Convention Center UpdateApril 1, 2014

Expectations Rising: Sensational Spaces and Free Wi-Fi Top Planners' Wish Lists By
April 1, 2014

Convention Center Update

Expectations Rising: Sensational Spaces and Free Wi-Fi Top Planners' Wish Lists
Pacific Ballroom at the Long Beach Arena

One of many entertainers, William Close and the Earth Harp Collective performed at the grand opening of the Pacific Ballroom at the Long Beach Arena.

Convention centers — a foundational pillar of the association meeting and convention marketplace — are now a focal point of concern among many meeting planners.  An emerging consensus appears to be that too many A-list destination facilities are becoming oppressively expensive, while at the same time often lagging behind when it comes to state-of-the-art technology and the specific services that planners currently demand.

The overarching issue at the moment for association meeting planners is the cost and quality of the Wi-Fi service available within a convention center. Because most attendees now bring at least two mobile devices — a smartphone and a laptop or tablet computer — with them to a convention or meeting, and exhibitors depend on dependable high-speed Wi-Fi as a practical sales and promotional tool, it is now vital to an event’s success.

At the same time, however, the rising cost of Wi-Fi service is a challenge for many planners stifled by tight post-recession budgets. As a result, an emerging trend is toward free Wi-Fi throughout the facility as a standard amenity.

“We are going to Detroit next year for our annual meeting,” says Allison Wachter, director of exhibits and registration at ASAE: The Center for Association Leadership in Washington, DC.

“And they offer free Wi-Fi, including on the exhibit floor. So that means we do not have to pay the cost. And that is a huge cost advantage for us.”

However, Wachter says, the vast majority of convention centers are still charging for Wi-Fi service. “And on the exhibit floor, it can be very expensive,” she said.

ASAE does buyouts of the available Internet service at convention centers and provides it to attendees and also in the exhibit hall. “But in the exhibit hall, we don’t overly promote the fact that we’re offering it, especially to exhibitors,” Wachter said, noting that the service is primarily intended as a convenience for attendees.

David DuBois, CMP, CAE, FASAE, CTA, president and CEO of the Dallas-based International Association of Exhibitions and Events (IAEE), agrees that the cost and availability of Wi-Fi service is now a key consideration for virtually all show managers and meeting planners.

The Great Wi-Fi Debate

Until recently, DuBois says, it was broadly accepted by planners and associations that free Wi-Fi would be provided for basic uses such as email and Internet access in certain public areas of a convention center, with other areas — including the exhibit floor — carrying a fee. “But as meeting planners look for ways to reduce their costs, they’re aggressively requesting now that facilities provide free Wi-Fi everywhere, including on the exhibit hall floor,” he says. “One reason for that is they don’t want to have to charge those costs back to exhibitors. But you’re talking about millions and millions of dollars in infrastructure upgrades just if convention centers say yes to that. So the question then becomes who’s going to pay for those upgrades to the facility? And then who is going to pay the additional millions of dollars that will be required to pay for the necessary bandwidth?”

Marguerite Leishman, meetings manager for the Alexandria, Virginia-based Association for Career and Technical Education, whose annual meeting each fall draws about 3,500 attendees, says that the question of whether a convention center offers free or at least reduced-fee Wi-Fi service throughout the center is a key consideration for her.

However, she says, lack of such a concession is not a deal-breaker.

“But in looking at destinations for future meetings, we have encountered convention centers that proudly say, ‘We offer free Wi-Fi throughout our facility, including in the exhibit hall.’ And these days, that might be the very first thing they say.”

And if such a concession is introduced, Leishman says, it goes into the plus column of her overall assessment of the viability of the facility. “That’s because it’s now very expensive for us to try to offer that to our members if we have to pay for it,” she says.

Based on ever-increasing demand from planners, Leishman believes that eventually free Wi-Fi throughout the facility will indeed become a standard amenity. “I think that is going to happen because they will begin to understand that the issue is at the top of our list, because our attendees and exhibitors now expect that,” Leishman says.

Wachter concurs that based on planner demand, free universal Wi-Fi is likely to become a standard concession in the future.

Johnnie White, CMP, executive director of the Center for Education at the New York-based Cardiovascular Research Foundation and a recent past chair of the Professional Convention Management Association, agrees that the industry trend is now toward free Wi-Fi at convention centers as a standard amenity. But he’s not so sure just how far it will extend.

“I do think there will be some kind of free Wi-Fi, but when you get into the details of what the bandwidth is or what the threshold is for the service they will provide, that remains to be determined,” says White, whose annual meeting draws about 12,000 attendees. “And I think the next basic area of discussion will be around exactly what bandwidth is going to be free.”

Bandwidth and Quality of Service

A related point of current discussion — and planner concern — is the bandwidth and overall quality of the Wi-Fi service provided by convention centers. It’s not uncommon today for major meetings to suffer crashes, especially during large and complex general sessions — or hear complaints from attendees about slow Internet access or the inability to use social media because available bandwidth has been largely consumed.

White says he hears such concerns from both show organizers and meeting planners.

He tells the story of a show organizer who not long ago asked for free Wi-Fi throughout the convention center, including on the exhibit floor. “And what happened then was that the freight elevator broke down in the middle of her move-in,” White says. “And the director of operations for the convention center, when confronted by the show organizer, who was very upset because the breakdown of the elevator was increasing her labor costs and she wanted to be reimbursed, said: ‘You know, things are just coming to a point where we have to be able to have honest conversations about these things. Because of all the money we spent to operate the Wi-Fi system because you wanted it for free, I didn’t have the money in my capital budget to fix the elevator, which I knew needed repair. But I had to put it off.’ That story is a good example of the reality that convention centers today are often between a rock and a hard place when it comes to money.”

Leishman says she also is aware of the inferior technology capabilities at some convention centers. “I absolutely find that to be true,” she says. “I agree completely with that assessment. We would not have our general sessions depend on the Wi-Fi capabilities within the facility, because based on the bandwidth they have, I don’t think most convention centers are prepared to deal with what we need.”

On the other hand, Leishman says, some of the best facilities in the country, such as those in Anaheim, California, and Austin, Texas, have set the standard for state-of-the-art technology, with basic Wi-Fi services provided today at no cost.

Meanwhile, the Ernest N. Morial Convention Center in New Orleans — the sixth largest convention center in the U.S. — now boasts a one gigabyte fiber optic Internet backbone that is 100 percent redundant, providing meeting planners with truly state-of-the-art technological capabilities.

“So in that sense,” Leishman says, “these other centers are now lagging behind. And if they continue to do that, I think they’re going to start losing business.”

Rising Costs

Over and above the cost of Internet service is the reality that costs, in general, are now rising sharply at many convention centers — and especially those in high-demand destinations.

In one sense, such cost increases are a natural result of the deep recession and meeting industry slowdown of 2009–2010. Just as in the hotel business, the proverbial meeting industry pendulum is swinging back to a seller’s market. And planners are now paying the price for that, both literally and figuratively.

“What you’re not seeing anymore is what you saw a few years ago, which was convention centers giving everything away for free,” White says. “Not only is that not happening anymore, but now they’re charging you for anything and everything. That’s the big change I see.”

Wachter agrees, based both on direct experience and from anecdotal accounts from ASAE members, that costs are now rising sharply.” And it is not just basic rental fees that are increasing,” she says. “More and more convention centers are turning more and more services into exclusive relationships with third-party vendors, and they’re saying you have to use this security vendor, you have to use this AV vendor. And one area where we’ve started to see that lately has been rigging. And all of that increases your costs.”

A number of major associations, including ASAE, are now resisting such acute challenges to their budgets. “We’re definitely pushing back,” Wachter says. “For example, we lean pretty heavily on our CVBs to help us negotiate those kinds of things.”

One issue that is difficult, if not impossible, to negotiate is the generally higher costs of a union convention center versus a non-union facility in a right-to-work state or city.

“I think the union issue plays into (cost concerns) exponentially, because you definitely have less ability to negotiate with a union facility than you would a non-union building,” Wachter says. “On the other hand, I don’t think unions are ever going to go away. If anything, I think we might see more convention centers going union. So unions are here to stay.”

Meanwhile, says White, it now requires two or three workers from different unions — which often invoke a four-hour or even eight-hour minimum to perform even the easiest task — to do something as simple as order and place a table.

Given such outrageous examples of the often exorbitant costs of union services, DuBois believes that “the good news is that they’re becoming more flexible in their work rules. And part of that means that at least in some cases, you don’t have to pay $100 anymore to have somebody come over for five minutes and screw in a light bulb.”

White cites another cost-related issue that is of growing concern to planners — the proliferation of exclusive third-party vendors for services such as F&B, audio-visual or rigging. “And you know when these third-party vendors are servicing you, based on the contract they have with the facility, that they’re generating (profits) from the services.” That’s because the vendors typically mark up the service, with a percentage of their profits being shared with the facility, while if the association had bought the same service directly, they would have saved money.

Leishman shares the concern about exclusive vendors. “If you want those services, they kind of have you over a barrel,” she says.

Despite such concerns from planners, the bottom-line reality of the convention center industry will continue to drive cost increases, DuBois says. That’s because convention centers, which often are publicly owned facilities, are under unprecedented pressure to reduce their annual operating losses. For decades before the recession, convention centers were seen as “loss leader” facilities that in turn generated millions of dollars each year in hotel room nights, F&B revenue and transportation services. Today, however, with city and state budgets even tighter than meeting planning budgets, public officials such as mayors and city council members are demanding that convention centers raise their prices to cover their operating expenses — or at least reduce their traditional losses.

Beyond that, DuBois says, there also is a larger market reality at play.

“The cost of living goes up every year,” he says. “And for convention centers, labor costs and other costs go up every year. That’s just the reality. So the real issue is that if planners want to go to a destination where there is high demand like New York or San Francisco, they are going to have to pay for the right to be in that city. If you want to drive a Mercedes, you have to pay for a Mercedes. And you can’t buy a Mercedes on a Mini-Cooper budget. It’s as simple as that.”

Impact on Destination Selection

Given the simple and inexorable market dynamics cited by DuBois and the equally simple and inexorable budgetary pressures planners face, one result of the recession and meeting industry recovery has been increased interest in second-tier destinations as a cost-cutting alternative for many meetings.

“The bottom line for associations is their budgets,” Wachter says. “And if the big convention centers in major destinations start pricing themselves out of our budgets, it will just become a matter of not being able to go there. So I definitely think that more planners will start looking at alternative destinations that are more affordable.”

“The bottom line for associations is their budgets. And if the big convention centers in major destinations start pricing themselves out of our budgets, it will just become a matter of not being able to go there. So I definitely think that more planners will start looking at alternative destinations that are more affordable.” — Allison Wachter

DuBois agrees there is now more demand for second-tier destinations. “Cities with populations of 500,000 to 800,000 people and good mid-sized convention centers and a nice, tight downtown that is walkable are becoming more of an option, as compared to a bigger, more expensive destination,” he says. “The problem is, those destinations are sometimes harder to sell to the association’s board of directors because they are often concerned that a second-tier city won’t draw the same attendance as a Chicago or Los Angeles. Or the board might say, ‘That second-tier city is just not sexy enough for me.’ ”

Nevertheless, Leishman says, many association planners will be forced by their budgets to look beyond traditional A-list destinations. “We now look at all our options,” she says. “So we have already been in second-tier cities like St. Louis and Kansas City. We look for destinations that we think our attendees will be attracted to and where we will get the best deal and the best service. So for us, a second-tier city can be just as attractive to us and our attendees as a first-tier city.”

In the future, Leishman says, the uncomplicated formula she follows will become standard operating procedure for most planners.

“And that,” she says, “is what we’re looking for — good rates at hotels and good rates at the convention center.”

New and Noteworthy

The Anaheim Convention Center’s 200,000-sf expansion project will create state-of-the-art multipurpose, flexible meeting and exhibit space. The development will involve the replacement of existing parking spaces, addition of new loading docks, vehicular entrance and a climate-controlled pedestrian bridge that will connect to the existing facility. The project is slated to begin late summer of 2014 and is expected to be completed by fall of 2016. Today, the 1.6-million-sf facility is the largest convention center on the West Coast boasting 815,000 sf of exhibit space, 130,000 sf of meeting space and outdoor function space such as the 100,000-sf Grand Plaza, which opened last year.

Nashville has raised the bar on what constitutes a state-of-the-art modern convention center. Last year, it debuted its much-anticipated, $623 million Music City Center complex that includes a 1.2 million-sf convention center and a $250 million, 800-room Omni Nashville convention center hotel.

The new expansion plans for the Ernest N. Morial Convention Center in New Orleans include private development of a hotel, condos and retail space on a site upriver from the facility. The 1.1 million-sf convention center recently added a new 60,300-sf Great Hall and 25,400 sf of multipurpose prefunction space. The Great Hall includes a 4,660-sf junior ballroom, complete with a 3,420-sf rooftop terrace, a 980-sf indoor balcony and a 5,700-sf executive club lounge.

The Las Vegas Sands Expo Center completed a $37 million renovation last December including a major bandwidth upgrade.

The 600,000-sf Albuquerque Convention Center is currently undergoing a $22 million redesign and renovation that will be completed this summer.

The Long Beach Arena added a new Pacific Ballroom special event venue as part of a $10 million renovation project. The Pacific Ballroom creates a “loft-style” ballroom out of the arena’s floor space with one of the largest-ever “flying” steel truss grid systems suspended above the 45,000-sf arena floor.  This grid system can be raised or lowered in minutes to provide the perfect ceiling height for any event, transforming the arena from a hockey venue filled with 13,000 raucous fans into an ideal meeting space for up to 5,000 reception guests. The grid contains a $1.6 million state-of-the-art sound and theatrical lighting system that can be customized by the event planner. Electronically operated curtain walls drop down to cover the arena’s upper deck seating, completing the creation of the Pacific Ballroom at the Long Beach Arena.

Groundbreaking on the Palm Beach County Convention Center Hilton Hotel is expected by mid-May. The 403-room Hilton is expected to open in late 2015, boosting the profile of the 12-year-old Palm Beach County Convention Center.

The Ontario Convention Center, Ontario, California, is frequently used by filmmakers as an onsite location for movies and commercials. Contemporary in design and equipped with the latest in technology, it boasts more than 225,000 sf of flexible exhibit, meeting and function space, and is ideal for conventions, trade shows, exhibits and meetings. The Ontario Convention Center provides a full range of technology services, including Wi-Fi, Internet, DS3 and video-conferencing capabilities.

The center features signature and custom-made menus including a variety of international, regional and healthful fare, which is prepared with the freshest ingredients, premium meats and seafood, and produce from local farms and growers.

MGM Resorts International has announced plans to add more than 350,000 sf of exhibit space to the existing 1.7-million-sf Mandalay Bay Convention Center, as well as underground parking and more carpeted ballroom space. Upon completion, the Mandalay Bay Convention Center will boast more than 2 million total sf and 1.1 million sf of exhibit space. This elevates its ranking in North America from No. 7 to No. 5 in total square feet and from No. 11 to No. 5 in square feet of exhibit space.

The $520 million Marriott Marquis Washington, DC opened May 1, marking Marriott International’s 4,000th hotel. Connected via underground concourse to the Walter E. Washington Convention Center, the 1,175-room Marriott Marquis offers more than 105,000 sf of meeting space including 83 meeting rooms, a 31,000-sf Marquis Ballroom, two 11,000-sf ballrooms, an 18,000-sf indoor event terrace, and a 5,200-sf outdoor event terrace. The below-grade meeting space (Marriott Marquis is as deep — 94 feet — as it is tall) has been designed to incorporate natural light that filters several floors down into the meeting corridors from the open spaces above.

The Westin Hotels & Resorts brand will be the official flagship of the Irving Convention Center at Las Colinas headquarters hotel, set to break ground in Irving, Texas, later this year with a grand opening slated for late 2015.

Groundbreaking was held recently for the 1,000-room Marriott Marquis Houston convention headquarters hotel, which is scheduled to open in summer 2016 and will be the second 1,000-room hotel attached to the George R. Brown Convention Center.

Kentucky lawmakers approved a major makeover to the tune of $50 million for the Kentucky International Convention Center, which is located downtown in the city of Louisville. The renovation will add nearly 100,000 sf of connected convention space, as well as improved meeting rooms.

The Minneapolis Convention Center, the largest convention center in the Upper Midwest, has achieved Level One certification to the ASTM Standard pertaining to the Evaluation and Selection of Venues for Environmentally Sustainable Meetings, Events, Trade Shows and Conferences. AC&F

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