^{February 2003}

CVBs under scrutiny

From budget cuts to increased public attention, the issues facing CVBs will impact your show as well

By Heather Kirkwood 

The climate at convention and visitor bureaus (CVBs) has definitely changed since the roaring days of the late ’90s, when budgets were fat, constituents were happy and exhibition clients weregrowing at a dizzying speed. Just a few years ago, CVB sales teams could rely on sharp marketing packages and lush FAM trips to help sell their destinations. Few publicly questioned how average CVBs did business or whether they were successful at meeting their goals. 

Today, however, an aura of austerity has descended on CVBs. Amid government budget crunches, shrinking tax dollars, increased public scrutiny and constant technological revolutions, CVB executives across the country say this is one of the most challenging business climates in recent memory. 

But the result has the potential to be a boon, not only for exhibition clients hoping to negotiate deals with increasingly competitive cities, but also for the CVBs themselves as they refine business practices and services and strive to emerge more efficient than ever. EXPO has identified four trends CVB executives say are most impacting their organizations and what those trends could mean for show managers. 

Stretching dollars

CVBs, like most businesses across the country, have felt the sting of budget cuts. With the economy and Sept. 11th taking a bite out of travel, CVBs are trying to do more with less. “The primary funding source for most CVBs is the hotel tax,” explains Marshall Murdaugh, President of Marshall Murdaugh Marketing, a CVB consultant who has audited several CVB budgets in recent years. “In most cities I’ve worked with, this revenue source has plummeted 25 to 50 percent.” Even major destinations have been hit by these shortfalls. The result is a careful review of the services CVBs offer and their performance efficiency. 

The challenge, however, is that with such a competitive market, CVB executives are reluctant to cut back on theservices they offer show managers. “We’ve learned that there are certain things we’ve been doing for show managers that we just can’t stop doing. Show managers expect these services from us,” says Deborah Sexton, Executive Vice President of the Chicago Convention and Tourism Bureau. For example, Sexton says she can’t afford to cut programs that help show managers build attendance by offering assistance with telemarketing, advertising and other marketing efforts designed to identify and attract international, as well as regional, attendees. 

Michael Gehrisch, President of the International Association of Convention & Visitor Bureaus (IACVB), says one result of the budget crunch is that more CVBs are privatizing or outsourcing certain functions. He advises show managers to be alert to this trend and perform thorough due diligence when staging a show in a city that has recently undergone this process. “A number of cities are privatizing their convention centers,” says Gehrisch. “It can work when done well, but it can complicate the coordination of services between the city, bureau and facility.” For example, it can take a while for entities to iron out responsibility for specific tasks or to establish good communication between private and public interests. 


Living in the fish bowl

Along with a money shortage, CVBs are finding they’ve become a topic of interest in their local communities. As tourism-related businesses experience a slump, they’re more likely to question what the local CVB has done for themlately. That questioning often catches the attention of local media and politicians eager to find funds they can redirect to other goals. 

The Los Angeles Convention and Visitors Bureau is one such example. Last year, the Los Angeles Times published a number of reports about the bureau’s staff incentive program. The paper reported that the bureau had awarded $225,000 in bonuses to its staff for bookings, 20 percent of which later cancelled.

And Los Angeles isn’t the only CVB to appear on the local media’s radar. Reports have appeared in other papers about a variety of CVB issues, from Dallas to Honolulu, Philadelphia to Orlando. 
CVB executives find themselves justifying their budgets and business practices to an audience that often doesn’t fully understand the competitive market in which bureaus have operated in recent years. But Gehrisch says it isn’t just investigative reporters scrutinizing CVB budgets. Too often it’s also local politicians whose support the bureau needs to meet its mission. “Local governments have become increasingly interested in CVB budgets, especially marketing budgets,” Gehrisch says.

Gehrisch encourages show managers to be more aware of events in the cities where they hold shows. If CVBs are going to be able to continue offering the same services, they could benefit from the support of show managers. What would specific cuts mean for the show? Would the show consider moving cities if certain services or amenities aren’t available? What economic impact does the show have on the community? “It means more when it comes from a customer,” he says. 

The field-of-dreams syndrome

Just as marketing budgets have become tighter, the competition among cities has heated up. The boom of the 1990s brought with it an explosion in convention center construction, and shows today benefit from a wider selection of cities with the exhibit space and hotel rooms to accommodate their shows. Even the biggest shows have more choices of venues as the size of the average convention center has grown. This means larger destinations can’t rely on a steady stream of repeat business from the largest shows. To keep exhibit halls full, they’re increasingly pursuing business that they would have left to second-tier cities in the past. 

Sexton candidly says that even a city like Chicago, with its abundance of exhibit space, hotel rooms and world-class attractions, is finding the market more competitive. “We’ve got to compete with more and more cities that are giving show managers everything but the kitchen sink,” she says. 

For now, the increased competition is great for show managers either negotiating renewals for their show or hoping to take their event to a new destination that might have been out of reach a few years ago. 

Counting heads

Lastly, CVBs, hotels and show managers alike have been heavily impacted by the current crop ofWeb sites for booking hotel rooms. Attendees and exhibitors can commonly find better room rates than the show manager’s negotiated rate. As corporate budgets have become tighter, attendees and exhibitors are under pressure to travel as cheaply as possible, so they don’t mind spending the time it takes to find a better deal.

Booking outside the block isn’t just a problem for show managers trying to avoid attrition charges. It’s also a problem for CVBs, which need to know how many rooms were booked as a result of a particular show so they can prove the economic impact each piece of business brought to town. 

In addition, without an accurate count of the hotel rooms booked for each show, it’s difficult for a city to know how much weight to give to a particular piece of business for the convention center. As a result, shows whose attendees book outside the block risk not getting the same kind of priority in a convention center’s schedule. Since the actual number of attendees may not have changed, both the show manager and the city lose out.

Show managers are likely to encounter a number of cities experimenting with various formulas and methods to count their show’s attendees. Gehrisch says IACVB is setting up an ad-hoc committee to study the issue and evaluate solutions. It’s too early to predict the outcome, but some methods being discussed include a formula based on the show’s attendance or creating a reservation system standard that would ask each customer what brings them to the city. 

Looking ahead

All four trends are good news for show managers, Murdaugh says. Tight budgets and increased public scrutiny make meeting and exhibition business even more important to a city’s tourism mix. It’s easier to estimate and quantify the economic impact of meetings and shows, Murdaugh says. 

Even though shows may outgrow the existing inventory of exhibition space across the country, for now the competitiveness fueled by the building boom of the 1990s is giving show managers more choices and better deals. Finally, now that the trend of booking out of room blocks has grown beyond just affecting show managers, the industry is pulling together to re-evaluate what has become an antiquated system. What may seem like difficult problems now may serve to refine and improve the industry as a whole in the future. 

Heather Kirkwood is the Senior Editor of EXPO. She can be reached at hkirkwood@expoweb.com.