Playing the Futures Market

Meetings & Conventions: Playing the Futures Market - August 1998 Current Issue
August 1998
Playing the Futures Market

How big will your show be years from now? Find out...

By Dana Nigro

A lot can happen in 10 years. In that space of time, the world political scene went from the Cold War to the fall of the Berlin Wall, and personal computers went from novelty to necessity. So what's to say your convention won't grow from 500 attendees to 5,000?

To get the dates and space they need in the cities they want, many convention planners have to book major events anywhere from five to 10 years out. But unless you're a psychic, how do you determine where things will stand by the time your convention rolls around? Following are planners' top worries about booking far in advance - and how to handle them.

History doesn't always repeat itself
Over the past five years, your convention has remained stable in size, drawing the same attendees and exhibitors each year. But will that be the case a few years from now?

"The biggest issue is anticipating your growth," says Jane Krause, CMP, director of meetings and conventions for the American Society of Cataract and Refractive Surgery in Fairfax, Va. "If you're planning five years in advance, should you be booking bigger space? It's kind of a crapshoot."

Changes in the U.S. health-care industry have meant that doctors don't have as much money or freedom to attend conferences. To determine her future numbers (she's booked through 2004 and looking through 2010), Krause keeps on top of trends in the field and looks closely at her convention's historical data. So far, the society's U.S. attendance has remained stable, but international attendance is growing. "We keep tabs on it, and so do the venues," she says. After each convention, she reports the attendance figures to venues she has booked for the future, so they can make any necessary adjustments.

The North American Society of Pacing and Electrophysiology's annual convention has increased in size for each of its 19 years, but not at the same rate. "We have to plan on that growth. That means booking larger exhibit space or more hotel rooms for [future] years," says Victoria Dutko, meeting manager for the Natick, Mass.-based organization. "It's scary because you don't want to overcommit."

Dutko signs a letter of intent with a convention destination about six years in advance and signs her headquarters hotel contracts soon after that. On peak night, her group uses about 4,000 rooms. In the past, she's blocked from 900 to 2,000 rooms of that total room count at one to two headquarters properties. Then she'll wait anywhere from two to four years out to sign contracts for the rest. That gives her flexibility to adjust her room block if she notices her group's size changing at preceding conventions.

Despite their best predictions, planners occasionally have to make significant changes to their room blocks. "We've had to appeal to hotel properties to give us more rooms, otherwise it's like stuffing 10 pounds into a five-pound sack," says Krause. But often the hotels are not willing to expand the block. Her solution: Point out that the group will have to pull out of the city altogether if it doesn't get the number of rooms it needs.

As a last resort, Krause has booked hotels miles away from the convention center and spent extra money for shuttle buses, and she has used hotels below her group's typical price range.

Comparing apples to oranges
It's too hard to get space at rates you can afford in first-tier cities, so you're giving a less expensive second-tier city a shot. Or maybe you've always held your convention in a warm-weather destination, and now you're switching to Denver in ski season. How do you know how many people will show up?

"Before I select a city, I look at our member demographics," says Ken Martin, director of shows and exhibitions for the American Philatelic Society in State College, Pa., which holds two shows a year. "The shows are open to the public also, so I'm looking at the population demographics and our history as to what cities have drawn. I know a core of members travel no matter where we have it, and about 75 percent of attendees will only go a day's drive. That's the base I have to work from." By tracking his group's history, Martin knows not to book as much exhibit space on the West Coast. "Most exhibitors come from the East Coast, and many drive to the event, since they don't want to ship their materials."

One way NASPE's Dutko tries to predict size fluctuations is by asking registrants to fill out a nine-question profile on the convention registration form. "We ask if they attended the year before and if they plan to attend next year," she says. Although Dutko wouldn't rely solely on that information to adjust her block, she says, "It does give you a sense of what's going on. If last year 70 percent responded they would come to your meeting the next year, and then that year you only have 40 percent responding they will come, you know you have a problem."

It takes a village
Your organization relies on local chapters to help out with the convention, from the planning stages to staffing the event. But what if the local planning committee is no longer there five years later?

Active chapter leaders can easily switch career fields, move to another city or cut down on their volunteer activities. Chapter membership could shrink for many reasons, too: market conditions in a particular industry, the town's changing population or a lack of dynamic leaders, for instance.

"It hasn't been a major issue so far, but it's something in the back of my mind," says Martin of the American Philatelic Society, which typically relies on 25 to 30 people from a local committee to volunteer for two half-days each. The society has been bringing more planning functions in-house to reduce its dependence on committees, says Martin. If worst came to worst, he says, the organization could hire temp workers.

The price is right...or is it?
Most hotels probably don't even know next year's rack rates for sure yet, much less their room rates for five to 10 years out. Likewise for convention centers, which are often reluctant to guarantee future prices. If they won't set a rate for you, how do you know you won't be hit with an unexpectedly high number? Or if you agree to a specific rate now, how do you know you're not overpaying for the future?

"My biggest problem in this sellers' market is if I book a hotel so far in advance, I have to play a game of where the market is going to be with the room rate," complains Ruthann Brettell, convention director for the American Numismatic Association in Colorado Springs, Colo. "Right now, everyone thinks the room rate should be higher, and they want anywhere from a 5 to 8 percent increase over each year to guarantee the room rate."

Many planners prefer to set annual increases at no greater than the rate of inflation, tied to the local consumer price index. And some throw in a caveat on this inflation cap: Their rate increase will be no greater than the actual increase in the average group rate each year. So if inflation is 4 percent, but the group rate in that market only goes up 2 percent, they are subject only to the 2 percent increase. "I don't know how I would hold them to finding out what the actual increase was," says Dutko. "What I've come to depend on is they will increase it by the maximum that's allowed."

Another guarantee to ask for is that the group's room rate won't be more than the hotel's average convention rate for the year the event is held. That's also tough to determine without knowing all the conventions the hotel is hosting. But Brettell has her ways. She checks the rack rates that year; convention rates should be 15 to 20 percent below those figures. And she'll periodically check the hotel reservations system anonymously. "I call to see what I can get as an AARP or AAA member, or as a weekend leisure traveler," she explains. "I go through a whole scenario. If I can get a better rate by calling, I'm going to be very unhappy. I'll call the hotel and say my rate needs to be less."

If you come, will they build it?
A second-tier city on a growth spurt and eager to boost its business is offering a fabulous deal to get your group's convention. But it falls a few hundred hotel rooms short of what you think you'll need in eight years. CVB officials swear they'll have five major new hotels open by that time. But what if the developers pull out or construction is delayed?

"If the city we are going to can't guarantee the number of room nights we need, we put a caveat in the contract: If you don't have X number of hotel rooms completed by this date, we have the option of canceling," says Krause of the American Society of Cataract and Refractive Surgery. The same goes for convention center space; the society has pulled out in cases where a facility hasn't expanded quickly enough to accommodate its growing trade show. Krause typically gives a destination a three-year cutoff date. "That gives us time to rebook somewhere else and gives them time to fill the space."

Krause doesn't just take the city's word that it will have the space: She looks for definite plans from developers, listens to the word of mouth at industry meetings and checks with her contacts at hotel chains to get the inside story. If the space shortage is really significant, she adds, "Our rule of thumb is we don't book until the shovel's in the ground."

Something better comes along
When you booked your blocks, there wasn't any mention of new hotels on the way. A year before your event, a 500-room hotel opens two blocks from the convention center.

"People want to be close to the convention center," says Brettell of the American Numismatic Association. "If they build a hotel that is closer than the hotels you've booked, people will go out of your block." That's another reason not to book your entire block right away; if a hotel opens that's closer, you can book the remainder of your block there.

The extent to which you leave a block open depends on the particular market, notes Martin of the APS. "If we are the only group using the convention centerÉI have more leeway because it's not likely the hotel attached to the center will fill up without using convention attendees. If it's Orange County or Las Vegas and we're just a small potato, it could be very chancy holding off if we want to get anything within walking distance."