spilling out of the convention center as it is,” he said. Some exhibits are located in a ballroom at the nearby Anaheim Marriott, Johnstone added. “Any large show manager will tell you that when you start having to go to satellite space, it doesn't work,” he said. “People feel left out.”

As a member-driven organization, NAMM is obligated to act on exhibitors' wishes to expand their booths and grow the show, Johnstone said, but there's nowhere to go at the Anaheim CC.

“It's rather simple math,” he said. “If the show continues to grow, and the convention center does not, at some point (leaving) will be a business decision. Our members dictate our future to us. A lot of members say, 'We love Anaheim, but want more space,' so we have to look at other options.”

The NAMM Show has a contract at the center through 2010 and, if it's up to Charles Ahlers, president and CEO of the Anaheim Convention & Visitors Bureau, shovels will be in the ground by that time for a proposed 200,000 to 300,000 sq. ft. expansion.

“NAMM has been pressing us to expand the building ... and I understand their position, because no one wants their growth cut off,” Ahlers said. “We have plans for how the expansion would look.”

According to Ahlers, the CVB has taken several steps toward getting the expansion off the ground:

• picked prospective expansion sites
• drawn up an economic impact study
• calculated a mix of exhibit and meeting space

Now, Ahlers added, he just needs to figure out how to fund it. “There's no opportunity to kick up the TOT (transient occupancy tax), but we do have (hotel) partners interested in helping us (with bond financing),” he said. “It's just a little harder way to do it.”

The NAMM Show has taken place at the Anaheim CC for 31 years, according to Johnstone, with a three-year gap when it moved to the Los Angeles Convention Center during one of Anaheim's previous five expansions.

“(Our members) would like to stay in Anaheim and, if they see an expansion is happening (by 2010), they would probably tough it out,” he added.

Johnstone pointed out that the music products show is not the only one that sells out the center. “Others need more space too,” he said. “If they grow, it will benefit much more than NAMM.”

Meanwhile in Detroit, the North American Intl. Auto Show, held Jan. 19-27, has maxed out the 700,000 sq. ft. of exhibit space at the Cobo Center. The product launches and 6,000 journalists that cover them each year are crucial to the automotive industry – and that is what has Wayne County (Mich.) Executive Robert Ficano worried.

“We have to maintain our status as the top show to get product announcements,” Ficano said.

He knows that Detroit may still be the symbolic heart of the automotive industry, but both design and production have spread to the far corners of the earth, and every one of those corners has its own car show.

Beyond those like the Los Angeles Auto Show that are vying to grab a slice of the pie in the United States, international venues – Frankfurt, Beijing and Paris, for example – also want in on the action. “We're not just competing against venues in the U.S.,” Ficano added.

The stakes are high for southern Michigan, an area that's struggling economically. According to a study completed recently by local economist David Sowerby, the estimated annual economic impact of Cobo events is nearly $600 million, 80 percent of it generated by the auto show. In addition, events at Cobo create more than 16,000 jobs. Over a 10-year period, Cobo's economic impact “equals more than 50 Super Bowls or 400 World Series games,” Sowerby said.

In December 2006, Ficano proposed a plan to expand the center by 270,000 sq. ft. at an estimated cost of $800 million, too much for local officials to approve.

During the recent auto show, Ficano, Michigan Gov. Jennifer Granholm and Detroit Mayor Kwame Kilpatrick released a scaled-back expansion proposal – 120,000 sq. ft. – as well as renovations to the aging center and a tax-free zone.

According to Ficano, construction would cost approximately $323 million and be paid for by extending an existing tri-county hotel tax and a statewide liquor tax for seven years past their current 2015 deadlines. The county also is working with the state to create a limited, sales tax-free zone for small- to mid-sized consumer shows, he added.

“We can expand our regional convention center without raising new taxes and give consumers a tax break at the same time,” Ficano said. “Let's get this done for the people of Michigan.”

Ficano expects the plan to be introduced as a bill in the Michigan State Legislature and take a year to go through the legislative process.

Larry Alexander, president and CEO of the Detroit Metro Convention & Visitors Bureau, said, “It would be a major step forward to keep up with the growth and stature of the Intl. Auto Show. It's critical we maintain that.”