However, PwC says attendance was up 9 percent in the largest centers (from 585,000 the previous year) and 3.2 percent overall (from about 900,000). Canton did not have trend information for attendance going back to 2000. He also said that because this is a trend report based on sample data of about 50 centers, overall attendance numbers were not as relevant as the percentage increase or decrease. Moreover, he said it's more difficult to track attendance than it is to track exhibit space demand because they must rely on other people's reportage. “Until more people begin to report audited attendance reports, the ability for anyone to accurately track attendance trends will be limited,” he says.

Attendance numbers do seem to vary by source. Based on its survey of about 400 events, which includes the Tradeshow Week 200 as well as a cross-section of other events, Tradeshow Week found attendance to be essentially flat through the second quarter of 2006 — up 0.15 percent. In 2005, attendance was up 3.1 percent. Hughes says the red-hot hotel market may be having a negative effect on attendance this year. “Hotel room prices have been rising, so we do see that as a warning sign for the meetings business,” says Hughes.

Canton takes issue with the Brookings study's central argument that the overall convention marketplace has “shifted dramatically” in a manner that suggests that a recovery is not likely to yield much increased business for any given community. “Our numbers show that many centers are already generating demand above their pre-9/11 levels, and over 60 percent of respondents show not only an increase in demand, but a [cumulative] increase of 73 percent [over demand levels in 1999 to 2000],” says Canton.

But Sanders argues that statistic is inconclusive because it doesn't show the available square footage of space, only the occupied square footage. He says that, with so many expansions and new centers added from 2000 to 2006, it's not known if the increase in demand at those centers reflects an increase in overall occupancy.

A Cyclical Economy

One thing that's telling about the current environment, says Canton, is how closely the demand for space and attendance at conventions and trade shows tracks to the health of the U.S economy.

IAEM's Hacker concurs. “It appears as though for the first time, the hospitality industry — and especially the exhibition industry — is not immune to economic cycles. In the 50-year time period preceding 2001, despite six serious recessions in the U.S. economy, the industry continued to grow without pause,” says Hacker. That changed in 2001. He adds, “It's become much more important that destinations do their homework to make sure the demand is there before building or expanding.”

If You Expand It, Will They Come?

Since the Indiana Convention Center was expanded in 2001 from 301,500 to 403,700 square feet of exhibit space, the city has seen the number of room nights booked in the city increase from 450,363 in 2000 to a projected 526,755 in 2006. The center hosted about 30 conventions per year before the expansion and now it attracts around 40 per year, explains Bob Bedell, president and CEO of the Indianapolis Convention and Visitors Association. The current occupancy rate (70 percent) is equal to what it was before the first expansion. Now, city officials are planning to expand the center again (to 733,700 square feet) and Bedell hopes for a similar pattern. “We expect to increase the number of major conventions and trade shows we host every year by 18 to 23 with this expansion,” he says. The expansion will be complete in fall 2010.

But the “build it and they will come” strategy may not work if the city doesn't have the destination appeal to support that additional growth, something Milwaukee officials are contemplating as they consider expanding the 189,000-square-foot Midwest Airlines Center. Unlike in Indianapolis, convention business has been sluggish in Milwaukee since the center opened in 1998. In 2005, the center generated 149,000 hotel room nights, down from 180,000 in 2000. While Milwaukee has lost business because the center doesn't have the space to compete for larger events, the expansion alone won't bring the business, says Doug Neilson, president and CEO at Visit Milwaukee, the city's convention and visitors bureau. The city must have the overall package to compete, he adds, and with new hotels, restaurants, and activities, including the Harley-Davidson Museum, in the pipeline, the city is intent on boosting its destination appeal.

Soon, a consultant will be hired to do an expansion feasibility study. “I wouldn't go forward with a study if I didn't think there was a possibility that the demand was there,” says Neilson. “And I think we owe it to everybody to find out.”
— DK

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