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San Jose Convention Officials Expect Only Modest Losses from the Economic Slump, Have
 More Professional Associations Booked, Which are Less Vulnerable to Market
 Downturns then Corporate Groups

By John Woolfolk, San Jose Mercury News, Calif.McClatchy-Tribune Regional News

Jan. 5, 20089 - --Corporate belt-tightening following the market meltdown has rocked the nationwide convention business with a wave of cancellations. Two Silicon Valley powerhouses recently called off events in San Francisco that officials there had hoped would deliver tens of thousands of visitors and millions in spending.

But San Jose convention officials expect only modest losses from the economic slump, thanks to their efforts to book more professional associations, which are less vulnerable to market downturns. It's a lesson learned the hard way after the dot-com bust.

In 2002, when the San Jose McEnery Convention Center was hit by the slump that followed the bust and the Sept. 11 terrorist attacks, nearly a third of bookings were corporate events and the rest were associations. Last year, those percentages were reversed.

"The association business we have is much more stable," said Daniel Fenton, chief executive of the San Jose Convention and Visitors Bureau and Team San Jose, which books the McEnery Convention Center. "We don't think we're going to see the sort of downturn we did when we were much more heavily based on the corporate sector."

The nearly 20-year-old center's economic performance is critical at a time when city officials are weighing a $300 million expansion and renovation, half of which would be paid for from an increase in hotel-room taxes and the rest with redevelopment money. A cost-benefit analysis is expected to be published soon.

The national economic meltdown that began in September, triggered by a rash of foreclosures after years of too-easy home lending, has prompted corporations to scale back on travel and events to trim costs, sending ripples through the convention industry. Figures nationally were unavailable, but anecdotal evidence suggests lean times.

San Francisco's Moscone Center reportedly saw cancellations of two key corporate events from Silicon Valley belt-tightening -- a Cisco Systems global sales meeting and a Network Appliance user conference -- that together were expected to bring 30,000 people and $47 million in spending.

San Jose, too, has seen recent cancellations. The JAX/DL World Tradeshow in October had been expected to bring $828,037 in spending, said Meghan Horrigan, the convention and visitors bureau's communications director. Other cancellations included The Real Estate Expo and an event for failed thrift giant Washington Mutual, she said, adding that estimated losses from those events were not immediately available.

But convention officials are buoyed by association and trade events that remain solid. November's three-day Airplane Owners and Pilots Association meeting brought 9,800 people and an estimated $4 million in total spending to the city. The upcoming SPIE-Photonics West trade show at the end of this month is expected to bring more than 20,000 people and an estimated $17.5 million in spending.

Horrigan said the convention and visitors bureau expects to see a 5 percent drop in short-term business events -- those booked within 12 months -- due to the economy for the current budget year, which ends in June. Short-term business events account for 20 percent of bookings, she said.

Fenton said that during the last severe economic downturn early this decade, San Jose convention business fell 40 percent.

"It's still too early," Fenton said, "but we don't forecast anything that dramatic at all. I think we're positioned much better than we were to be more resilient."

Contact John Woolfolk at jwoolfolk@mercurynews.com or (408) 975-9346.

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To see more of the San Jose Mercury News, or to subscribe to the newspaper, go to http://www.mercurynews.com.

Copyright (c) 2009, San Jose Mercury News, Calif.

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