John Kaatz, CSL International, and Adam Jones, PriceWaterhouseCoopers, participate in a panel moderated by Kevin Molloy, Lancaster County Convention Center, Lancaster, Pa. (VT Photo)
REPORTING FROM CHARLOTTE, N.C. — Cozier meeting space, renovation within the existing footprint and the need for more than airlift were among the trends outlined at the IAVM International Convention Centers Conference here Oct. 3-5
Doug Ducate, president and CEO, Center for Exhibition Industry Research (CEIR), told attendees, “We are trending toward smaller, cozier events” in the meetings and conventions industry. There are now 1,500 healthcare shows averaging 2,800 square feet, versus the super shows of yore. Big manufacturers want targeted marketing, he explained.
And convention centers and expo halls need to market themselves to smaller groups, with “features” or “benefits.” Airlift can be a benefit, but you also need features that set the venue apart. “Nashville will have a big impact on the business,” he predicted, referring to the new Music City Center, which is marketing itself as a destination with an abundance of entertainment outside the conference walls.
Adam Jones, PriceWaterhouseCoopers, reporting on the state of the industry, said nearly 75 percent of Destination Management Organizations expect convention center sales and marketing budgets to increase in FY 2014.
John Kaatz, CSL International, reported that capital investments tend to stay within the walls of existing convention centers, citing Cobo Hall in Detroit as an example. They repurposed Cobo Arena, adding a second floor in what had been the arena bowl to accommodate additional exhibit space, banquet space and meeting rooms.
Overall, Kaatz has seen less pressure on convention centers to offer more and more exhibit space and more pressure to increase ballroom space.
“We are tweaking the existing footprint of the building with gathering spaces, flexibility, outdoor functions and wireless,” Kaatz said.
Carpeting exhibit space is the new trend in smaller markets, he said. He called that an appropriate response to the need for banquet space. “You can do a lot with carpet. The quality is up and the cost is down.”
The best new source of revenue continues to be sponsorships and advertising. Convention centers are missing revenue, Kaatz said. Significant new digital signage was installed in Boston, including a 160-foot wide marquee in the lobby space for advertising revenue. Sponsored Link-Up areas are also a growing trend.
However, naming rights for convention centers, which usually average $150,000-$300,000 a year, are still few and far between, Kaatz said.
A NEW GENERATION MEETING SOON
Kaatz also listed disruptive forces that will impact the longterm outlook for convention centers. There will be no major changes in the meetings business until people change, he said. “Kids in high school learn differently today and they are the meeting planners of tomorrow,” Kaatz said.
He envisions a future of participant-driven meetings with facilitators, not lecturers. “How you meet will change in the next 15 years.”
Online enrollment in colleges is growing rapidly and that means future generations learn online. “Keep an eye on small group meeting space, outdoor opportunities and FF&E changes,” he said, predicting more chairs, couches and comfortable groupings, less traditional conference tables-and-chairs-seating based on lectures.
There is revenue potential in the “event as content,” he said, content that is then broadcast to the rest of the “attendees.”
Jan Addison, Orange County Convention Center, Orlando, and Douglas Ducate, Center for Exhibition Industry Research.
Kaatz based his optimism on the fact that “the balance sheets of corporate America are clogged with a ton of cash” because corporations have been holding off on new launches during the recession. When stability is achieved in Washington, “we may see growth in industry and the launch of new products.” For a healthy meeting business, we need six-seven percent growth, he said
Douglas Ducate, Center for Exhibit Research, noted this is the third year in a row that has started well, but fizzled by the second quarter. “The economy doesn’t take off,” he said.
The impact of sequestration on the exhibition business has been $500 million over three years, according to Ducate. “We’ve seen attendance repeat a 10-20 percent decline each year,” he said. The gridlock in Washington, D.C., has had a dramatic effect on the exhibition industry.
Add to that the fact that exhibit space exceeds demand and “we are creating a buyer’s market and that is pushing margins up,” Ducate said.
New launches are attributed to entrepreneurs, and entrepreneurs are being bought by strategic players and they opted not to do multiple new launches, buying shows instead. That means a reduction in supply of meetings and conventions.
On the association side, trade shows are changing dramatically. What was once a sure bet is going south, a phenomenon that didn’t dawn on anyone until 2011-2012, Ducate said.
Trade shows used to be a real estate transaction, Ducate noted. “Now it’s about customer retention.”
Education is the focus and that is user-driven. Ducate advised convention center managers to remember attendees drive the message in those meeting rooms. And it is an important learning experience. While many claim to be meeting via social networking, “the social network is a kayak, not a car,” Ducate said. Once you are in the water, your goal is to proceed downstream and stay upright, but you are not in control of the direction it takes. “In social media, you cannot control the message,” he noted, keeping face-to-face meetings an essential cog in marketing and education.
But the experience will change. He’s seen some interesting innovations, like a heat map that can track where attendees are in the exhibit hall allowing exhibitors to prepare for a particular customer’s arrival. And there are floor map sensors tracking exactly how much time someone is standing in front of a monitor.
Referring to the cozier, smaller shows Ducate sees ahead, he cited national computer conferences that then split and then imploded. “Any horizontal show is subject to being broken up,” he said. In 2008, there were eight shows that booked over one million square feet. In 2012, there were five.
FACE-TO-FACE SPACE
On the facilities side, Ducate sees the fourth generation of construction underway and noted the reduction of exclusive services, a la McCormick Place, Chicago; free wi-fi in public areas as a must have; some space repurposing, even taking some out of service, as in Reno, Nev., where three of five halls became movie studios; and organizing exhibits in-house. Because there are few new launches, the convention center needs to partner with entrepreneurs to launch shows in exchange for a longterm agreement, Ducate said.
In the future, maybe 15 years out, he sees different formats for shows; different business models and more competitive options, but nothing is going away. He recalled that in 1993, shopping centers and trade shows were threatened by the Internet. “But in reality, it didn’t replace face-to-face,” he said. “Liquor stores should have put bars out of business, but people go to bars for other reasons. If connectivity was gong to impact face-to-face, it would have.”
In fact, Ducate said, the social network is a great place to market face-to-face for almost no cost.
“Our most significant challenge is technology,” he said. He recalled when everyone was investing in fiber optic just when it went to wi-fi. The life cycle of technology begins with a breakthrough, which is then incorporated into consumer products which are introduced to the public. The last step sees the public accepting the product and generating widespread use. “By then, the inventors have moved on.”
Interviewed for this story: Douglas Ducate, (972) 687-9219; John Kaatz, (612) 294-2000; Adam Jones, (813)229-0221