Square feet versus heads in beds.
"Oh, the farmer and the cowboy should be friends," sang the cast of the musical Oklahoma! For many years, meeting planners were strongly tempted to paraphrase the lyric so that it would apply to convention centers and convention and visitors bureaus. A decade or so ago, as convention centers sprouted like mushrooms and CVBs prospered on taxes, in some cities the two not only failed to be friends but virtually competed with each other, sending separate delegations to trade shows and maintaining independent sales and marketing staffs.
Hard times and a fresh look at the nature of both entities have changed that. These days, not only are convention centers and CVBs collaborating, they're combining offices and in some cases actually merging into one organization that promotes tourism and convention services for the entire destination.
The person on the street may have difficulty distinguishing between a convention center authority and a CVB, but the two serve interests that may not coincide. CVBs, in the trade parlance, "put heads in beds" to improve the fortunes of the hospitality industry. They aim to benefit the hotels that house and feed travelers, whether those travelers are coming to town for a meeting, for business, or for a vacation.
Convention centers, on the other hand, sell square feet of exhibit space. They must answer to the taxpaying public, usually in the form of city government, if their operating losses soar too high. To minimize the red ink, convention centers are happy to sell space to local-oriented events, such as an automobile show or a flower show, even if the booking means that hotels stay empty.
Who books what?
The historically separate nature of the convention center-CVB relationship led to confusion among meeting space buyers, who in many cities found themselves dealing with one organization to reserve the convention center itself and another to stake out a concurrent block of rooms.
William H. Just, executive vice president and cofounder of the Association for Convention Marketing Executives, Atlanta, formerly worked as a meeting planner with two major medical associations. He reports, "When I would go to the site, many times I found the bureau and the center were at odds with each other. I was not too certain of who was selling what. The bureau claims they sell the center, the center says they sell the space, and the planner is saying, 'Gee, who's in charge, and how do I get an honest answer?'"
But those days are passing fast. As the federal government money pump runs dry, municipalities across the United States are tightening their belts and looking around for new revenues. Local governments are looking to cut their budgets and seeking to raise taxes wherever they can.
That one-two combination squeezes convention centers and visitors bureaus in the middle. Convention centers, traditionally viewed as loss leaders to attract free-spending conventioneers into the city's hotels and restaurants, are being urged to minimize their losses and come as close to breaking even as possible. The visitors bureaus, on the other hand, are finding that jurisdictions are increasingly eager to tax the hospitality industry with airport surcharges, restaurant taxes, and room taxes and fees.
"|Municipalities~ are tempted time and time again to look at the visitor and convention industry as if it were a bottomless well of liquid gold, and all they need is to throw a bucket down and up comes the money," says Steven G. Hacker, president of the International Association of Exposition Management, Indianapolis. The problem is, Hacker points out, that high taxes make a destination less competitive. (A recent study in New York City showed that the city actually lost revenue when it raised the hotel bed tax.)
Meeting and merging
The result of the squeeze on convention centers and CVBs is that the two entities are finding common ground in adversity. Convention centers and CVBs are cooperating more and more to market their cities as destination packages and to provide better customer service. In some cases, this has led to an outright merger; in others, to coordinating the sales staff; in still others, to a closely linked cooperative relationship. What form the cooperation takes is influenced by local conditions: "Each city has its own political structure, its own constituency of voters," Just explains. "You're going to get as many different systems as you have ideologists who think they know what's best for their town."
Milwaukee is one city that went the merger route. Dave Nolan, president of the Greater Milwaukee Convention and Visitors Bureau, describes the state of affairs before he signed on: "There were two distinct yet duplicate efforts going on." MECCA, the Milwaukee Exposition Convention Center and Arena, marketed itself. The convention and visitors bureau also sold the convention center and arena as part of the destination. That meant each entity had separate marketing plans, separate offices, separate sales staffs, and separate budgets (one for the privately managed convention center and the other from the government-funded CVB). "The result was duplicate booths at industry trade shows, potential confusion with the customer on overlapping of solicitation calls, and obviously not maximizing efficiencies of expenditures," Nolan says.
Nolan's first step in implementing the merger was to look ahead. "We knew our competitors were moving forward. We said, what does our customer need in the future?" Given that the area's industrial base was shrinking, there was a need to shift to a focus on other sources of jobs. In addition, the area needed to be competitive in order to attract customers. Finally, in an era of shrinking budgets, a significant cost savings would be realized from adding efficiencies of scale. The merger was two years in the making, and it involved, among other logistical problems, the transfer of government employees to a private corporation. "A big hurdle was the physical moving," Nolan says, "with a commitment to close down offices and build a million-dollar facility within the convention center so we could provide one-stop shopping."
The blending of the two organizations has paid off. The most important single benefit, Nolan says, has been having "one philosophy of management and training to maximize sales." Financial efficiency came in merging the sales and marketing budgets, which reduced costs by half. Arranging lines of authority proved no problem: "We assumed the sales and marketing of the convention center, while the president of the convention center took over all operational control of the facility," Nolan says.
The only effect the merger has had on the convention center, Nolan says, is that it's brought in more business. "In 1992 it recorded the highest profit year in the history of the convention center," he says. He attributes this record to improved strategic use of the space and the ability of staff to concentrate on booking more profitable functions in the arena.
Resorts and responsibilities
Atlantic City, which hosts 30 million visitors every year, has also reorganized its marketing into one convention and visitors bureau. "We are in fact all but merged, in the sense that we have really done everything but some legal niceties," says Robert McHugh, vice president for communications for the Greater Atlantic City Convention & Visitors Bureau, New Jersey.
The reasons for the merger are "enormously complicated," McHugh says, but boil down to the need for a more integrated marketing effort for the new convention center. Atlantic City had been represented by a privately funded visitors bureau as well as the Atlantic City Convention Center Authority, which oversaw the city-owned boardwalk convention center. Legislation for a new convention center and a bed tax to fund it passed in 1991, creating a $6 million marketing fund.
Atlantic City has faced the same kinds of government-private merger issues as other cities: "The convention center authority remains a state agency whereas the CVB is not, so we are a quasi-governmental corporation. So there are some legal hurdles to bringing a private sector and public sector agency together--dissolving a pension system, those kinds of nitty gritty issues," McHugh says.
The merger of the private CVB and the state-funded convention center is going smoothly, says Stephen B. Richer, president of the Greater Atlantic City Convention & Visitors Bureau. "Basically the same team is in place, only it's got more resources." He finds the high level of state involvement beneficial: "Show me another city in the U.S. that has over $1.3 billion in publicly generated money to fix up the city."
In addition to the usual complications, Atlantic City has the casino presence. "The casinos are obviously a major player in town," says McHugh. "But it's disingenuous to talk about the 'casino industry'; they are |an industry~, but they don't agree on very much--the individual properties are in competition. They're sympathetic--what's good for the convention center is good for casinos--but they consider the marketing fee |income from the bed tax~ to be their money, even though it's their customers' money." As a result, McHugh says, "we're trying to work with them in cooperative marketing programs. Our job is to get people to come into Atlantic City, and in a sense we don't care where they stay when they get here."
A governor-appointed board of directors has just approved a new logo and a new name: the Atlantic City Convention and Visitors Authority. "Any time you take two organizations with two different cultures," McHugh points out, "it's a little bit difficult. But now people are starting to say, 'I work for the Atlantic City Convention and Visitors Authority.'"
Another city where the resort presence has a tremendous impact is Fort Lauderdale, Florida. C. Dean Hofmeister, president of the Greater Fort Lauderdale Convention and Visitors Bureau, insisted on a convention center--CVB merger as part of his tenure. Fort Lauderdale's situation is the reverse of that faced by nonresort destinations: During the height of the tourist season, hotels won't commit to giving up large blocks of rooms to conventions, so the center is virtually compelled to book local consumer-oriented shows and events.
Hofmeister came to Fort Lauderdale with merging on his mind: "I had seen destinations where there seemed to be a measure of turf develop between a facility and the marketing arm for that facility. Here, since both are funded from a tourist tax, it made good sense to merge. I explained to Broward County that I would be interested in taking over the CVB but only if they let me merge with the convention center."
The merger is not quite complete, however: "Unfortunately we're still located in two different office areas. As soon as I'm able to get out from under a lease, I will definitely move the convention and visitors bureau into the convention center."
Operationally, Hofmeister sees improved efficiency as a major benefit. "We have one budget, one organization chart, you might say one point of authority. That makes it easier from a management point of view." The merged bureau has also been very successful in selling the facility, which opened in 1991. "In our first year of operation we were projected to do about 98 events in there; we had 253. And we'll have well over 300 this year. I think it's just that close day-to-day coordination between the people operating the facility and the marketing and sales organization," Hofmeister says.
Sharing sales and reservations
For most destinations, merging the two functions is probably out of the question. But cooperative ventures are springing up all over. Donald B. Engler, director of marketing for the Ernest N. Morial Convention Center in New Orleans, says, "I don't think you could ever merge the two completely, and the reason being for that is the bureau's real reason to be is to put heads on beds, and that's not always consistent with the bottom-line necessities of a convention facility. Our real goal is to take this facility to a break-even level, through enhanced bookings and services we deliver to our users.
"Now, can we work together? Definitely." The convention center and CVB just started sharing computer access to the center's books, allowing faster and more accurate space reservations. "Where we're coming from is a system where we had a computerized calendar system, they had a set of manual books, and we shared updates by mail. So you can see how many light years we've come in a very short time," Engler says.
However, Engler doesn't see much more integration in the near term. "We've discussed cooperative advertising opportunities, though from a funding standpoint it's not going to happen in the near future," he says. He also believes there will always be a difference between the two entities, even though "we sell the destination as much as we sell the facility, even in our own internal advertising," Engler says. "The logic is certainly there for the cooperative effort, and we strive very hard to make that team sell really work. We hang together or we hang separately." But merger? Not yet. After all, he says, "If two people always agree, one of them's not necessary."
Melvin Tennant, president and chief executive officer of Charlotte, North Carolina's new convention center, says, "There are difficulties inherent in a relationship between a convention center and a convention and visitors bureau, primarily because of the two different ways in which they are judged. Convention centers typically are looking at minimizing their operating deficit; we accept the fact that they are not profit centers, whereas a convention bureau is looking at overall economic impact--and in our case specifically how many room nights we're generating for the city."
Tennant describes the Charlotte arrangement in these words: "What we've done is come up with a set of booking guidelines which address both the issue of operating deficit in the convention center while allowing us flexibility to book the maximum number of room nights." Tennant says the best solution is to look at the big picture and the long range. "We've evaluated what our markets are," he says. "We look at the |meeting~, spending, and size, and we make an educated judgment as to whether this is the type of group we need to pursue. At this point in our evolution we are more likely to be flexible because we're building business, but as we become more successful, we presumably will be able to become more selective." Implementing that arrangement, Tennant notes, has taken most of the year he has been in his position.
What these new partnerships boil down to in the long run is competitiveness. "I think the market is significantly overbuilt in terms of convention center facilities," says George D. Kirkland, CAE, president of the Los Angeles Convention and Visitors Bureau. "There hasn't been very much growth in the number of associations that are producing trade shows. There's a reason for individual facilities to expand, but |with~ the new buildings coming up, the only way for you to win is to take business from someone else."
That means the destinations that can offer better customer service, that market cooperatively, and that provide the least confusing and most customer-driven booking opportunities are going to have a significant advantage in the marketplace.
Kirkland says, "The phenomenon of bureaus working together is not necessarily all that new." He cites an eight-year-old collaborative effort that includes San Francisco, Los Angeles, Anaheim, and San Diego to cooperatively fund an office in London. He also points to the merging of the various destination marketing functions in Dade County, Florida, that resulted in the Miami Convention and Visitors Bureau. "There are a number of bureaus in the Northeast that have collectively joined forces to promote themselves.
"Where you have seen explosive growth in the trade show industry in the last five years is in the number of consumer shows that have come into the marketplace," Kirkland says. "You'll see far more |convention centers~ that have a balance of consumer and trade shows side by side, and bureaus and centers have to be flexible enough to learn to do that and live with one another."
When it comes right down to booking the meetings, square footage is only a start. Increased competition will drive more bureaus and centers to cooperate, says Carroll R. Armstrong, marketing director for the San Diego Convention Center and a cofounder of the Association for Convention Marketing Executives. "When you look at the proliferation of space, there are 55 million square feet of exhibit space in this country alone. In 1995 it'll be 71 million square feet and climbing. There are a lot of choices |for the buyer~, and I don't think the customer base is keeping pace with that. There's going to be a lot of competition, and it's going to get even more ferocious."
As Hacker, of the International Association of Exposition Management, points out, all the meeting rooms in the world can't compete with competent customer service. "It makes the life of a meeting planner like myself a whole lot easier when we get the kind of support we need from the bureau, convention center, and hotel community. The key word is creating new partnerships on a micro and macro basis, within the city and extending to the meeting planner.
"I will not take us into a situation where I know in advance that the city and center and hospitality community don't have their act together," Hacker says. "It doesn't matter if it has a new convention center or newly renovated hotels. If they don't know how to utilize those facilities, then they don't make people happy. Buildings don't make people happy. Service makes people happy."
Stephanie Faul is a senior editor of ASSOCIATION MANAGEMENT.
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|Title Annotation:||convention centers and visitors bureaus set aside differences and join forces|
|Date:||Oct 1, 1993|
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