Supply and Demand: Every City Has Its Story

As noted elsewhere in this issue of Tradeshow Week, there are more than 11 million square feet of new exhibit and meeting space in the pipeline and scheduled to become available over the next few years.

It is easy enough to draw broad conclusions about what that much space will mean to the tradeshow industry in the future. However, the truth is it means something different in every city a show organizer might consider for his or her event.

In the next few pages, TSW editors take a closer look at a handful of selected American cities and examine the way the law of supply and demand is working itself out in very different situations from one end of the country to the other. In some places, there is an abundance of space; in others, a dearth. You can see that the circumstances in New York are quite different from Cleveland, which are quite different from Las Vegas, which are quite different from … the list could go on and on.

Let's face it, there are only so many mega-sized tradeshows to go around and, even though Chicago's McCormick Place is the granddaddy center of them all and ranked No. 3 in the number of TSW 200 shows it hosts (just two behind Orlando), it still has had to come up with a new way to market itself to stay in the game.

Hence, the opening of yet another building in August, McCormick Place West, that added 470,000 square feet of exhibit space to the 2.2 million sq. ft. that already exists.

What's different about the nascent facility, though, is it also has more than 60 meeting rooms and, as a result, is able to jockey for a different slice of the tradeshow pie.

“Chicago has always been known as a tradeshow city,” said Mark Theis, executive vice president of sales at the Chicago Convention & Tourism Bureau. “(Now) we're able to attract other types of groups. The new building is geared toward the association and corporate market.”

Eighty-eight events are on the books so far, he added, and some of the larger ones expected to fill the West building this year are the annual meetings of the American Academy of Neurology; American Society of Cataract & Refractive Surgery; and American Speech, Language & Hearing Assn.

Just the kind of business they were hoping for.

But, even with the successes, Theis said the uncertain economy, combined with fierce competition from other marketplaces, keeps everyone in Chicago on their toes. “The surge in development in the last five years with hotels and convention centers means there's a bigger supply with the same demand,” he added.

In the association and corporate meetings market, Chicago goes head-to-head with cities such as Boston, Philadelphia, Washington, D.C., San Francisco, Orlando and Atlanta, Theis said.

Luckily for the Windy City, even with the competition and looming economic downturn, Theis is confident that McCormick Place as a whole will be just fine because it services the tradeshow, association and corporate sectors. “We feel blessed in Chicago,” he added. “Should one segment get soft, we still have two legs of the stool to hold us up.”

–Rachel Wimberly

In early November, a member of the Cuyahoga County (Ohio) board of commissioners told Tradeshow Week it would have a good story before the end of the year (2007, that is): A site for the new convention center that Cleveland has been waiting nearly half a century for.

But earlier this month, Positively Cleveland (the city's convention and visitors bureau) President Dennis Roche said, “We'd hoped we'd have a site selected by now, but we don't.”

Eight months after county officials began collecting a tax to pay for it, Roche and others in Cleveland are still waiting for a decision on exactly where a convention center with 300,000 square feet of exhibit space and 200,000 sq. ft. of meeting space will go – and what it will look like.

Although the decision is ostensibly in the hands of the commissioners, they can't make one without a buy-in from Merchandise Mart Properties Inc., the Chicago-based developer that will be the county's private-sector partner. MMPI, which manages 10 million sq. ft. of permanent and temporary exhibit space and organizes about 300 events of all sizes every year in six cities, wants the proposed Cleveland venue to include a medical mart with 500,000 sq. ft. of permanent show space modeled after its Merchandise Mart in Chicago.

Although Roche and local government officials would like the new facility in the downtown area close to shopping, hotels and restaurants, MMPI plans to manage the facility and wants it close to a hub of health care institutions near the Cleveland Clinic, about five miles east of downtown.

All the parties involved – county commissioners, Positively Cleveland and MMPI – are polite in their we're-working-on-it comments, but it seems as if there must be plenty of behind-the-scenes negotiations underway.

“There's a different sense between the for-profit side and the non-profit side,” Roche said. “We want to drive business to town but, if we were the operator coming to town, we'd want to make a profit too.”

–Michael Hart

Gaylord Entertainment's strategy for success so far has been simple: build or acquire as many hotel-convention centers as possible in the top 20 or 30 markets and then book groups willing to rotate among them.

The company built properties from the ground up in Nashville, Tenn., where a $400 million expansion is in the works; Kissimmee, Fla., just outside Orlando; and Grapevine, Texas, 20 miles from Dallas.

Another property slated to open in April, Gaylord Natl. Resort & Convention Center, will be in Prince George's County, Maryland, on the Potomac River just eight miles south of the nation's capital.

“We broke ground in December 2004,” said Tina Sampson, vice president of sales and marketing at Gaylord Natl. “By June 2007, we sold 1 million room nights. The demand immediately hit as soon as we came into this region.”

The target markets are associations and corporations, she added, like all Gaylord properties. The idea is to sign a group up at one venue and then at other venues under the Gaylord banner around the United States in following years. “We have a lot of Gaylord-loyal customers,” Sampson said.

A group's attraction to a place like Gaylord Natl., she added, is the convenience of having everything under one roof with 2,000 hotel rooms, a center with 180,000 square feet of exhibit space, 76 break-out rooms and restaurants.

Stepping out of the build-and-book model, Gaylord acquired a property in November, the Westin La Cantera Resort in San Antonio, for $252.5 million. John Caparella, Gaylord Hotels COO and executive vice president, said the resort, with its 508 rooms and 39,000 sq. ft. of meeting space that the company plans to expand, is part of a new three-legged plan. “We're looking at new builds, expansions and acquisitions,” he added.

The strategy may be simple, but executing it isn't always easy. Gaylord's development of a West Coast location in Chula Vista, Calif., just south of San Diego, has been a roller-coaster ride, and even included conflicts with local labor unions that caused the company to temporarily walk away from the deal.

With the labor unions currently out of the picture, negotiations are back on with the city of Chula Vista and landowner, the Port of San Diego. The 2.2 million sq. ft. property would include 400,000 sq. ft. of exhibit and meeting space and a 1,500-room hotel.

–Rachel Wimberly

For many venues that cater to the tradeshow business, the choices are simple: grow or lose shows.

That was the case for the Indiana Convention Center & RCA Dome. During the past few years, the Indianapolis Convention & Visitors Assn. has declined the opportunity to bid on 150 events because it didn't have enough convention space or hotel rooms to accommodate them, according to Chris Gahl, the ICVA's spokesman.

That will change in 2010 when the $275 million expansion of the ICC opens.

ICVA President Bob Bedell previously told Tradeshow Week the convention center was at capacity immediately after it expanded in 2001, so another expansion was needed to retain current business and attract larger events.

In 2004, the ICVA had a feasibility study done that found the city not only needed a bigger convention center, but also more hotel rooms.

Indy's getting both. Exhibit space at the convention center will double to 745,000 square feet and the expansion will add about 47,000 sq. ft. of meeting space. Roughly 2,200 hotel rooms will be added to the downtown inventory for a total of 8,000.

Because of the lack of space, the Performance Racing Industry Tradeshow, staged in Indianapolis for seven years, left for Orlando in 2005.

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

There are also other shows to worry about, such as attendee-rich Natl. FFA Convention, which is booked in Indianapolis through 2012. The Natl. FFA (previously Future Farmers of America) Organization, the show's owner, is conducting site visits this year in four cities – Indianapolis; Minneapolis; Kansas City, Mo.; and Louisville, Ky. – all of which are bidding on a seven-year contract to host the show starting in 2013.

But with the expansion, ICVA officials said they are hoping to keep the FFA show, get PRI back and attract new business it previously wasn't large enough to accommodate.

–Stephanie Corbin

In the game of convention space supply and demand, Las Vegas sets the bar high for anyone else who dares to play.

According to the 2007 year-end report of the Las Vegas Convention & Visitors Authority, the city has 132,947 hotel rooms and 9.5 million square feet of convention space. It also has two of the 10 largest exhibit halls and the largest hotel exhibit hall as listed in Tradeshow Week's most recent Major Exhibit Hall Directory. They are the Las Vegas Convention Center (1.9 million sq. ft. of exhibit space), Sands Expo & Convention Center/Venetian Resort Hotel Casino (1.1 million sq. ft.) and Mandalay Bay Resort & Casino (934,731 sq. ft.).

Nevertheless, the city's average hotel room occupancy last year was 90 percent, compared with the national average of 63 percent.

That's why, while hospitality officials in other cities fret about whether there will be enough bookings to fill the space they so desperately want to build in order to better compete, Las Vegas leaders simply smile and unveil another 5,000-room, multi-hotel property with more than 750,000 sq. ft. of meeting and exhibit space; in this case, Boyd Gaming's Echelon, set to open in 2010.

Echelon aside, however, the city is holding steady in terms of new convention space construction. The enhancement of the LVCC, now underway, will add meeting space but no exhibit space. The formerly planned expansion of Sands Expo is stalled (even off, if you believe some rumors that facility officials will neither confirm nor deny), and MGM Mirage has no plans to build for now, according to executives.

Hotel rooms are another story. If all goes as developers are presently planning, the city will have 178,000 rooms, 45,000 more than the current inventory, by the end of 2012. That may be why the LVCVA's focus is on boosting international tourism, as part of President Rossi Ralenkotter's goal to bring 43 million visitors (both foreign and domestic) to the city per year by 2009.

–Heidi Genoist

Two and a half years after Hurricane Katrina, New Orleans' convention and tradeshow business is still trying to weather the storm.

Bob Johnson, Ernest N. Morial Convention Center president and general manager, said Katrina not only devastated the city in 2005, but also put on hold a substantial expansion that had been in the works. There is now no timetable for when the expansion might be revived.

Despite the setbacks and now the possibility of an economic downturn, Johnson said he thought New Orleans' convention and tradeshow market would come back. “We're bruised, but our success over the past five months, both in conventions and events such as the Sugar Bowl game, the BCS college football title game, and the NBA All-Star game, has been remarkable,” he added.

Still, not everything is rosy in the Crescent City. Some meetings on four- or five-year rotations canceled their 2011 or 2012 events in New Orleans, so the city is aggressively pursuing events – including some smaller than it might have looked at before – to fill the convention center's dates, said Tim Hemphill, Morial executive director of sales and marketing.

The hurricane-damaged convention center has undergone $62 million in renovations, and the officials are bringing as many people to town as they can via fam' trips and other special events.

“We're still paddling hard with bookings because of the cancellations,” Johnson said, although 2009 bookings are approaching pre-Katrina levels.

It's still hard to get groups to hold meetings during hurricane season, and understandably so, he added. If the city goes through a few years without a hurricane and can demonstrate that it's prepared if one does come, it'll make the marketing job easier, Johnson said.

He noted that when New Orleans representatives attended industry meetings, they perceived an attitude change. In the past two years they've received sympathy from attendees, but more recently they've been asked about open dates.

“The perception has changed,” Johnson said, “but we're still fighting the images burned on the retinas of the country.”

–Gary Tufel

What more can you say about the on-again, off-again proposed expansion to the Jacob K. Javits Center of New York?

In the latest blow to the project, Patrick Foye, chairman of the Empire State Development Corp., which oversaw it, said of the expansion, “It's not a prudent use of taxpayer dollars,” and called it off.

In fact, the $1.8 billion raised to pay for the added space will now be used for repairs to the aging center and the expansion, if any, will be well under 100,000 square foot, a far cry from the ambitious 340,000 sq. ft. plan proposed a decade ago.

A number of factors torpedoed the project, but the biggest one was the change of guard that ushered out former New York Gov. George Pataki and brought in current Gov. Eliot Spitzer.

Spitzer looked at the plans and said there was no way the expansion could be built with the money in the coffers. Then, after an unsuccessful attempt to get New York hoteliers to cough up some more cash, the project was officially scratched, much to the dismay of a group that calls itself the “Friends of Javits.”

These “friends” are described as a group of show owners, show producers and industry-related companies that includes Jeff Little, head of George Little Management; Freeman COO John O'Connell; Mark Scheinberg, president of the Greater New York Auto Dealers Assn. (which runs the New York Intl. Auto Show); and Ken McAvoy, senior vice president of Reed Exhibitions.

In an open letter, the friends scoffed at Spitzer's revised plan saying, “(The) expansion plan is not an expansion plan. To spend $1.8 billion and create less tradeshow business for the state of New York is absurd and a bad business decision. It's the highest cost per square foot remodeling project in the history of the world.”

In other words, Javits' biggest customers seem to think that anything short of a significant expansion to the building is not only bad business, but egg on the face of a city that calls itself the Big Apple.

–Rachel Wimberly

In the world of Mickey Mouse and Donald Duck, more meeting and convention space doesn't necessarily mean an expansion of Orlando's Orange County Convention Center.

Venues around the busy central Florida city have been opening hundreds of thousands of square feet for exhibits and meetings – including the Orlando World Center Marriott near the OCCC, which completed its expansion in October with 186,000 additional square feet of exhibit space; the Intl. Plaza Resort & Spa with 60,000 sq. ft. of meeting space; and the Orlando Sun Resort and Convention Center by Lexington that offers 20,000 sq. ft. of exhibit space, 22 meeting rooms and a 13,500 sq. ft. ballroom.

Even more meeting space – linked to the OCCC – will be added when the Hilton Orlando opens in summer 2009. The convention center's first anchor hotel will have 130,000 sq. ft. of meeting space, including a 50,000 sq. ft. grand ballroom, 30,000 sq. ft. junior ballroom and 38 meeting rooms. In the pipeline for 2010 are the InterContinental Resort & Residences Orlando at Palazzo del Lago, New Orlando Magic Arena and The Peabody Orlando.

On top of that, the largest convention center facility to open in the United States in 2006 – Rosen Shingle Creek with 195,000 sq. ft. of exhibit space and 250,000 sq. ft. of meeting space – just hosted the Religious Conference Management Assn. World Conference & Exposition, the first major industry organization meeting at the venue.

And all the additions are welcome in Orlando, the city with the second most TSW 200 shows (after Las Vegas).

“When you think about new construction, you think about what (Rosen) Shingle Creek has added to that convention center area,” Gary Sain, president and CEO of the Orlando/Orange County Convention & Visitors Bureau, previously told Tradeshow Week. “New construction affords you opportunities that can take you to the next level.”

–Stephanie Corbin

Facing stiff regional competition from the likes of the Boston Convention & Exhibition Center, which opened in 2004, and the Washington (D.C.) Convention Center, which opened in 2003, Philadelphia is eager to expand its Pennsylvania Convention Center.

But a $700 million expansion of the convention center ran into two contentious, nearly simultaneous obstacles early this year that were resolved and allowed construction to finally proceed on the project, expected to add 260,000 square feet of exhibit space for a total of 700,000 sq. ft., as well as 72,000 sq. ft. of meeting space. Completion is scheduled for October 2010.

The first snag was a dispute with the construction unions on the project over minority hiring. The second arose when a judge temporarily barred demolition of two historic buildings that stood in the way, which actually halted construction until another judge decided to allow the razing of the buildings. When preservationists decided to drop the issue, construction proceeded.

In the first issue, the Philadelphia City Council required that, as part of its approval of the expansion, the 15 construction unions that would work on the project outline their plans for guaranteeing minorities and women would be part of their workforces.

Pennsylvania Convention Center Authority President and CEO Albert Mezzaroba persuaded Gov. Edward Rendell and recently inaugurated Philadelphia Mayor Michael Nutter to get involved in negotiations with the unions, worrying that further delays would ultimately push completion back past the target.

In early February, the city council gave the go-ahead to construction when 11 of the 15 unions showed it plans to make sure their workforces would be made of up of 40-percent minority workers and 10-percent female.

More concrete plans for minority inclusion are still being developed (and discussions with the four remaining unions were still going on at press time), but construction was able to proceed – putting Philadelphia right back into the convention center expansion game.

–Gary Tufel