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What a Difference a Year Makes - the Convention Business in Kansas City
 is Exploding, Filling Hotels, Record Future Bookings
By Rick Alm, The Kansas City Star, Mo.McClatchy-Tribune Business News

Nov. 21-- In July, one of the groups converging on the convention center was Silpada jewelry sales representatives from all over the country. They were eager to see the company's new line of jewelry.

What a difference a year makes. The convention business in Kansas City is exploding this fall, filling hotel rooms and building momentum with record future bookings.

Kansas City's nascent downtown revival, anchored by the Sprint Center, the Power & Light nightlife district, the Kauffman Center for the Performing Arts and a new ballroom at Bartle Hall, is practically selling itself.

"What we're doing is starting to pay off," said 6th District Kansas City Councilman Chuck Eddy, one of several behind-the-scenes conductors orchestrating the projects' complex financial and management details.

Kansas City Convention and Visitors Association sales chief Bill Bohde echoed that. "People are excited about what's going on in this market," he said of the new attractions, which open next year beginning May 1 with the inauguration of a new Kansas City mayor in the as yet unnamed ballroom.

"Our total product right now is creating a tremendous buzz through the meeting and planning world," said Bohde.

And as bright as the future looks, the present isn't bad, either. The occupancy rate for the metro area's 29,087 hotel rooms hit 67.1 percent in September, the best in a decade and a giant leap past 2005's average of 58.5 percent. The September figure was inflated by moves of the Irish Fest to Crown Center, a national convention here from New Orleans and a NASCAR Nextel Cup race. But occupancy for the year is still expected to exceed 60 percent.

Moving forward, Kansas City is heavily advertising its lineup of coming attractions, and Bohde's sales staff travels coast to coast pitching bids to meeting planners who book convention venues years in advance.

"We've had more opportunities to bid than in previous years," he said.

So far this year Kansas City has pitched 75 bids for events scheduled between 2008 and 2012. Bohde said 30 of them have or are expected soon to sign on.

If they were playing baseball the sales team at that pace would be batting .400. That's Hall of Fame territory. Last year's "closure" rate for signing deals was a minor league .210, or 21 percent.

"We've almost doubled our closure rate," said Bohde, and it keeps getting better. He boasts the already impressive 2006 booking numbers have the potential to double by year's end.

Bartle bookings boom

Last year the association booked six conventions of at least 1,000 room nights, which consumed a total 43,580 room nights.

Through October, 19 of those major-event groups have committed to a whopping 123,340 room nights. Bohde said a dozen more groups were close to decisions. He is confident Kansas City will get its share, or more.

On Friday Bohde announced the first of those decisions -- a letter of intent from a national college testing service that could bring as many as 4,000 professionals here in 2008 for a two-week event and one of the largest meetings ever held here.

That may be just the beginning.

"Kansas City was a very easy decision for us," said Bill Sanders, director of U.S. Department of Labor's Workforce Innovations program. The group is bringing more than 3,000 government and private sector employers to Kansas City next summer for its annual national conference.

Kansas City's hotel prices and airport access were big pluses, said Sanders. "And certainly Bartle Hall was a huge factor. We're really excited about that new ballroom," he said, where his organization will hold four major sessions over three days. "That will be the nicest ballroom we'll have ever worked in."

But Sanders said there was one other issue that helped push Kansas City past other finalists that included St. Louis, Indianapolis and Minneapolis.

"We like coming to a city where we're a big deal," he said. "In some big cities we get kind of lost in the noise.

"It's nice to know you're having an impact and you're appreciated. We're getting welcomed with open arms."

Kansas City's uptick in bookings tracks with national trends.

An early peek at an annual industry survey by PricewaterhouseCoopers estimates that total U.S. conventions in 2006 will be up 2 percent from 2005. That follows a 16 percent leap last year over 2004, which marked the beginning of the end to an industrywide recessionary swoon that began in the late '90s.

"It appears many convention centers are already generating demand at or above their pre-September 11 levels," said Robert Canton, a director in PricewaterhouseCoopers' hospitality and leisure practice. "Despite rising energy prices and continued concerns about travel, the meeting industry has experienced a strong rebound in both demand for space and event attendance."

In an interview, Canton might as well have just said "Kansas City" when he outlined what it takes for a city to succeed in the industry today.

"There are more facilities to choose from and the gap is growing between the have and the have-not destinations," he said. "The bar has been raised. The haves now offer glitzy ballrooms and high-tech meeting rooms. It's hard to see a big difference from one center to another."

Cities separate themselves from the pack, he said, through hotel affordability, travel accessibility and walkable convention districts with plenty of dining and entertainment options. Kansas City is in the middle of the nation's highway and air travel networks, and room rates here historically are below national averages.

National research data provided by the Convention and Visitors Association now pegs average room rates here at $80.06 a night, up from the 2005 average of $75.62. Kansas City is still a bargain compared to the current national average rate of $96.90.

A recent technology upgrade and extensive remodeling inside Bartle Hall, along with Kansas City's multibillion-dollar downtown makeover, complete the picture.

Meanwhile, Bartle Hall and Municipal Auditorium are again posting solid usage numbers, according to figures provided by Convention Center facilities director Oscar McGaskey.

Usage days at Bartle the past two years have averaged 57 percent, right at what Canton calls "a good efficiency range" of 50 to 60 percent.

Canton projects 2006 usage at the nation's largest 100 centers for business conventions and trade shows alone will be around 48 percent, up a few points over 2005. Venues typically fill out the rest of their booking calendars with civic, religious and private organization events and public exhibitions like Kansas City's annual Home Show and Boat Show.

Hotels getting healthy

September's occupancy boom of 67.1 percent was 12 percent better than September 2005 and even bested the national average of 65.1 percent. That hasn't happened in a long time, if ever, said Kansas City-based hospitality industry guru Jeff Marvel, of Marvel & Associates.

Through September 2006 metro area hotel occupancy is at 61.3 percent for a robust leap past last year's lackluster 58.5 percent average.

"It's stunning and nice to see," said Marvel.

For almost a year Marvel has been forecasting a strong 2006 finish in the low 60s, and it appears his educated guesswork will be on target.

But Marvel cautions that a slowdown is just around the corner when as many as 4,000 new hotel rooms in the planning pipeline start coming on line next year.

Not all of those rooms will make it off the drawing boards if history is any guide, he noted. But at least half of them almost certainly will.

Supply growth is healthy for the industry, said Marvel, but only if demand keeps pace.

Lots of little indicators point in that direction.

Online travel agent Travelocity, for instance, earlier this month ranked Kansas City among the nation's top destination cities based on annual growth in Thanksgiving travel market share, up 18 percent. New York was up 15 percent.

KCI air traffic in September hit a five-year high for that month, and airport officials recently announced October passenger counts were up 10.5 percent over October last year.

After nearly half a decade of decline, Marvel said, Kansas City's lodging industry appears to be stabilizing with balanced growth. "When you dig deep into the third-quarter numbers there's some pretty good demand growth in there," he said.

Future bright

The competition isn't standing still.

Bohde said St. Louis had added 3,500 hotel rooms in recent years and soon would have a new downtown casino complex.

Indianapolis has added 1,000 rooms and is nearly doubling the size of its convention hall.

The November issue of Convene, the trade journal of the Professional Convention Management Association, counted 83 cities that have recently completed expansion projects, built new convention facilities or are somewhere in the planning or construction pipeline.

"Cities have made big strides in recent years," said Bohde, and now it's Kansas City's turn.

Bohde said it is vital for downtown hotel occupancy rates to stabilize somewhere in the mid-60 percent range to attract a major hotel developer.

He said two missing pieces to Kansas City's downtown convention district jigsaw puzzle are a second big convention headquarters hotel downtown to complement the 983-room Downtown Marriott, and expansion of Bartle Hall's exhibit floor from 388,800 to 600,000 square feet.

Behind-the-scenes work on both is under way.

McGaskey has been lobbying for a 225,000-square-foot addition to the hall for more than a year, and the preliminary blueprints already exist.

Bohde says a new hotel must come first. "There are people out there who believe an expansion of Bartle Hall eventually is going to happen," he said. "But additional ... hotel product downtown is the primary need."

A new hotel can't and won't be built by traditionally conservative investors until they see competitors' occupancy rates bursting at the seams.

The means Bohde's convention sales machine must keep running at full throttle. That keeps hotels profitable and up to date. Nice hotels attract conventions. It all works together, he said.

The marketplace is still pretty much a buyers' market for midsized venues like Bartle Hall, said PricewaterhouseCoopers' Canton. Hanging on to market share, much less increasing it in a slow-growth climate, will be a challenge.

Helping Kansas City in the task will be Minneapolis-based travel industry consultant CSL. The company in 2001 recommended a bigger and better Bartle Hall ballroom to enhance its marketability.

CSL is back in town working for the city and the visitors association on a long-range tourism infrastructure wish list.

The first phase of CSL's study will examine market feasibility for another downtown mega-hotel in the 1,000-room range. Rick Hughes, president of the local visitors association, said that report could come by spring and trigger the first round of City Council debate over location, tax breaks and other incentives.

Hughes is optimistic the publicly driven but mostly privately owned downtown convention district is about to embark on an era of sustained success.

If so, he said, success eventually would prompt the question, "When do we say no?" to tax breaks to spur development.

"Where do we go from here?" said Hughes. "We have a very bright future. We've created quite an expectation for downtown. We want to be able to live up to it."

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To reach Rick Alm, call (816) 234-4785 or send e-mail to ralm@kcstar.com.

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Copyright (c) 2006, The Kansas City Star, Mo.

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