News for the Hospitality Executive
The Meetings and Conventions Industry Bracing for a Downturn,
But So Far
Anaheim, Orange County’s Convention Hub, Is Holding Its Own
Return Business Drawn to Orange County’s Location
May Stem Feared Losses this Year
|By Sandi Cain
Orange County Business Journal Staff
January 26, 2009
Solid Attendance Projections, Few Cancellations Buoy Spirits
The meetings and conventions industry is bracing for a downturn this year, but so far Anaheim—Orange County’s convention hub—is holding its own.
The number of citywide conventions (those using multiple hotels) is up, there have been almost no cancellations and attendance projections are nearly on par with 2008.
The question is how many of those who register will show up.
“Attendance is the question mark,” said Robert Donahue, director of groups and conventions for the Disneyland Resort.
In 2008, conventions and trade shows like International Music Product Association’s NAMM Show, Natural Products Expo West and the Academy of Management posted record attendance. This year, many show organizers will breathe a sigh of relief if those numbers shrink less than 10%.
A December forecast by Trade Show Executive magazine’s Economic Forecasting Board indicated overall trade show attendance is likely to drop 14% this quarter and 12.5% for the year. The number of companies that exhibit is expected to drop by 8.5% this quarter and 10.6% for the year.
“We don’t know what to expect in this economy,” said Tony Lee, vice president of meetings and exhibitions for the Craft & Hobby Association, which will hold its convention here in February.
Lee said pre-registration was slow compared to last year, but that more buyers from big companies have signed up, which bodes well for the business end of the show.
“Those who don’t come are the tire-kickers,” he said.
Convention sales people also say it’s tougher to get groups to sign on the dotted line, though officials are hopeful they will end the year with about the same number of groups and conventioneers as in 2008.
As of the end of December, there were 264 groups confirmed for 2009 with combined expected attendance of 902,117. That’s compared to 764 meetings and conventions with 1.25 million attendees in all of 2008.
The difference is not alarming, said Jim Kissinger, vice president of convention sales for the Anaheim/Orange County Visitor & Convention Bureau: “Forty-four percent of the meetings held during 2008 were booked in 2008,” he said.
Anaheim’s largest convention, The NAMM Show, was held last week. Show organizers said early indications were good, but some area hotels said they had fewer room reservations than in the past.
Last year the show drew more than 89,000 people to Anaheim. Many attendees lived close enough to drive to the show, so this year, some of those who previously stayed at a hotel may have chosen to commute.
Citywide conventions like The NAMM Show use multiple hotels for their exhibitors and attendees. This year, Anaheim has 42 such conventions on the books—roughly the same number as in 2008. Twenty-one of those are expected to bring 10,000 or more people to the area. Nine of those are scheduled in the first quarter.
The convention count is expanded by supplemental business booked directly with the Convention Center to fill in open dates. At the end of December, the Convention Center’s own bookings account for 36 additional multi-day groups in 2009.
The Visitor & Convention Bureau will probably need to book another 100 or so groups to match last year’s performance. That may not be an easy task in the current economic climate.
Individual hotels and other event venues also host self-contained meetings throughout the year. This year, even those groups are waiting until the last minute to book.
“For 2009, everyone is taking a wait-and-see approach,” said Brad Logsdon, director of sales and marketing at the 1,500-room Hilton Anaheim.
Any downturn in conventioneers is costly. In 2008, meetings and conventions attendees spent roughly $975 million in OC.
On a positive note, both the Hilton Anaheim and Anaheim Marriott—the largest of the city’s convention hotels—have reported few group cancellations to date.
“If they haven’t canceled yet, they’re probably not going to,” said Steve Pufpaf, director of sales and marketing for the Anaheim Marriott.
Reservations for association meetings are “healthy,” but corporate groups are looking to trim expenses, Pufpaf said.
Anaheim’s largest conventions also come from diverse sectors, some of which haven’t been hard-hit by the recession.
Natural Products Expo West, which showcases natural and organic products, represents a market that’s still seeing growth. Last year, it had 53,000 attendees and expects about the same this year.
The Medical Design & Manufacturing trade show—a combined effort of seven simultaneous shows—had 53,000 attendees last year and expects about 50,000 people here next month.
The annual Religious Education Congress is expected to bring 40,000 people to town. Attendees pay their own way, so attendance isn’t dependent on corporate budgets, though personal hardship could play a role.
The United Spirit Association brings various cheerleading competitions to Anaheim annually, to the tune of 33,000 people in all. Those competitions aren’t subject to the whims of the stock market or boardroom decisions.
Similarly, the 30,000-person California Dental Association convention should still post strong numbers because its members rely on this convention for some of their required continuing education credits and typically pay their own way to the event.
Other conventions set to bring 15,000 or more people to OC include:
Newcomer American Library Association drew 22,000 in its first Anaheim convention last year and rebooked for 2012. The Association of PeriOperative Nurses rebooked for 2016. The Academy of Management had record-breaking attendance of almost 10,000 and rebooked for 2016.
Major sectors represented on this year’s convention calendar (see page 31) aren’t markedly different from past years’. Healthcare and medical groups, sports, education groups and professional associations dominate the calendar.
Notably absent this year: the government sector and real estate-related meetings. Many state government meetings have been canceled or put on hold. In real estate, the Irving, Texas-based National Association of Professional Mortgage Women is one of just two professional groups scheduled.
New and returning conventions are drawn to Anaheim by its affordability, the number of hotels within walking distance of the convention center, the convention center itself and the Disneyland Resort, according to market watchers.
Those groups that have a large local member base choose OC because they get higher attendance from the region. Others like the proximity to major companies that may exhibit at the shows or provide opportunities for attendees to see their operations.
New and returning conventions also say they appreciate the marketing assistance offered by the visitor and convention bureau to attract more attendees.
“We spent time, effort and resources on a stepped-up attendance promotion plan because of the economy,” said Hugh Easley, vice president of meetings and expositions for Ohio-based National Association of College Stores, which has a new convention for Anaheim this year.
Easley said pre-registration numbers were encouraging as of late December.
“We’re fortunate to have attendance close to where we were last year, and marketing is a big part of that,” he said.
Anaheim’s proximity to international markets also is attractive.
Alexandria, Va.-based ASIS International, an organization of security professionals, is another newcomer this year. Vice President of Education Susan Melnicove said worldwide accessibility was a big factor in choosing OC because roughly 25% of its 25,000 attendees come from overseas.
“We also like that it’s in the middle of a densely populated area with so many Fortune 500 companies and a huge drive-in market for those who want to just come to see the trade show,” she said.
Similarly, Chicago-based Institute of Food Technologists is returning because of Anaheim’s proximity to a strong food production market on the West Coast and easy access for members from the Asia-Pacific region.
Susan Andronowitz, director of meeting operations for the Institute of Food Technologists, said Anaheim is “one of the few true destination cities that can host us” with the institute’s space requirements.
The group plans to do extra promotion to potential attendees, emphasizing the benefits of attending during a recession.
Returning conventions also include the Barbershop Harmony Society, Arlington, Va.-based National Industrial Transportation League and Denver-based Financial Planning Association.
The Barbershop Harmony Society was last here in 1999 and will bring about 10,000 people to town over the July 4 holiday.
“It’s a very family-oriented convention, so the presence of Disney and other attractions is a significant factor in (members) deciding to come,” said John Schneider, director of events.
The National Industrial Transportation League was last here in 2005.
“We love that the hotels are in walking distance of the Convention Center and don’t require shuttle buses,” said Vice President Ellie Gilanshah. “That makes it easy to network, and that’s what (our attendees) come for.”
The group expects 3,000 people.
Event Planners Expect Slight, Not Severe Drop in Business
Company events fall; association, medical set to shine
Medical Design & Manufacturing conference: expects growth in 2009
Orange County event planners may not have a trio of witches around a bubbling cauldron to foretell how the recession will hit their business this year, but they do have a trio of shows they think will be an accurate oracle.
Three of the county’s largest conventions and trade shows are held in the first quarter:
Convention planners and hotels are bracing for a pullback in company spending, but see certain groups—association, healthcare and religious groups—maintaining and even growing their meeting business this year.
The major local conventions come at a time when the economic downturn is widespread. Employment data released Jan. 9 by the Department of Labor counted 2.6 million jobs lost nationwide last year—the worst decline since 1945. The unemployment rate hit a 16-year high of 7.2% in December.
NAMM draws heavily from the regional market. Organizers expected attendance to be similar to last year, but final numbers were not available.
The Medical Design & Manufacturing group, staged by Los Angeles-based Canon Communications LLC, hopes to see a 3% increase in exhibitors. Attendee registration is “holding up compared to last year,” said Dan Cutrone, Canon’s director of marketing. The show is weathering the downturn well because attendees view it as a necessity to keep up with changing technology, according to Cutrone.
The nationwide drop in meetings started last fall when companies began scaling back on their meetings and conferences.
San Jose-based Cisco Systems Inc. was one of the first, canceling its 2009 sales conference to hold a virtual meeting instead.
Fifty-eight percent of more than 600 meeting planners surveyed during a fall Webinar said they expected business to worsen this year.
The things that will hit conventions the hardest this year are likely to be corporate mergers and acquisitions, reduced marketing budgets, restrictions on travel expenses and fewer people working at exhibit booths, according to market watchers.
The hotel and convention industry survived a downturn after the terrorist attacks of 2001, but Charles Ahlers, President of the Anaheim/Orange County Visitor & Convention Bureau, said this downturn is different. “It’s broader and longer-reaching than 2001,” he said. “And consumer confidence is destroyed.”
The December forecast for trade shows from Trade Show Executive’s Exposition Forecasting Board estimated the number of exhibiting companies will fall 8.5% this quarter and 10.6% for the year while attendance is likely to drop 14% this quarter and 12.5% this year nationwide.
Even Las Vegas—the largest convention market in the U.S.—saw its convention attendance fall by 4% through October. Visitor volume that month plummeted by 10.2%, the worst drop since 2001, according to Las Vegas Convention and Visitors Authority. And attendance is expected to continue dropping this year.
Some convention centers are offering discounted or free space and other perks to lure groups, while some expansions and new construction projects have been put on hold or pushed back.
Some hotels also are offering perks such as free parking or Internet service at no extra cost at the request of conference organizers.
Hotels also are bracing for a downturn in convention business—Starwood Hotels & Resorts Worldwide Inc., Marriott International Inc. and Wyndham Worldwide Corp. all announced cost-cutting measures before year’s end—and have seen some, but not too many booking cancellations.
The Hilton Anaheim, OC’s largest hotel and a frequent convention headquarters, is ahead of the booking pace for the same period a year ago. Yet some groups have asked to reduce the number of rooms reserved.
“We’re trying to be as flexible as possible,” said Brad Logsdon, director of sales and marketing for the hotel. It’s harder than ever to predict a group’s room usage, Logsdon said. “Some look like they’ll be short of target and end up OK; others look to be OK and end up short,” he said.
Ahlers of the Anaheim/Orange County Visitor & Convention Bureau said he’s hopeful that the convention business will remain strong, if not stellar. “We have more (large convention) business on the books than in a long time,” Ahlers said. “We’re framed up pretty well for a good year. But we can’t predict the number of leisure visitors, business travelers or the number of people who come to work at an exhibit booth.”
At a November hotel investment briefing in Long Beach, PKF Consulting Inc.’s Executive Vice President Bruce Baltin said there likely will be six more quarters of decline ahead before things turn around for hoteliers, putting recovery some time around mid-2010.
Reports indicate hotel tax revenue is down 3% so far for the 12 months through July, Ahlers said. The number of rooms used by conventioneers versus initial projections is off by 4%, he said.
That leaves visitor officials hopeful.
The OC sky may be cloudy, but it isn’t falling. Real estate and construction events are scarce, but those related to healthcare, energy and other industries targeted by the Obama administration are likely to fare well this year.
The local hero could be association business. This group is widely credited for saving the business in 2001 and may ride to the rescue again. Associations typically are required to meet annually and professional associations are the backbone of many industries.
OC association manager Erin Bello said one financial industry group has seen more interest from prospective members at its local events in recent months as attendees look for networking and educational opportunities.
When association members travel to conventions, they typically pay their own way, so are less subject to corporate travel cutbacks. It’s a sector where OC shines. There are roughly 40 association meetings already booked in the county for this year.
“Association meetings are picking up (rooms) at a healthy rate,” said Steve Pufpaf, director of sales and marketing at the Anaheim Marriott.
Aside from association business, OC attracts several large religious conferences. Some of them cite Anaheim’s affordability, family atmosphere and good safety record as attractive features.
There are other positives that may help OC through the downturn.
Groups often mention the area’s choice of airport options as a plus.
“(Anaheim) is very accessible with fairly good rates and good access from the East Coast,” said Joette Cross, director of meetings for the Denver-based Financial Planning Association, which is due to meet here in the fall. The location also is well known internationally, which helps bolster global attendance, Cross said.
Disneyland is a big draw for the meetings market and has already ramped up its recession engine to drive more business to its hotels. Disney Meetings and Disney Institute programs provide opportunities for groups to tailor a program to their budgets.
“We’re leveraging Disney assets to the benefit of the meetings customer,” said Robert Donahue, director of groups and conventions for the Disneyland Resort.
There are a few things that could dampen enthusiasm.
Companies are pulling back on corporate retreats after a public flogging of American International Group Inc., which hosted an expensive retreat at the St. Regis Monarch Beach last fall shortly after receiving federal bailout money.
Partly as a result of that fallout, “resort” has become an unwelcome word in the corporate board room, planners said.
“Any place you go that deals with tourism, AIG comes up,” said Jack Kyser, founding economist for the Los Angeles County Economic Development Corp. “It probably will for a couple of years.”
Some resorts admit group business has been off slightly, but most are confident it will return.
“It’s a compelling destination for both leisure and corporate (business),” said James Bermingham, general manager of the Montage Resort & Spa in Laguna Beach. “It will stand the test of time.”
Airlines were a big concern last summer as Los Angeles, Las Vegas, Oakland, Phoenix, San Jose, San Diego, Portland and OC airports suffered big cutbacks in airline service. Planners worried that the cuts would result in higher fares.
“Members will stay home if fares are too high,” said one association planner on a meetings networking Web site. Passenger traffic at John Wayne Airport was down 10% through November to 8.3 million passengers compared to 9.2 million for the same period in 2007.
Travel spending is expected to grow just 1.4% this year, compared to 6.3% in 2008, according to the U.S. Travel Association (formerly the Travel Industry Association) and the Department of Commerce. That might affect budgets for the next few years if the falloff results in lower hotel room taxes, which help fund the Anaheim/Orange County Visitor & Convention Bureau. This year, the bureau’s budget is $7.5 million.
The bottom line is that this recession makes forecasting a challenge.
Kyser said OC’s meetings and conventions industry is probably poised to come out of the recession relatively unscathed because of its package of hotels near the convention center and the lure of Disneyland.
Hilton’s Logsdon agrees. “We’ll have to pull out all the stops (this
year), but it’s not mission impossible,” he said.
|Also See:||Anaheim Convention Center Looking to Expand to Capture Bigger Shows; Targeting Pharmaceutical Industry / Sandi Cain / January 2008|
|2009 Tourism Preview: Orange County, California Bracing for a Decline of 2% to 3.5% Visitors in 2009 / Sandi Cain / December 2008|
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