It is up to the host community to capture that potential.” For Tucson in 2007, he could proffer the assessment, “The meetings and convention industry has expanded significantly over the past ten years in both supply of events and new and/or expanded quality venues but the Tucson Convention Center has not participated in this sector to any degree.” And in a 2007 presentation, CSL’s Bill Krueger offered an audience of local elected and economic development officials a series of slides on “The Recovery for the Biggest …” and “Decades of Growth for the Largest …”54
Over and over, major industry consultants have either misread or misrepresented the data on convention and tradeshow demand. By focusing on a subset of years, using inaccurate annual percent change numbers, or basing their conclusions on an overly broad definition of events, they have succeeded in painting an upbeat and optimistic portrait of demand growth. That illusion of persistent growth could help justify “build it and they will come” recommendations for a remarkably broad array of communities, from the largest to the most modestly sized.
The reality of far more limited growth, even in the face of a continuing expansion of supply, is that the convention market appeared to be increasingly zero-sum. Las Vegas and Orlando succeeded in gaining some events and attendees with major expansions (at least prior to 2008). But their success came largely at expense of cities like New York, Chicago, and Los Angeles. Chicago, for example, saw its share of the “200” events plummet from 30 in 1993 to just 18 in 2008. And even Las Vegas and Orlando have failed to achieve the increased business they had been promised and anticipated.
The world of convention center activity changed over the years after 2001. The boom in center building had produced an oversupply of space. If the growing competition for conventions was not obvious to the consultants (or their clients) after 2001, it was evident to the industry, to both the local convention and visitor bureaus that market centers and the convention center managers themselves. In January 2006, a group of CVB heads and center managers assembled in Phoenix to begin to discuss the growing problems in selling center space. By that June, a series of presentations at the annual meeting of the Destination Marketing Association International in Austin noted the “Increased competition in marketplace” and “Price erosion.” Peggy Daidakis, director of the Baltimore Convention Center, described the growing use of “Opportunity Funds,” where “CVB’s are paying a portion of the Center’s rental; picking up transportation costs; covering the costs of ancillary charges,” and Bob Hodge, head of the Austin Convention Center, described how his city was “Pricing [the] Convention Center competitively within our market and allowing for discounts when business warrants.”55
By 2007, discounts, incentives, opportunity funds, and offers of free center rent had become commonplace in the convention center world. Tradeshow Week reported in fall 2007 that fully 60 percent of centers maintained “incentive funds” to lure business. And when the joint study committee of CVB heads and center managers issued its report on center sales and operations in August 2007, the conclusion was quite direct. The report noted “the recognition that supply of available exhibit and meeting space across the nation currently exceeds demand, resulting in a ‘buyers market’” and that “The resulting ‘buyers market’ has exacerbated an already competitive environment, resulting in the need to discount rental rates or increase services that can create a competitive advantage.” That view of a “buyer’s market” and an oversupply of space was not particularly in evidence in the consultant reports.56
At the same time as centers and CVBs were trying to buy business with discounts, the cost and difficulties of travel had grown, making attendance at a convention or tradeshow a more problematic investment for firms and organizations. The changed technology of communication and interaction, from PCs, tablets, and cell phones to virtual meetings and the Internet, had significantly altered communication and information sharing. Even where Indianapolis might lure an event from Kansas City, or Chicago beat out Baltimore for a convention, the number of attendees they would see likely would be far smaller than in years past.
Convention Demand and the Economy after 2008
The path of convention and tradeshow demand after 2000 and 9-11 demonstrates that the industry is far from insulated from larger economic forces. For 2002, Tradeshow Week reported a drop of 6 percent in exhibit space use and a 4.4 percent decline in attendance for the “200” events. The impact of the financial meltdown and recession of 2008 and 2009 has been, by all measures, even more dramatic, albeit not fully evident until 2009 and after.
The annual count of convention and tradeshow events from the Tradeshow Week Data Book provides one measure of the impact of the recession. The event total was 3,742 for 2008 and 3,745 in 2009. As events are commonly planned well in advance, the 2009 count did not immediately reflect any real change on the part of event organizers. Since the Data Book directory is prepared during the year before the events are held, it could not reflect meeting cancellations such as the decision by the American Society of Newspaper Editors to cancel its 2009 convention, made just months before its April date. But the 2010 event volume reflected a significant change, falling to 3,552. That amounted to a decrease of five percent, bringing the convention and tradeshow count to its lowest level since the data were first reported in 1994, clearly below the previous low of 3,648 in 2002.
Event cancellations do not directly affect the annual set of top “200” events. Instead, those events may shrink in size as exhibitors choose to reduce the size of their booths or simply not attend, and they can drop in attendance as firms, organizations, and individuals decide to reduce travel spending and cut back on event attendance. Tradeshow Week reported that in 2008 the “200” showed a 1.6 percent drop in exhibit space use and a 3 percent decrease in attendance.
The full brunt of the recession’s impact on the “200” came in 2009. Exhibit space use dropped 17.8 percent and total attendance 15.8 percent, to a level equal to that of 1989. There would be no “200” listing for 2010 or after—Tradeshow Week ceased publication in April 2010.
The dramatic drops in space use and attendance from 2008 to 2009 far exceeded the greatest fall-off previously seen: a drop in exhibit space use of 6.0 percent and an attendance drop of 4.4 percent, both in 2002. These recent changes can also be seen in the attendance performance of individual events, most accurately for the small set of events that have their attendance figures audited and verified by a third party. Audited attendance for the annual Rental Show in Atlanta in 2009 was 7,007, a drop of 35 percent from the previous year in Las Vegas. The 2009 INTERPHEX pharmaceutical event in New York saw attendance fall by 19.7 percent from the 2008 event in Philadelphia, to 12,343. INTERPHEX attendance slid again in 2010 to 11,739 and 11,100 in 2011. The 2009 Motivation Show for the incentive industry (consistently held at Chicago’s McCormick Place) witnessed a 26.6 percent attendance drop. Attendance dropped again in 2010 by 33.2 percent, to just 6,006—less than half the 2008 total.
The Las Vegas-based Global Gaming Expo, long a growing event, saw attendance fall 5.5 percent from 2008 to 2009, to 24,771. Attendance was again down in 2010, by 2.1 percent, and in 2011, to 23,648. And the annual convention of the American Institute of Architects had a 7.9 percent attendance drop from Boston’s 2008 total of 19,520 to 17,977 the next year in San Francisco. The 2010 meeting in Miami saw attendance fall to 15,574—a 13.4 percent drop. The 2011 event in New Orleans garnered even lower attendance, just 12,366, although the 2012 edition in Washington, D.C., saw attendance increase to 15,214.
Major convention centers have also seen substantial declines in convention and tradeshow attendance. At Chicago’s McCormick Place, attendance dropped 7 percent from 2008 to 2009, despite completion of a major expansion in August 2007. It fell another 4.8 percent in 2010 and 9.6 percent in 2011. The Las Vegas Convention Center saw attendance fall from 1.6 million in 2008 to 1.12 million in 2009, a drop of 30.3 percent. There was a slight rebound of 3 percent in 2010. Orlando’s Orange County Convention Center had a convention and tradeshow attendance drop of 21.8 percent in 2009, to about 780,000. It managed to make up a part of that loss in 2011,
