Convention Centers: The Next Wave

Convention centers continue to expand. While the venue development industry may not be booming, it still is healthy.

From August 2007 through July 2008, total exhibit space supply increased by 3 percent, according to the Tradeshow Week Major Exhibit Hall Directory. In terms of the development outlook, there are 71 new venue and expansion projects currently underway or in the planning process. This is the highest figure since 87 projects were counted in 2002, and it is not far off the 10-year average of 74.

Private investors, mainly hotel developers, continue to play a larger part in the convention center industry. In fact, of the 25 new venues in development in North America, nearly half, 13, are privately funded. And, of the six new venues opened in the last year, three were private; of the eight expansions completed, seven were private.

Hotels actually have been somewhat late to realize the potential of the convention and meetings industry. They are playing catch-up in terms of building ample exhibition and meeting space with their new properties.

Yet, most of the venue expansions (81 percent) underway today are municipal projects. Many of the new venues that opened since the early 1990s, and even expansions completed since then, were simply not large enough. Looking back over the past 30 years, the convention center building boom proceeded pretty cautiously, driven mainly by prudent, incremental municipal investments.

New venues, expansions and renovation projects will always be important – and there are a number of cities large and small that need more exhibition space. Still, the trend of primarily competing by adding more exhibit space is coming to a close. In most cases, expansions are now more supplemental than transformational. And, as this column has noted in the past, event producers are looking more closely at hotel capacity, quality and pricing when making site-selection decisions.

The next wave is for venues and convention and visitors bureaus to add value by providing additional services and by selectively deploying incentive funds. It is still a buyer’s market for convention center space, and the extra space under development will exacerbate this.

The current slowdown in the hotel market actually gives even more power to event producers.

These trends are suggested in recent survey data that found 86 percent of venue and CVB marketers say that incentive funds are very important. And 84 percent say their funds will likely remain stable or increase in the future.

But incentives and discounts will only go so far. I predict that, increasingly, associations will choose cities and rotation patterns designed to boost attendance, not simply to cover the major regions of the country during a five- to 10-year period.

This trend to add value is not only on the venue side of the industry. Show producers say their attendees and exhibitors are demanding more as well. Show producers tell us that attendees are more pressed for time, harder to get to shows, more focused and better prepared. On the exhibitor side, they are more focused on cost justification, ROI and the need to prove value.

The key question is how the venues, event producers and service providers can add more value to the entire event experience?

The industry needs to rethink the business it is in. For one, the terminology needs to change. There are no “exhibitors” or “attendees” anymore. There are only companies that need to build their brands and professionals who need to assess people they may purchase from, review products and access education and networking opportunities. Those professionals don’t call themselves convention or tradeshow attendees anyway.

In a way, there are no “show producers” either, only market makers and education providers. Even associations tend to primarily fall into one of three camps: information provider, advocate (lobbyist) or marketplace maker.

The evolution required is this: Think of buyers instead of attendees, then of people instead of buyers. Further still, consider individuals instead of people and, ultimately, of serving guests in search of value.

This may sound like customer service seminar boilerplate, but it’s critical in a time when almost every respected industry person I speak to wonders aloud if “the younger, Internet generation” will value conventions and tradeshows as previous generations have.

Whether you’re running a show or a venue, your guests are not attending a “show” in a “venue.” They’re searching for a range of interactions, both planned and unplanned, to improve their careers and lives. In our knowledge economy, which becomes more closely tied to the Internet every year, the risk is that one day the traditional big-box convention center and tradeshow exhibit booth environment will become obsolete.

Up until now, the convention center industry has crammed more meeting rooms, communications technology and food and beverage options into the big-box model. And this has worked during the past 20 years.

The challenge for convention center designers is to develop a facility that more directly helps companies build their brands and buyer-guests to access the information and experiences that they can’t access via the Web.

What would this type of facility look like?

It will have more intimate spaces to foster personal interaction, more areas for comfortable sitting, a different floor and exhibit experience, and areas and technology for information and data collection, including locations and services that allow for more self-service.

Part of the goal is to more closely tie events and facilities to the Internet and digital networks. The challenge is to serve a faster-moving society that also needs to slow down and be more effective at critical moments. A tall order indeed.

The first convention center to truly offer a 21st-century marketplace will be a game-changer.

Michael Hughes is associate publisher and director of research services for Tradeshow Week. He can be reached at mhughes@reedbusiness.com.