Chicago's convention center rivals are suffering

Published on April 6, 2010 3:12 PM
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By Kathy Bergen
While Chicago is singing the convention business blues, its two biggest rivals -- Las Vegas and Orlando -- have reasons to howl even louder, according to attendance data for 2009, when the deep recession kept many conventioneers tethered to their home bases.



Attendance at McCormick Place conventions and trade shows tailed off by nearly 7 percent last year, to 893,068 individuals, according to data released Tuesday. The same year, the Las Vegas Convention Center experienced a 30 percent dive, to 1.1 million attendees, and the Orange County Convention Center took a 21 percent fall, to 781,740. The two Sun Belt facilities also saw a decline in number of events, while Chicago saw a rise last year.

"These are really hefty declines in places where you would not expect it -- in places that systemically have done well," said Heywood Sanders, professor of public administration at the University of Texas at San Antonio.



To some extent, Vegas and Orlando continued to suffer from the so-called "AIG effect," or the backlash stemming from American International Group Inc.'s spending more than $400,000 on a luxury resort excursion shortly after receiving a federal bailout in the fall of 2008.



"Chicago is considered more business-oriented," said Ted Mandigo, a hospitality industry consultant based in Elmhurst. "If you're going to Orlando, you better have had a good year, and if you're going to Las Vegas, you better have had a superb year, because of the image of those two cities [as entertainment centers.]"



Convention officials in those two cities say the economy was the No. 1 factor in their declines, but that corporate America's reluctance to book events in resort locations did hurt the meeting slice of their business.



While Chicago suffered lesser damage in 2009, it faces a steeper uphill climb out of this slump because it has a much smaller budget to lure future shows in an increasingly cutthroat landscape, Mandigo said.



"Chicago has a handicap of funds and that's what's used to subsidize conventions," he said.



The Chicago Convention and Tourism Bureau, a state-aided non-profit that markets McCormick Place, has a sales and marketing budget of $13.8 million, compared with $143 million in Las Vegas and $47 million in Orlando, according to Tim Roby, president and chief executive of the Chicago bureau. He presented those figures last week at a state legislative hearing on how to overhaul the city's struggling convention business.



"Looking forward, legislative changes are paramount if Chicago is to remain a premier meetings and convention destination," Roby said in a prepared statement. The state legislative panel is expected to conduct a second hearing on the issue Wednesday morning at the Thompson Center.



The issue also is being studied by the interim board of the Metropolitan Pier and Exposition Authority, which voted at its first meeting Tuesday to spend up to a total of $190,000 to have two consulting firms assess the cost competitiveness of its operations relative to its chief rivals.



Because the assignment must be completed by later this month, the authority's board awarded the contracts to Pricewaterhouse Coopers and C.H. Johnson Consulting Inc. on an emergency basis, without soliciting competitive bids. The board is aiming to make its recommendations on overhauling operations by the end of April.



While Las Vegas officials say they see anecdotal evidence of economic improvement, Orlando and Chicago officials are predicting a slow recovery.



"The meetings/convention industry typically lags one year behind a major recession," Roby said. "We can expect 2010 to be as soft or softer than 2009."



Kathie Canning, deputy general manager of the Orange County Convention Center in Orlando, says the center is taking a conservative stance, forecasting a flat performance this year and next.



The slump in the trade show business has been nationwide, with the Center for Exhibition Industry Research trade group reporting a 12.5 percent decline in its index, by far the steepest drop in the decade it has been tracking performance.



No doubt the recession played a big role, but there are other factors at work, some of which may persist, even in an economic rebound.


The rising use of technology means potential attendees can review products and listen to seminars online, allowing some to trim their stays at trade shows, or eliminate them altogether.


And exhibitors who reduced the size of their booths during the recession may have grown comfortable with smaller displays, said Doug Ducate, president and chief executive of the Center for Exhibition Industry Research. "Truthfully, the jury is still out," he said.


And the shrinking shows now have more choices of venues large enough to accommodate them, both because the shows themselves are smaller and because there has been a rapid and continuing expansion of convention hall space, Sanders said. This has led to an environment of extreme discounting and increased political pressure to save struggling convention halls, he added.


"This is not just about Chicago," he said. "There are larger, immutable forces at work."



http://www.chicagobreakingbusiness.com/2010/04/mccormick-place-and-mcpier-chicagos-convention-center-rivals-suffer.html