Two allies that have historically provided a united front to the association meeting planner — a city's convention and visitors bureau and its convention center — are lately finding themselves more often with conflicting priorities and goals. So said a panel of convention and visitors bureau and convention center executives during a presentation at the annual meeting of the Destination Marketing Association International last summer. Several representatives from the country's convention centers and convention and visitors bureaus have formed a joint task force to address mutual challenges and offer solutions for the industry. The committee, which first met last June, met again at the recent meeting of the International Association of Assembly Managers in Denver.
Challenges from All Sides
“Most convention centers operate at a deficit, and are now being faced with mandates to break even,” says Peggy Daidakis, executive director at the Baltimore Convention Center and IAAM-DMAI committee member. That's a shift from the 1970s, '80s, and even '90s, according to Daidakis, when the center's sole mission was to generate out-of-town hotel room nights, and therefore hotel occupancy tax, as well as drive business to taxis, restaurants, and attractions. The center's bottom line was not the focus.
While that same mission remains constant for bureaus, funding pressures have caused a shift in priorities for centers. A convention center has municipal funding and rental fees as its primary revenue sources, while a CVB typically operates from a combination of revenues from occupancy tax, membership dues, and government subsidies. “So by measuring a convention center's financial performance, we have come into direct conflict with a CVB's goal. And, when we're being pushed to use less government monies, we have to cut operating expenses, which means reduced services,” says Daidakis. So the CVB and center now often find themselves competing for a shrinking piece of the government-funding pie.
Enter the hotel seller's market, which has presented some challenges to convention centers, says Daidakis. Because the hotel package has become such a critical site-selection factor, centers often are at the mercy of hoteliers. “We're finding more and more that if we lose the business to another city, it's because of hotel availability and price,” she says.
In a strong hotel market, properties tend to offer smaller room blocks to groups because they can generate more revenue by holding out for leisure or business travelers. “They're in business, they have a bottom line to make, and they should make as much as they can,” says Daidakis. “But unfortunately, there's a slight disconnect.”
Consequently, centers are feeling the squeeze from CVBs, who are aggressively competing with other cities for convention business. To make the package more appealing, centers are often asked to offer discounts for meeting space, in part because hotels are not always willing to be flexible on rates.
At the inaugural meeting in June, the joint committee discussed ways to bridge the gap and allow the CVB to generate room nights and the center to meet its financial goals. One practice is to create “opportunity funds,” where CVBs contribute to rental fees, transportation costs, and other ancillary charges that an association convention might incur. The committee also discussed offering incentives to CVB sales staff for driving revenues to the center, as opposed to room nights booked; frequent communication between the CVB and center; getting the CVB sales staff to sell the center just as if it were a hotel, including pushing the center's hot dates, food and beverage, and other ancillary services; establishing formal policies, processes, and procedures around booking guidelines, including which entity is responsible for new and existing customers and creating clear-cut booking windows; and engaging mayors and other key politicians in the process.
In Baltimore, where the CVB sales team books all groups beyond 18 months out and convention center sales books the rest, Daidakis meets with CVB sales staff once a week and hoteliers twice a month to discuss leads.
Because the center hosts multiple events simultaneously, she wants to avoid situations where incompatible groups are meeting next to one another. “We're helping our bureau colleagues understand that it's not just about filling hotel rooms,” she says, it's about “understanding the product that you're selling a little better and the challenges that the facility may face when you're booking multiple events at the same time.”
Daidakis and her bureau counterparts are pretty passionate about what they do. “When we get together, there is very emotional dialogue,” she says. The committee hopes to hold a summit around the topic and to take the issues to gatherings of municipal leaders from around the country.