Convention Center Follies. Heywood T. Sanders
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tradeshows has consistently been below the levels of 1999–2001. The 2010 report, covering performance in 2009, brought an even more striking result: the count of conventions and tradeshows at Gateway Centers averaged just 51. In 2011, the average convention and tradeshow count was at 50, falling in 2012 to just 48.
The report for San Diego also included a chart of Gateway Center exhibit hall occupancy by conventions and tradeshows from 1999, a measure directly tapping the use of exhibit hall space. The occupancy rates for 1999 and 2000 stood at about 48 percent, with an increase to 50 percent for 2001. After 2001, convention and tradeshow occupancy fell to a low of 39.3 percent in 2003. Occupancy rates then hovered in the low 40s until hitting roughly 48 percent in 2007. The more recent editions of the annual Convention Center Report show an occupancy rate of 44.1 percent for 2008, 36.6 percent for 2009, 42.3 percent in 2010, 40.6 percent for 2011, and 39.2 percent in 2012.
Convention and tradeshow occupancy after 2001 has remained at levels below that for the 1999 to 2001 period, with the single exception of a boost in 2007. The most recent years have slipped back to the levels of 2003 and 2004. Paralleling the event count figures, recent exhibit hall occupancy has remained below the peak years of the late 1990s.
The figures for convention and tradeshow attendance are more dramatic than those for occupancy, and far more relevant to cities seeking to lure visitors. The average convention and tradeshow attendance at Gateway Centers for 1999 was about 620,000, followed by some 540,000 in 2000 and roughly 480,000 in 2001. In only one post-2001 year did attendance equal these earlier figures—an average of 520,000 for 2003. The total convention and tradeshow attendance in 2007 was just under 400,000. The attendance reported in 2008 and 2009 came to 419,300 and 416,300 respectively. The 2010 report showed attendance dropping even more to just 351,400—more than 40 percent below the 1999 figure. For 2011, a modest increase brought the attendance average to 410,900, but it fell to 387,400 in 2012.
PWC included a limited presentation of data on “National Centers” as part of its April 2005 report on a proposed new convention center for Cleveland. A chart in the Cleveland report included data on exhibit hall occupancy by conventions and tradeshows at these centers covering 1992–2004. Exhibit hall occupancy grew from an average of 30 percent in the early 1990s to some 40 percent for 1996–1999 and 31.2 percent in 2000. Occupancy then fell steadily to a low of 21.5 percent in 2003. The Cleveland analysis stated, “The decline in occupancy may be attributed to several factors, including economic conditions, and a growth in supply of exhibit space that exceeds a growth in demand of [sic] exhibit space.”53
The most recent PWC data on National Center convention and tradeshow occupancy show an increase to 32 percent for 2006, followed by 27 percent in 2007, 25.1 percent in 2007, 25.1 percent in 2008 and 21.8 percent for 2009 and then 20.1 percent for 2010, 23.1 percent in 2011, and 22.5 percent in 2012. These recent occupancy levels are thus considerably below the average of 40 achieved in the latter part of the 1990s and the peak year of 1999, with about 42 percent occupancy.
The Cleveland report did not include a historical time series on events or attendance from National Centers. But the annual Convention Center Reports indicate an average convention and tradeshow attendance at national centers of 212,000 for 2003 and 217,000 for 2004. More recent years have seen average attendance consistently well below these two years, with 163,000 in 2007, 141,000 in 2008, and 169,300 for 2009. The 2010 report gave average attendance as 149,600, dropping to just 125,400 in 2011, and then rebounding in 2012 to 165,400.
These data tell a consistent tale. For both the Gateway Centers and the smaller National Centers, the peak levels of events, occupancy, and attendance came in 1999 or 2000. There were notable drops in all of these measures after 9-11. Although center exhibit hall occupancy rebounded somewhat after 2004, it subsequently fell in 2008 and after. Those increased center occupancy figures may simply reflect the discounts on space rental and incentives centers increasingly offered after 2001 to lure new business. And convention and tradeshow attendance—the central driver of economic impact and visitor spending for cities, the phenomenon that has spurred center building—failed to rebound to pre-9-11 levels, and then plunged to a new low point in 2010 or 2011. What there manifestly was not was evidence of a growing, expanding industry filling the nation’s convention halls with ever more attendees—just the opposite.
Summing Up the Growth Argument
Over and over, consultant market and feasibility studies for new or expanded convention centers have forecast a significant return in terms of new convention attendees, visitor spending, economic impact, and jobs. They regularly have tied those findings to a picture of the national convention and tradeshow market that describes a history of consistent growth in demand, with an optimistic outlook for continued future growth.
That picture was fundamentally misleading. Although some of the measures regularly employed by consultants such as Coopers & Lybrand, CSL, C. H. Johnson, SAG, HVS, and PriceWaterhouseCoopers did indeed show growth during the 1990s, that pattern shifted dramatically after 2000 and 2001. The total volume of annual convention and tradeshows for 2007 and 2008 was at or slightly below the levels of the mid- to late 1990s. The convention and tradeshow event count then plummeted in 2010.
Much the same image of an industry that remains below the peaks of the late 1990s is provided by the Tradeshow “200” data. Although overall exhibit space use has grown in recent years—perhaps due to the rampant discounting of convention center space rentals—total attendance remains below the peak years of 1990s, even as there has been an explosion in the growth of available convention center space. And the annual data series on actual convention center performance from PriceWaterhouseCoopers provides yet another set of metrics that mirror the story from the Tradeshow Week series. In terms of convention and tradeshow event counts, exhibit hall occupancy, and attendance, center performance has remained below the peak levels of the 1990s, with substantial declines after 2007 or 2008.
The growth of the national economy in the years after 2002 did not produce a parallel level of growth in convention center activity. It appears that demand had been “reset” to a lower level since 2001. Yet that conclusion is nowhere evident in the bulky consultant studies for cities from Boston and New York to Midland and Jackson. Instead, there has been a consistent invocation of the notion that convention demand is growing. Charlie Johnson could employ both Tradeshow Week and PriceWaterhouseCoopers data in his 2005 study for College Station, Texas, and offer the conclusion, “Despite the economic downturn that began in early 2000, the meetings market has remained fairly strong and a long term need for event space still exists …. 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