by Bruce Myint | December 01, 2003

Ellen Cardwell, meetings manager for the Washington D.C.-based Ecological Society of America, faced a tough choice when booking the ESA’s 2006 annual meeting.
   Sure, San Antonio is a beautiful city, but the convention center was asking for $121,000 in rental fees. Memphis, Tenn., on the other hand, was charging only $26,500. But wouldn’t the group prefer San Antonio? Cardwell’s boss thought so. Then Memphis came back with a pledge of $15,000 to cover shuttle buses.
   Able to offset the rental fee with the shuttle bus inducement, Cardwell calculated the ESA could hold its 3,000-person convention for $11,500 less than a tenth of what they would spend in San Antonio. Memphis it was.
“Normally, it is the whole package for us,” says Cardwell, who recently chose Portland, Ore., as the site of the 2004 annual convention, based partly on attendees’ fondness for gourmet coffee and microbrews. “But price can be a deal breaker,” she adds.
   Or, from Memphis’ point of view, a deal maker. Cardwell’s case is just one example of the lengths cities will go to in order to lure convention business in an increasingly competitive market. These include finding new ways to bring costs down, shaking up sales responsibilities and contracting with private marketing companies to bolster their efforts.
   Such strategies are changing the way meeting planners do business and how they make destination decisions.

Rental-fee discounts
In San Jose, Calif., where economic woes have been worsened by the dot-com meltdown, the city is hoping to turn things around by changing the way it markets the McEnery Convention Center. In October, the city council unanimously approved a new pricing structure that is drawing raves from planners booking events in Silicon Valley.
   Under the new policy, the city’s director of conventions, arts and entertainment is permitted to reduce facility fees by more than 50 percent of established rates or even to waive the fees altogether. Also, the director can cut the facility’s parking garage rates, which can be as high as $20 a day for an in/out pass.
   The San Jose Convention and Visitors Bureau also was granted the power to offer planners lower prices, based on factors such as multiple event commitments, revenue history and event dates.
   Prior to these changes, facility fee reductions were capped at 50 percent, and there was no wiggle room on garage rates, handcuffing the city’s ability to compete.
   Sue Davis, director of special events at the Bellingham, Wash.-based International Society for Optical Engineering, applauds the moves. “I’ve gone back to the bureau and asked them to come up with a proposal based on this new mandate from the city council.”
   Davis, who has been holding events in the McEnery Center since the late ’80s, expects the new policy will save her organization up to $50,000 in annual rental fees. That degree of savings, she says, could enable her to upgrade a reception, add an F&B event or, best of all, avoid hiking registration fees.
   This is the kind of response San Jose was aiming for. By reducing the rental rate often a group’s largest expenditure, with the possible exception of food and beverage the city is able to appeal to planners saddled with budget problems and growing concerns about returns on investment.
   “Typically, with the public sector, the ability to be flexible with pricing hasn’t been there,” says Dan Fenton, president and CEO of the San Jose CVB. “Colleagues say this has to be the future.”
   In some cases, that future already has arrived. Davis recalls being offered a rental-fee waiver from one major East Coast city as well as heavily discounted fees at other major cities in California.
   Anaheim/Orange County Visitor and Convention Bureau president Charles Ahlers confirms such reductions have grown common in recent years, especially on the West Coast, where competition among convention cities has grown fierce. Recently, he says, his convention center adjusted its pricing structure by doubling the amount of meeting space offered for the same rent.
   “A lot of destinations literally are giving away space to attract business,” Ahlers says. “But I don’t think that can last. As soon as the economy picks up, a lot of those deals will go away.” Still, Ahlers thinks price cuts are here to stay.
   That’s a strategy under consideration in Portland, Ore., where city officials recently commissioned a study to determine if they should drastically reduce or even waive rental fees. But Chicago-based CH Johnson Consulting concluded that steep rate cuts are a last resort and a move to be avoided. Instead, the report recommended offering planners tax breaks to help them offset costs like transportation.
   “There’s a lot a building can do besides a formal rent reduction,” insists Charles H. Johnson, president of the consulting firm. “They can waive the charge for a move-in day or be lenient in how they charge for square footage. There’s plenty of wiggle room that doesn’t pertain to the rental rate itself.”