October 2005
New CVB Models
There’s a not-always-so-quiet revolution taking place at today’s CVBs, and if it hasn’t hit the cities in which you hold events, it likely soon will. At an EXPO roundtable, five bureau and convention center executives discuss the specifics of their new models, the motivation behind their changes and the ramifications for show organizers.
By Donna Sanford



There’s a not-always-so-quiet revolution taking place at today’s convention and visitor bureaus (CVBs), and if it hasn’t hit the cities in which you hold events, it likely soon will. Taxpayer demand for accountability, municipal demand for a return on the investment made in our industry and a need for funds to be allocated to homeland security, education and other local issues are all bringing greater political scrutiny to the traditional business model of the CVB. Bureaus and convention centers are merging into one entity, convention centers are taking over bureau functions, 501c3s are becoming for-profit corporations and an increase in third-party private management is evident. In fact, as new as this trend is, so many business models already exist that it’s clear there will be no “one-model-fits-all” approach — and no more business as usual in the world of bureaus.

To help shed light on this new destination management trend, EXPO assembled a roundtable of five bureau and convention center executives who are at the forefront of this trend. Publisher Donna Sanford discussed with them the specifics of their models, the motivation behind their changes and the ramifications for show organizers. As some of the first in the industry to undergo these transformations — some by their own choosing and others at the demand of politicians — they reveal the challenges and successes they’ve found and provide a glimpse into what is probably the future of the bureau/convention center relationship.

EXPO: Given that you’ve each made a dramatic change in your business model, how will progress toward your new goals be measured?
Wallace: We’ve always been measured by room nights — that hasn’t changed. But we also focus on convention center revenues. One of the reasons the City of San Diego created our corporation is to run the center as a business, which means making smart business decisions. We won’t give the center away, for instance, if it doesn’t make good business sense to do that.

Butts: We use the same benchmarks as always — room nights, convention center revenue, occupancy and overall tax revenues (sales tax, bed tax, prepared food tax). Nothing for us has really changed relative to the measurements of success.

Adams: For us, room nights is a new measurement — and it’s the key measurement. We used to measure success on the number and size of events, whether they were state, U.S. or international events — we also give measurement weight to time of year since our seasonality is so strong with leisure travel.

Sainz: Another difference with San Diego is that City Hall used to evaluate both the bureau and convention center when looking at the number of room nights produced. Now, they only have one party to look to. So part of the decision for the change includes putting complete accountability in one party.

Wallace: We also have a very specific budget that we negotiate with the city, and we must meet that budget. It’s not a spoken goal, like the number of rooms nights, but it’s certainly a financial goal for which we’re held accountable.

EXPO: Is your new model working? Has there been an increase in the number of shows? Room nights? Attendees?
Fenton: Absolutely it’s working. I’m even more convinced now that this is the right model for us. Our room nights are increasing. Our number of events is up 20 percent year-over-year because short-term opportunities can be handled so much more efficiently. Our corporate non-room-night generating business is up. And we’ve reduced the amount of subsidy needed from the city by $2 million.

Sainz: In fiscal year 2004, the last year the bureau had responsibility, San Diego booked 685,000 room nights. In fiscal year 2005 — the first year of responsibility for the convention center corporation — we’ve booked 915,000 room nights. So, yes, it’s working.

Wallace: It’s also working for show organizers. We are truly a consolidated team. You’ve got one contact for everything — space in the convention center, room blocks, contract negotiations, operations, even food and beverage. The turn-around time for booking meetings has shortened considerably, which means there’s no lost time that costs us clients.

Butts: We’ve just finished our best year ever, and we’ve been able to consolidate finance and HR departments to free money for more marketing. I don’t think we have the efficiencies of San Diego yet, but we’ll get there. You can go through mergers like this for all the right reasons, but the devil is in the details in creating a more impactful, empowered team to get the results you want. We would like to be more hotel-like, in that there are less people to deal with when booking in Charlotte.

EXPO: What are some of the other ramifications for convention planners?
Adams:  I think most of us would say there’s a real priority here to make it easier to do business with us. We’re trying to simplify a lot — contracts, systems, policies. Our customers believe the change in having SMG responsible for the marketing has proven to be positive after the initial ‘hiccups’ in getting started. This year will be our strongest year to date.

Wallace: I think you’ll also find that our sales managers and directors have a greater understanding of our entire operations. They’re empowered to use their own judgment. There’s not the constant hand-off from one contact to another.

Fenton: This equates to a faster turn-around. If a person is part of the big picture, they can make a decision on the spot. And there’s more flexibility. It’s no longer about “building policy.” It’s about what’s best for the destination.
In San Jose, we’ve also included organized labor as a part of our board. They see the financials. They understand the nuances of different pieces of business. It tears down that adversarial relationship that can exist.

Sainz: Our relationships with the hotels are close, as well. One of the concerns when we embarked on this path was that we would become convention-center centric. Instead, we’ve become destination specialists. We make decisions based on what’s in the best interest of the city.

Butts: The benefits to show organizers are the efficiencies we’ve created. The money we’ve saved can be put right into marketing programs that help draw attendees.

EXPO: You are four of the first, but are we about to see a wave of bureau transformations? Are you the start of a trend?
Butts: I get at least a call a month from other bureau execs. When the economy went south, cities were struggling for revenues. They had to make sure they could take care of police and fire departments, fix potholes and fund education. They just couldn’t fund us at the old levels — especially in cities where the politicians don’t necessarily see it as a tourism destination.

Wallace: Cities also began looking for a return on the direct investment they make in this industry. Taxpayers are demanding accountability.

Fenton: In all honesty, the old model is set up to fail. It sometimes works because you have just the right mix of the just the right players. But really, who decided 18 months and out was under bureau control? How can you set a flat rate price structure without looking at the whole picture of what that meeting brings to a destination?

Butts: There will be no one model that can be replicated in all cities. Different things will drive it, and various entities will be empowered differently. Show organizers are going to need to be sure they understand the various models, and who’s managing what.

And as other cities consider ways of merging, centers and bureaus should lead the discussions rather than having it imposed upon them by politicians. My advice is to get ahead of the politicians and get a model that makes the most sense.

P.S. As we go to press, John T. Taylor, Chairman of the Greater Cincinnati CVB, and Dan Meyer, Chairman of the Convention Facilities Authority, have proposed a plan to combine the CVB and convention center operations into one, new organization to maximize the community’s return on the $160 million convention center investment.