Democracy In Albany

Best Practices
Convention Center Sales and Convention Center Operations
A Report from the Joint Study Committee

August 25, 2007

Many convention centers developed in the last three decades were viewed by municipal ownership as “loss” leaders contributing essential economic activity that drove new tax revenues, economic benefit and employment from other services and establishments like hotels, restaurants and retail stores. It was largely because of this benefit that cities “accepted” annual losses from facility operations because the convention center was the sole or primary source of new business activity in the corresponding central business district. The post 911 environment is somewhat different and municipal governments and other convention center ownership groups now seek to make operating revenues cover a much higher percentage, if not all, operating expenses for a host of reasons. Moreover, expansions authorized prior to and just after 911 have also created greater expectations to meet debt service in the face of shrinking “margins” due to the current “buyers market”. This shift in thinking has placed greater pressure on Center management to more closely monitor its operating expenses and the sales performance of its organizational partner, the DMO.

Even those convention centers with significant dedicated public funding are under greater pressure to at least cover expenses or make a profit on their operations. Complicating these transitional conditions is the recognition that supply of available exhibit and meeting space across the nation currently exceeds demand, resulting in a “buyers market”. Pressure to perform financially and discounting rental rates to meet the competition are not necessarily compatible, but offer real considerations none the less. Given this unique environment and the fact that most convention centers are owned and operated by public entities and marketed by independent non?profit organizations, the quality of the relationship of the two entities has never before been more critical. Moreover, the need to develop a shared vision and common performance objectives has become paramount to success.

As stated earlier, as greater pressure for improved financial performance has grown, so has the amount of available space inventory as new communities develop new and expanded convention centers. The resulting “buyers market” has exacerbated an already competitive environment resulting in the need to discount rental rates or increase services that can create a competitive advantage.

This was a report put out a month ago. These are the people who are the industry cheerleaders.