Mar. 9--Even though convention centers in San Bernardino and Riverside counties were not hit as hard as some others in the state following the Sept. 11 terrorist attacks, it will be tough going for the region's convention business this year. 

While some conventions were canceled or postponed at centers in Riverside, Palm Springs and Ontario, those venues weren't as severely bruised as those in Los Angeles, Orange County and San Francisco. 

Instead of competing with larger destinations, the Inland Empire's convention centers market toward the regional market, where convention-goers usually drive, said Steve Henthorn, executive director of the San Bernardino Convention and Visitors Bureau. 

"Premier destinations have fallen off because they depend on fly-in traffic," Henthorn said. 

But the regional business has suffered, too. Area convention center managers say attendance is down 10 to 15 percent from a year ago, impacted not only by travelers' reluctance but the struggling economy and California's budget deficit, which has resulted in fewer government meetings. 

And they expect this year to be challenging, with competition increasing from smaller venues and hotels that have discovered the local-meeting niche. 

Most convention managers say there was a slowdown before Sept. 11 that began with the collapse of the technology sector and spread to other segments of the economy. 

"While we still attribute some of the slowdown to decreased air traffic due to concerns over the safety and convenience of flying, the real issue is economics," said Jeff Dallas, Ernst & Young's West Coast hospitality practice leader. 

Companies re-evaluated their travel policies as the economy stumbled and the stock market tumbled. Instead of planning conventions, companies would link people through telephone or video conferencing. 

In California, the state spent heavily to buy power last year during the electricity crisis, turning a surplus into a $9 billion deficit. That prompted Gov. Gray Davis to clamp down on state conferences. 

"We've been virtually shut down in government group bookings," said Ted Weggeland, president of Entrepreneurial Hospitality Corp. which operates the Riverside Convention Center and the Riverside Convention and Visitors Bureau. "This will clearly have an impact this year." 

The Ontario Convention Center, the region's largest at 220,000 square feet, and the San Bernardino Radisson Hotel & Convention Center have also been hit. 

"We've felt the budget cutbacks from the state," said Lori Hoy, director of sales and marketing for the Ontario Convention Center. The hall had to lay off five of its 45 full-time employees in late January as a result of the slowdown. 

Area convention center managers say things could have been worse. Other areas provide evidence of that. 

The Anaheim Convention Center lost 15,000 visitors when two conventions canceled after the attacks on the World Trade Center and Pentagon. San Diego lost 6,000 convention-goers while San Francisco lost 14,000, according to a report by Ernst & Young's Hospitality Services Group. 

"People want to stay closer to home. We've found that larger conventions are breaking into smaller regional meetings. That way people can get home in a reasonable amount of time," said Henthorn, referring to the increased inconvenience of flying because of tightened security. 

There is a downside, however. Attendance at these regional meetings are down. 

"We're just not getting the same numbers that we did last year," said Jim Deskus, general manager of the Radisson in San Bernardino. 

With fewer people attending events, revenue from catering and income from audio-visual services are down, convention managers said. 

Convention and conference centers in the Inland area have avoided some of the national slowdown in traffic because they market primarily to social groups, military organizations, educational associations, religious groups and fraternal organizations -- known by the acronym SMERF. 

But competition has increased as centers intensify their marketing toward regional business and as new centers enter the market. 

"As all the convention centers in the Inland Empire and those in major cities try to fill space, everybody is trying to compete for a piece of a smaller pie," Dallas said. 

The newest competitor is in Temecula. The Pechanga Band of Luiseno Indians this summer is opening a 40,000-square-foot conference center as part of its 522-room hotel. The conference space is roughly the size of the Riverside Convention Center. 

The new facility has the disadvantage of being an hour's drive away from an airport, but it will be the largest meeting facility in southwest Riverside County. It is also halfway between the Los Angeles area and San Diego County, next to a casino, and close to the wineries and other attractions of Temecula, said Butch Murphy, the tribe's communications director. 

The Big Bear Convention Center is also going after regional business, according to Monica Marini, one of the partners of Big Bear Enterprises LLC, which bought the center in November. 

The center traditionally markets to local organizations and does a lot of weddings. However, its owners want to lure more business with the natural attractions of the Big Bear Lake area. 

"We plan to do more off-mountain marketing," Marini said. 

The 14,000-square-foot hall is the smallest of the region's convention centers but its new owners hope to remodel the facility, soundproof its four breakout rooms and attract more meetings. 

Another venue that may expand its focus is the National Orange Show, the private, not-for-profit fairgrounds in San Bernardino. Operators traditionally have filled the 130-acre facility with music festivals, fairs and shows. It also does a lot of weddings and business luncheons. 

To expand business at the fairgrounds, National Orange Show managers are considering a remodeling of banquet facilities and the addition of meeting rooms. Management will do a market study before committing to the plan, said Bradley C. Randall, general manager. 

These venues are competing with hotels for smaller conferences and conventions. Resorts such as the Hyatt Grand Champions and the Renaissance Esmeralda, both in Indian Wells, are undergoing extensive remodeling. They also hope to attract more convention-goers by adding ballroom space that can serve as meeting space. 

While there are no immediate plans to expand the Ontario Convention Center, there are plans to add up to 100,000 square feet of convention space to the Palm Springs Convention Center. Palm Springs residents late last year voted to increase the tax on hotel rooms. The tax is expected to raise about $25 million for the center's expansion. 

The center needs the additional space because many of its clients have outgrown the 105,000-square-foot facility, said Jim Dunn, general manager. The center lost four conventions last year because it was too small, he said. No time frame for the expansion has been set, but Dunn estimated that the center could be remodeled by 2004. 

While there are no plans to expand the 45,710-square-foot Riverside Convention Center, Weggeland said the center will need to grow or its revenue will soon plateau. 

Despite the slow economy and increased competition, the region's convention center managers expect business to improve by the end of this year. 

"We've suffered through difficult times before," Dunn said. "This recession is certainly less severe than the one in the early 1990s." 

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(c) 2002, The Press-Enterprise, Riverside, Calif. Distributed by Knight Ridder/Tribune Business News.