|By Kathy Bergen, Chicago Tribune
Knight Ridder/Tribune Business News
Sep. 11, 2003 - Chicago, once the only city with a convention center large enough to host the nation's mega trade shows, is losing ground to Sun Belt upstarts Las Vegas and Orlando.
Last year Chicago hosted only 19 of the top 200 trade shows, compared with as many as 30 in the early 1990s.
"Clearly, there's a real problem," said trade show industry expert Heywood Sanders, professor of public administration at the University of Texas at San Antonio. "Chicago was able, in recent years, to recoup some major event losses by attracting small- and medium-size events, but that is a strategy other major cities can and are pursuing," said Sanders.
Loss of big shows can be costly. The National Hardware Show, for instance, the city's seventh-largest trade show, generated an estimated $39 million in direct spending here last year. Next year, the show's owner will move it to Las Vegas.
The show's longtime sponsor, the American Hardware Manufacturers Association, which has severed ties with the owner, is mounting an alternate show next year at McCormick Place. The overall economic impact on Chicago remains to be seen, and economic effects of the city's slippage in the big show arena remain unmeasured.
What is clear is that large-show attendance has slipped dramatically, to 688,354 in 2002, from 1.1 million in 1996, the peak year among those reported by the city, which has kept such data since 1994.
The Hardware Show's change of location turned the spotlight on an escalating war in which rapidly growing Las Vegas and Orlando have been bruising Chicago and other trade show venues nationwide.
The two recreational playgrounds are expanding their convention facilities at an aggressive clip and grabbing an increasing share of the business generated by the 200 largest trade shows in the nation, according to Tradeshow Week magazine.
In 1990, Las Vegas laid claim to just 14.9 percent of the exhibit space used in the top 200 shows. But by 2002, it had corralled 26.1 percent, and by 2005 it may snare 30 percent or more, according to a recent report on the Las Vegas market issued by Merrill Lynch. Orlando went from 1 percent of the market in 1990, to 9 percent in 2002.
Meanwhile, cities with longer histories as convention and trade show magnets, including Chicago, New York, Atlanta and Dallas, have seen their share of big-show business shrink. Chicago dropped to 13.5 percent in 2002 from 18.8 percent in 1990, while in the same period New York dropped to 6.4 percent from 14.1 percent.
The Orange County Convention Center in Orlando is opening a massive addition that nearly doubles its exhibit space. The expansion brings the center to almost 2.1 million square feet of exhibit space, within spitting distance of the 2.2 million at McCormick Place, the biggest venue in the U.S. and for many years the only one that could house the 15 or so megashows mounted annually.
In Las Vegas, the Mandalay Bay Convention Center completed a huge expansion this year, giving it more than 1 million square feet of exhibit space. This comes on the heels of a major addition at the Las Vegas Convention Center last year, bringing that publicly owned facility to nearly 2 million square feet. Add in the Sands Expo and Convention Center, with 1.1 million square feet of space, and Las Vegas boasts three of the 10 largest venues in the nation.
"Las Vegas has become socially acceptable--gaming is not the issue it was years ago," said Danielle Babilino, vice president of hotel sales at Mandalay Bay Convention Center. "Las Vegas has become multidimensional, whether it's shopping, spas, dining or entertainment.
"It's comparable to any other major city ... except maybe not as expensive," she said. "And distances are short, the weather conditions are great and it's easy to get in and out of the city."
Orlando makes some of the same sales pitches, as well as touting a low-cost and flexible labor force at the facility, which is not unionized.
Chicago convention officials acknowledge the competitive landscape has shifted significantly, but argue that Chicago has fared well, in part due to specific counter-punches.
The city has been fighting back on a number of fronts: chasing small- to mid-size slices of business; pressuring hoteliers to price competitively; launching dedicated buses to ferry conventioneers from downtown to McCormick Place; and extracting concessions from the labor unions.
For starters, Chicago has remained a powerhouse by attracting events such as medical conventions, which may use relatively modest amounts of exhibit space but draw huge numbers of big spenders to the city, said Chicago Convention and Tourism Bureau officials.
"Attendance and economic impact to the city is pretty phenomenal," said Deborah Sexton, president of the bureau.
Bureau officials note that Chicago drew 6.9 million U.S. business travelers last year, more than any other city in the nation, according to a study by D.K. Shifflet & Associates. This brought an estimated $6 billion in direct spending to the city.
Convention officials also have put the squeeze on hotels, urging them to keep prices attractive for conventioneers.
For instance, to aid the American Hardware Manufacturers Association when it mounts its rival show in Chicago next spring, the bureau prevailed upon local hoteliers to meet or beat the rates paid by show attendees this year.
"Chicago hotels are willing to price appropriately to attract trade shows--I don't worry about that too much," said Jim Reilly, chief executive officer of the convention bureau.
Chicago also expanding venue
The city also hopes to attract fresh business to McCormick Place during the peak spring and fall seasons after completion in 2007 of a $1.14 billion expansion. The new west building will include 500,000 square feet of exhibit space and about 200,000 square feet of meeting and event space.
In September 1998, the city won union concessions on work rules and costly overtime practices at McCormick Place, and officials expressed confidence then that the agreement would help ensure the city's place as the nation's trade show capital.
But now, more changes are needed if the city is to remain competitive, Reilly said.
"Labor is unquestionably an issue," he said.
Convention center construction generally is financed with visitor-based taxes, and Orlando and Las Vegas, with the ability to tax more than 100,000 hotel rooms each, have an enormous leg up on most other cities.
"If you're competing by adding space, Orlando and Las Vegas can do it faster," noted Sanders, of the University of Texas.
And both cities are snagging business from elsewhere.
After holding its annual expo in Dallas for 26 years, the Promotional Products Association International moved the event to Las Vegas this year.
Show attendance had been dwindling, "and we wanted a more exciting destination that would draw more attendees from across the country," said Tina Filipski, a spokeswoman. The Vegas show drew 20,000 attendees, up from fewer than 15,000 the year before.
In the case of the National Hardware Show, "the marketplace is saying it needs something fresh and new," said Dennis MacDonald, senior vice president at Reed Exhibitions, the trade-show management firm that owns the National Hardware Show.
Looking forward, it's clear that the days when Chicago could dominate by the sheer size of McCormick Place are over.
"Competition now will take place on a variety of other related dimensions--attractiveness of destination, air service and costs, including space rental and labor," said Sanders.
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(c) 2003, Chicago Tribune. Distributed by Knight Ridder/Tribune Business News.