Meetings & Conventions: Shopping Centers December
An inside look at the deep mysteries of pricing at
facilities across the country
BY DAVID GHITELMAN
To the weary convention-goer or trade show attendee, all
convention centers may look the same. The people who plan events in
them, however, know better. They're extremely aware that these
facilities can be as different from each other as snowflakes in at
least one regard: Probably no two convention centers have identical
"There are no standards at all on how convention centers are
priced," says Deborah Rosencrance, vice president of meetings and
exhibits for the San Francisco-based American Academy of
Ophthalmology. "You can't expect to go from one city to the next
and find that anything is the same. Each contract negotiation is
like reinventing the wheel."
Centers vary on the way they charge for virtually every aspect
of a gathering. Some facilities won't negotiate final contracts --
or set firm prices -- until a year or less before an event, while
others will go as far as three years out. Some charge half-price
for move-in and move-out days; others allow groups four or five
move-in, move-out days before they start charging.
Some centers are eager to negotiate rates; others require the
approval of the city council or state legislature before they can
take a nickel off their rack rate. Some have a long list of
exclusive suppliers; others have a very short list. (The convention
hall with no exclusive suppliers appears to be an extremely
Even on the issue of price per square foot there is considerable
variation from facility to facility, with some charging for gross
square feet (all the space in the building or part of the building
the group is occupying) and others for net square feet (only the
space the group is actually able to use).
This inconsistency -- particularly when it leads to
unanticipated charges -- can give planners the sinking feeling that
centers are taking them for suckers. "It drives me crazy," says
Joyce Stanley, director of exhibits for the New York City-based
American Society of Mechanical Engineers. "You have to clarify what
the pricing means, and it can be confusing. Some facilities don't
make you aware of certain charges until the last minute. Sometimes
you get the information from your decorator, rather than the
facility. You're paying a significant amount to the center, and you
get the feeling it's nickel-and-diming you."
Not only do price structures differ from city to city, but
they've begun to change from year to year in the same facility.
"We've gone in naively thinking the situation is going to be what
it has always been," says Jim Johnson, president of Meetings &
More, a Scottsdale, Ariz.-based independent planning and
association management firm, "but since 1993 there are a lot of new
costs involved. At some convention centers, if I want a podium in
the ballroom I have to pay extra for it. Now, we're a little more
perceptive. We've realized that we have to be on our toes. What
used to be assumed is no longer the case."
Center to Center
The sales directors for the centers and for convention bureaus
eagerly defend the practices at particular facilities, but in the
process highlight the center-to-center inconsistencies that
increasingly have planners climbing the walls.
Consider the issue of how far in advance centers will negotiate
contracts with groups. Michael Holt, director of sales for
Atlanta's Georgia World Congress Center/Georgia Dome, explains that
he can give firm prices for the next three years. "I just did an
agreement with a group for July 2000 and quoted them firm prices,"
Mike Gamble, director of sales for Philadelphia's Pennsylvania
Convention Center, says he will offer groups rates well into the
next millennium. "We will confirm prices long-term," he says,
"although I'm not anxious to go past 2010."
However, Gamble's quotes for the year 2009 are not as firm as
Holt's for 1999. At the Philadelphia facility, the amount a group
will pay in 12 years is based on the current rate plus however much
prices in general rise in the next dozen years according to the
U.S. government-determined consumer price index.
Exclusives also vary from place to place, with planners unable
to choose their vendors for a wide-range of extremely odd services.
At San Francisco's Moscone Center, which has relatively few
exclusives, groups must use the facility's own shoeshine stand. At
Denver's Colorado Convention Center, Internet access is an
exclusive. And at Seattle's Washington State Convention & Trade
Center, exclusives include emergency medical personnel and badge
checkers. Badge checkers? "That's a 10-minute conversation I have
with everyone who looks into using the center," says the facility's
sales and events services director, Michael McQuade.
However, not all convention center representatives themselves
find the differences particularly striking. "People ask us why all
centers conduct their business differently," observes Claude
Legris, senior sales manager at the Pennsylvania Convention Center.
"I tell them we'll all run our centers the same when our customers
all run their businesses the same."
Eric Jones has seen convention centers from both sides now.
Since April, he's been president of EDJ Enterprises, a
Phoenix-based meeting and event planning firm. He brings to this
new job more than 15 years experience in convention facility
management in such cities as Houston, Tampa and Phoenix. As a
result, Jones understands the rising chorus of planner complaints.
"Convention centers are the most unstandard part of the meetings
industry," he says.
He also has an explanation for why planners and convention
center management often find themselves working at cross-purposes.
"Being government-owned, facilities have rules that do not relate
to the business world," explains Jones. "You have a business trying
to operate in a government environment."
A decade or so ago, this was not as much of a problem as it is
today, he notes. Back then, the convention centers -- and the
usually local governments that funded them -- didn't care too much
about a facility's bottom line as long as it brought groups to town
to fill hotels and restaurants. Now that the age of big government
is over, however, centers are expected to at least break even, if
not earn a profit.
"For years, the buildings were underpriced because they were
loss leaders," says Jones. "But for the last eight to 10 years,
state and local governments have been asking them to cover their
own operating expenses or even to make a profit. It's forcing
facilities to operate like a business."
What planners need to do to cope with these changes, Jones
suggests, is learn all they can about the politics and economics of
convention center management. At present, he says, too few planners
do adequate research before entering negotiations. "The facilities
don't take the time to understand the clients' needs, and the
clients don't take the time to understand the facilities," he
Among the questions to ask:Who owns the convention center? The answer
will go a long way to explaining whether the facility will be eager
for or indifferent to a particular piece of business. If the city
owns the building, says Jones, it will probably be very anxious to
negotiate favorable rates with planners who are bringing large
events to town. If, as is increasingly the situation, the state
owns the convention center, and perhaps owns another two or three
centers in other cities, it's not going to be so quick to offer
deals for an event that is only going to benefit part of the state.
If the convention center is privately owned, the owner has to at
least try to make a profit on each event. If the center is owned by
a state or municipal authority, management is government-related
but usually has enough distance from elected officials to be
flexible in negotiations.How is debt being retired, and where do operating
revenues come from? "If the debt is being retired by the
center's operating revenue, a planner is going to spend a lot of
money," says Jones.
On the other hand, he points out, if the debt is being retired
by the hotel tax, the center will be hospitable to groups that
bring a lot of out-of-towners in need of a place to stay. This
means the other kinds of events will probably be less welcome.
"If the hotel tax pays for the building," notes Jones, "the
center will not be giving consumer trade shows dates every year for
the next 10 years."
It can also mean that when planners consistently negotiate down
the room rates at a city's hotel, they are forcing the local
convention center -- if it is funded by a percentage of those room
rates -- to charge more. Jones points out that it can often be
easier for an association to have its members pay an extra $25 a
night than to come up with another $40,000 to pay the convention
hall.Who signs the contract? "If the center's
general manager signs it, then he or she has a lot of authority,"
says Jones. "When I worked in Tampa, the mayor signed the contract,
and if you wanted to change a word, you had to go to the city
council."What does the rental fee include? Jones
recommends that planners try to get as many services as possible
packaged into the price, rather than pay for services à la
carte.What are the center's major profit areas? Does
the center make more money from a food and beverage function than
from renting exhibit space? If so, would holding an elaborate
dinner there get a group a break on the charge per square
These questions may help planners navigate their way through
many of the obstacles created by the irregularities of convention
center pricing. They don't, however, solve the underlying
Jones proposes a long-term solution to the chaos: an industry
association for convention center managers. "Facility
representation is not good," he says. "Convention center people
make up only one-fifth of the membership of the International
Association of Auditorium Managers. Times have changed, but the
industry hasn't responded."
At October 1995's White House Conference on Travel and Tourism,
he says, out of 1,800 attendees, there were only three facility
managers: "Convention centers are major capital contributors to the
travel and hospitality industry, they make a multibillion
investment in this industry, but we have not been taking the lead
in shaping its future." Jones hints that he is currently involved
in setting up such an organization, which may be launched within
the next year.
Perhaps an industry association could help convention centers
get political recognition of their economic clout. Even if it only
established industry standards on how much to charge for move-in
days, how far in advance to sign contracts and whether groups could
bring in their own electricians, caterers and hat-check personnel,
the organization would have gone a long way to simplify the jobs of
Key Cost Questions
Since the ways in which convention centers charge for their use
vary so widely, how can a planner shed some light on this extremely
Eric Jones, currently president of EDJ Enterprises, a
Phoenix-based independent planning firm, and a 15-year veteran of
convention facility management, recommends that planners focus on
the broader canvas of convention center politics and financing to
find out what kind of deal their groups can expect from a
He advises planners to fax these 10 questions to a convention
center they're considering booking, and to be sure to get answers
well before signing a letter of agreement -- to say nothing of a
- Who owns the convention center?
- Who is retiring its debt and how?
- What are the center's internal revenue sources?
- Are the rental structures inclusive or à la carte?
- Are the rental rates flexible (or can they only be changed by
the city council, state legislature, etc.)?
- Are facility operations underwritten by public funds or are
- Who employs the staff at the center? Is it private or
- What are the union jurisdictions in the facility?
- Who signs the contracts for the center?
- Can I have a copy of the boilerplate contract?
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