Jun. 20--Some Dallas hotels are cutting room rates, offering free meeting space for conventions and showering meeting planners with gifts in an attempt to fill empty hotel rooms over the next 18 months. 

Hardest hit by this stepped-up competition is nearby Arlington, whose convention center competes directly with some of the large Dallas hotels that cater to conventions with on-site meeting space. 

Grapevine, which has a 28,000-square-foot convention center, hasn't felt that pressure, because its market is smaller events. Fort Worth, which is marketing brand-new space that is easier to fill, also hasn't felt the pressure. But in Arlington, which expanded its convention center three years ago and offers meeting space comparable to the large hotels, the discounts are having an effect. 

"It's always been an interesting aspect of competition for a small convention center which competes against larger convention hotels," said Nadine Felix, convention services director for the city of Arlington. 

Dallas convention hotels, such as the Adam's Mark, Hyatt Regency and Wyndham Anatole, have cranked up the pressure in recent months to levels that haven't been seen in more than 10 years. In addition to special room rates, which they will only disclose to potential customers, they are offering food and beverage discounts and, in some cases, rent-free meeting space. 

"Hotels have the flexibility to give the meeting space away in lieu of clients paying for hotel rooms and food and beverage service," Felix said. "All the convention center is is meeting space. The only way we make money is if they pay for" the meeting space. 

It's a particularly bad time for the Arlington Convention Center to have to compete against hotels that are giving away meeting space. In a recent report to the Arlington Convention & Visitors Bureau board, Felix admitted that the center wasn't performing up to expectations. 

Revenue estimates for this year are $500,000 below budget, in large part because of a dropoff in corporate shows and meetings, Felix said. That is money that the city -- which owns the center -- might have to transfer over from its general fund, City Manager Chuck Kiefer said. 

The city itself is facing its worst budget crisis in 24 years and is considering layoffs, Kiefer told the City Council on Tuesday. 

Consumer shows, which the convention center is increasingly attracting, don't generate as much revenue as business conventions and don't fill hotel rooms. Visitors at hotel rooms generate sales taxes and bed taxes for the city. 

The competition for conventions and business meetings began heating around May 2001, when business began to dip at facilities nationwide. Companies were cutting back on business travel because of the sluggish economy and sending fewer people to conventions and trade shows. Local hotels reported a drop of 15 percent to 20 percent in group business from 2000 to 2001. 

"In the early parts of 2001, we started to see some caution signs," said Jerry Wolsborn, general manager of Adam's Mark Hotel Dallas. "The frosting on the cake was Sept. 11." 

Some shows and meetings were canceled, and others were rescheduled, but at much smaller sizes. 

Now, the hotel and convention industries are trying to get back to 2000 business levels, a banner year for business travel and the meeting industry. 

To do that, facilities are making offers they haven't made since the recession of the early 1990s. 

"It's all about getting the wheels in motion," said Tom Faust, vice president of sales and marketing for the Wyndham Anatole Hotel. 

The Anatole is rolling out special rates for meetings and throwing perks such as frequent-flier miles, Palm Pilots and ergonomic chairs at meeting planners who bring big groups to the property. They get twice as many perks if they book a meeting during a slow period. 

Wolsborn, at the Adam's Mark, has increased his meeting sales staff from 16 to 20 in an effort to book more groups. Sales efforts are being concentrated on generating business in the next six to 18 months. 

The hotel is also offering specific perks or discounts, depending on the needs of each group. 

"There's not a generic situation," Wolsborn said. "Some are more service-oriented. Some are more rate-oriented. We try to press their hot buttons." 

Arlington is fighting back, massaging long-established relationships, reminding clients about Arlington attractions, and even dipping into a long-held special-events fund to pay for receptions or coffee breaks for clients. 

"To remain competitive, we're going to be offering it a little more aggressively and liberally," said Linda DiMario, chief executive of the Arlington Convention & Visitors Bureau. 

They are counting on those relationships to help them compete against the likes of the Hyatt Regency Dallas, which increased its meeting space to 160,000 square feet in May 2000. The new space was relatively easy to sell and the facility has stayed busy since 2001. 

"Coming into 2002 we were already ahead of pace," said Nan Stone, director of sales for the Hyatt Regency. "We'll have a good year barring another Sept. 11 act." 

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(c) 2002, Fort Worth Star-Telegram, Texas. Distributed by Knight Ridder/Tribune Business News.