As cities face their worst budget crisis since World War II, CVBs and convention centers have been hit exceptionally hard.
The lower hotel occupancies of the past two years have reduced revenues, cutting, sometimes deeply, into occupancy taxes — the lifeblood of most convention and visitors bureaus. Meanwhile, many expanded or new convention facilities are coming online in a post-9/11 climate (see story, page 41). The competition to fill these facilities has severely hampered convention centers' ability to recoup lost revenues by raising rates and fees. For meeting planners, this could mean a hike in bed taxes.
“A potential increase in bed tax is something we're watching very closely,” says Lisa Block, director of meetings for the Society for Human Resource Management and the outgoing chairwoman of the Professional Convention Management Association. “It's a popular kind of thing to raise, because it doesn't affect local constituents.”
Another option for states are sales tax hikes, which can inflate the overall tab for a convention. Block says she recently received notice of a 1 percent increase in the sales tax in Orlando, Fla., where her annual convention will be held next year.
But don't expect convention centers to raise rates to recoup lost state and local government subsidies. “We're seeing the opposite — cities giving away space to get more business or capture delegates,” says Eugene Dilbeck, president and CEO of the Denver Metro CVB. Denver's CVB collects revenue only from hotels in the city (about 16,000 rooms).
Others, such as the Greater Pittsburgh CVB, which has been adjusting to a $200,000 to $300,000 decline in state funding, are freezing salaries, leaving some positions unfilled, and cutting back on advertising. “We made a commitment that we would not deplete our service capabilities [for meeting planners],” says Robert Imperata, executive vice president. “These are the individuals who can bring us back.”