|By Sara K. Clarke, The Orlando Sentinel,
Fla.McClatchy-Tribune Regional News
September 22, 2010 --When the Peabody Orlando quietly opens its $450 million expansion on Thursday, it will do more than add 750 new hotel rooms to the local market. It will also expand its meeting-and-convention space by nearly a quarter-million square feet. The hotel's new ballroom alone is large enough to hold 32 typical homes.
The Peabody addition and the opening of three new hotels in the past year have together added more than a half-million square feet of meeting space to the area's existing supply -- almost one-fourth of all the space inside the sprawling Orange County Convention Center, the Peabody's next-door neighbor on International Drive.
Orlando may be home to the nation's second-largest convention center, capable of handling some of the biggest trade shows in the country, but an overwhelming majority of the area's meeting space is actually inside its hotels. Their combined meeting, convention and trade-show facilities have ballooned during the past decade to nearly 4.7 million square feet, according to the Orlando/Orange County Convention & Visitors Bureau.
That's almost twice the 2.58 million square feet in the county convention center, which is not included in the CVB tally.
The meeting space added just in the past 12 months by the 1,641-room Peabody, the 1,400-room Hilton Orlando (another convention-center neighbor), the 1,000-room Hilton Orlando Bonnet Creek, and the 497-room Waldorf Astoria (also at Bonnet Creek) has boosted the local inventory by more than 13 percent at a time when the meetings-and-conventions business, and the hospitality industry generally, are still struggling to get back on their feet following the longest recession since World War II.
Yet local tourism promoters say more options simply make an already popular destination even more attractive to meeting planners. And hoteliers are relying more and more on convention space to put heads in their beds.
"Coming from the hotel business myself, I always had the philosophy that you can never have too much meeting space," said Gary Sain, president and chief executive officer of the convention-and-visitors bureau. "With only so many prime-time dates available, the more opportunities you have to book will give you more success."
During the peak of Orlando's convention season -- January, February and March -- the new ballrooms and conference centers should help Orlando snag conventions that in past years may have had to go elsewhere. But even Sain admits the difficulty comes during off the "shoulder" seasons on either side, when facilities have to compete for bookings.
"It works for you when times are good," he said. "In the off periods of time, you've got to work that much harder to fill that space."
Meetings are increasingly important for the hospitality industry, especially in Orlando, which is the nation's second-biggest market for both hotel rooms and meeting-and-convention space. For instance, 80 percent of the Peabody's business comes from groups booking blocks of rooms, mostly for meetings in the hotel or next door at the convention center, said Alan Villaverde, the hotel's managing director and president of Peabody Hotel Group.
"For a major hotel to be competitive these days, you have to have a large amount of function space," he said. "That is such a lucrative part of our business."
In part that's because meetings generate additional food-and-beverage sales, but the primary purpose of convention space is to sell more hotel rooms, said Scott Smith, a lodging instructor in the University of Central Florida's Rosen College of Hospitality Management. Hotels allocate meeting space based in part on how many guest rooms a group intends to book, because those are the big money makers.
"It's the carrot that gets those large groups to book," Smith said. "You use that meeting space to sell sleeping rooms."
While there were earlier pioneers in the meeting-space game -- the Swan and Dolphin hotels at Walt Disney World, for instance -- Villaverde credits the Gaylord Palms Hotel & Convention Center with kick-starting the growth in Orlando.
Other hoteliers thought the Gaylord was crazy when it included 400,000 square feet of convention and meeting space in its plans, Villaverde said. But when it debuted in early 2002 on Disney World's doorstep near the Orange-Osceola county line, it had sold a million room nights in advance -- just four months into a travel slump triggered by the September 2001 terrorist attacks in New York and Washington.
"Space is the commodity that we have," said Monica Schyck, vice president of sales and marketing for the Gaylord Palms. "The ability to do it all under one roof has been our niche."
Others followed suit, and since 2001 the amount of meeting space in Orlando-area hotels has nearly doubled, according to the visitors bureau. Significant projects have included an expansion of the already-giant Orlando World Center Marriott and the construction of Rosen Shingle Creek, which has 445,000 square feet of meetings space.
Since the opening of two Hiltons and the Waldorf within a month of each other last year, the big bump in meeting space and hotel rooms has become apparent, even as the Peabody prepares for this week's "soft opening" -- and, ironically, the Gaylord is one of those feeling the strain.
In its second-quarter earnings report, parent company Gaylord Entertainment Co. said the past year's growth in the Orlando market was putting "significant pressure" on guest-room prices, especially given the economy's sputtering recovery.
"Over 2,000 rooms have been added into the market since September 2009," the Nashville-based company noted. "Absorption of this new supply has been slow as a result of the challenging economic environment."
What about the added space's effect on the county-run convention center?
Hoteliers say they generally attract a different type of customer, which minimizes the chances of them cannibalizing the giant facility. Meeting planners choose between a hotel and a convention center based largely on the size of the group as well as the aim of the event, they say. Some groups want or need the large, unobstructed exhibit space offered by a convention center, while others are more interested in keeping everything tied to their event, including overnight accommodations, under one roof.
According to Villaverde, the meetings and conventions that choose the Peabody don't necessarily want a convention-center environment. And area hotels are taking in a lot more meeting business than they might be siphoning from the convention center, resulting in "more of a gain than a loss" to the area "by a large margin."
The convention center views its relationship with convention hotels as one of "give and take," said Gwen Wilson, a spokeswoman for the county operation.
Nearby hotels with added meeting space, such as the Hilton Orlando and Peabody, may land some smaller shows and meetings that previously used the center, Wilson said. But they also have added much-needed guest rooms within walking distance of the convention center, which allows it to attract more of the country's really large trade shows and conventions, she added.
According to a recent survey by Meeting Professionals International, only about 8 percent of its members expect to use an actual convention center for their upcoming meeting or trade show, compared with 68 percent who intend to book some sort of hotel facility.
"From a planner's perspective, it depends on what you're trying to accomplish and what setting you want to have," said Theresa Davis, a spokeswoman for the planners' group. "Not everyone wants to be in a convention hall, or will have a need for hundreds of thousands of square feet of trade-show space."
Sara K. Clarke can be reached at email@example.com or 407-420-5664.
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