November/December 2005
Lessons Learned
How industry leaders are dealing with the impact of Hurricanes Katrina and Rita on their businesses in the short and long term.
By Maxine Golding



It doesn’t matter to a show organizer whether a disaster is natural or man-made. The effects of either are immediate and potentially catastrophic.

Disasters like Hurricanes Katrina and Rita may hold our immediate attention, but their urgency fades all too quickly for people and businesses least or not at all affected. Similarly, much loud and earnest talk post-9/11 about emergency preparation and disaster recovery planning dissipated as time passed without incident.

However, the enormity of the recent huge hit to the Gulf Coast region, home to one of the most popular convention and trade show destinations, seems to have moved the needle for show organizers. Of the many lessons learned by show organizers, perhaps emergency and disaster planning is — finally — no longer an option.

The pain will not easily be overcome or forgotten for groups like Specialty Graphic Imaging Association, which canceled its event outright, or the National Association of Convenience Stores, which quickly relocated its show and may revisit its future Gulf Coast booking.

How and when the region will return to its competitive form as a draw for trade shows remain big question marks.

The New Orleans Metropolitan Convention and Visitors Bureau was unequivocal in announcing that “your hotel partner and this city will not re-open for meetings and convention business until we are fully prepared to deliver an experience that meets both your and our highest standards.” It canceled hundreds of large and medium-sized shows and meetings between Sept. 1, 2005, and March 31, 2006, valued at billions of dollars. But even as residents return and roll up their sleeves, the Gulf Coast faces extraordinary rebuilding challenges as cities and communities struggle to resume water, power, gas, and mail services, undertake environmental and trash cleanup, and get back to business.

Show organizers and suppliers alike are revisiting with fresh eyes disaster planning post-Katrina and Rita. Industry leaders tell EXPO how they’re dealing with the impact of the hurricanes on their businesses in the short and long term.

The Convention That Canceled
Michael E. Robertson, President and CEO,
Specialty Graphic Imaging Association
www.sgia.org
First Response: There’s a huge difference in our position this year from 2001, the first time we had to cancel our meeting. Then, I had to focus on keeping the association afloat, since 60 percent of our income was gone in a week. It really shook us.

Because of increased storm activity in the Caribbean and Gulf and greater hurricane intensity, I bought weather insurance for the 2005 New Orleans meeting (Sept. 28-Oct. 1), something never done in the history of this organization.

We really wanted to relocate to Atlanta and not cancel outright. However, we had a couple of big concerns. Most hotels were booked for another big convention in Atlanta, and it would have hurt us dramatically to be housed in the suburbs and beyond. And companies with large exhibits didn’t want to participate in a show not up to our standards. Without the luxury of time to deliver the level of value to attendees and exhibitors, we knew within five or six hours that we had to cancel.

While insurance will not match what we would have made with the show, it covers our expenses and defrayed revenues and puts us at the point of not losing money. This year, staff can focus the association’s resources on supporting the industry.

Lessons Learned: More than anything, it was the experience with cancellation in 2001 that helped me keep a cool head and look at how to minimize the effects on the industry and the association.

When we canceled this year, many exhibitors were familiar with the Push Forward program, which we applied in 2001. The weekend after 9/11, we told exhibitors, “We’ll create an online virtual trade show within 30 days and give you a 5 percent discount on next year’s booth space if you leave with us the money for this year.” That gave us 24 months to deal with cash flow issues and helped dramatically cut down on tapping our reserves.

This time, attendees could contribute their registration fee to the American Red Cross, and we set up a job bank and equipment bank.

It also helped that after 2001 we adjusted credit lines to have easier access to half a million dollars in cash. With one major event that accounts for so much revenue, you have to do financial planning based on the worst-case scenario if you have to cancel the show. I continue, though, to be concerned with so much of our income tied to one event, so we are looking for ways to increase revenue in other areas and diversify more.

Because the digital component of our industry is developing very fast, after cancellation we decided to hold a digital exposition in Phoenix this December as a one-time event. It took just three weeks from jump-starting the show to 90 percent sold out (about a third of the size of our annual exhibition of 220,000 NSF), and we’re conservatively projecting 3,000 will attend.

Future Impact: When something like this happens, it brings you back to your roots. We’ve increased dramatically our educational outreach to the industry and see many opportunities for programs and interactions between supplier and user communities that we might not have looked at if not stunned by this cancellation.

We plan to return to New Orleans in November 2009. I’m anxious for the city to come back and for us to be a part of it. While that meeting comes at the very tail of the hurricane season, there’s always a risk, so we’ll purchase insurance. At about 1 percent of gross revenues for the meeting, it really is a great deal and something we’ll do whenever weather potentially may become a factor.

The Convention that Relocated
Jane M. Berzan, CAE, Senior Vice President, Events, Marketing & Supplier Relations,
National Association of Convenience Stores
www.cstorecentral.com
First Response: The NACS SHOW was slated to be held in New Orleans in late October. The show is extremely important to our industry, both attendees and exhibitors, who rely on it as a key element of their business plans. However, with more than 1,400 exhibiting companies and 25,000 total attendees, we very quickly had to do some scenario planning, which began as early as Saturday before the hurricane hit.

One of first things I did was dust off our insurance policy. We’ve had insurance for many years, but a lot of shows don’t, which is absolutely dangerous. I told the CEO, who was a few months new to our organization, “We need to discuss a few scenarios: we go to New Orleans or we don’t, we have a show or we don’t, we relocate or we don’t.” While the decision had to be brought to the board of directors, he knew they would immediately choose the third, to relocate.

Only a handful of cities can accommodate us because of our size: trade show, amount of meeting space, and number of hotel rooms. Relocation also had to be relatively close to the show’s original dates — we didn’t want to push it to January — but not earlier. It’s a miracle we found exactly what we needed (Las Vegas, Nov. 15-18).

Lessons Learned: We need to be flexible and always have contingency plans. I did not proactively contact [alternative sites] until we knew we were canceled out of New Orleans. In the meantime, I looked at site calendars and destination Web sites. If we had not done this advance research on what our options might be for relocation, we either might be hosting the show in a city that doesn’t work well for us or we might have had to go to the option that no one on our board wished to consider, which was canceling. 

Fortunately, our executive committee, which ultimately had to approve where to move the show, was extremely responsive to our need to make a decision quickly and communicate to our members.

Insurance is critical for all events, and event planners need to be sure they’re adequately covered for disasters such as hurricanes and other events that impact their meetings. [When it happened,] 9/11 was a huge wake-up call for us in terms of carefully reviewing our coverage and assessing financial risk of an event that would impact us holding our show.

If there’s one thing that we can never do enough, it’s communicate — with exhibitors, attendees and members. And keep in mind that not everyone reads every e-mail you send them or visits your Web site regularly. You need to communicate using a variety of vehicles to make sure your message reaches all of your audiences. Concurrent with the relocation plans, we developed a comprehensive communication plan that began immediately.

Future Impact: Our board of directors is responsible for the strategic direction of the show, including our rotation pattern. I’m sure they’ll want to review all our future dates and locations very carefully to avoid this type of disruption in the future. While it’s impossible to avoid natural disasters altogether, steps can be taken to minimize the risk. I expect the executive committee of our board will want a detailed report from me in January, since New Orleans is currently in our rotation pattern for 2007.

Third-Party Management
Bruce Harris, President,
Conferon Global Services
www.cgscompanies.com
First Response: Conferon had 37 groups (and 47 additional clients through ExpoExchange and ITS divisions) contracted in New Orleans through 2006. These groups represented more than 200 hotel contracts and many convention center contracts. We contacted those directly affected and sent a letter to all 3,600 clients the day or two after the levees broke. Whether they were directly involved or not, we wanted them to know they could rely on us to be responsive.

All short-term meetings in New Orleans and those scheduled at the Hyatt in 2006 have been moved; three groups canceled, since their attendees were needed in the recovery operation. Some meetings from May through August 2006 have relocated, while others are awaiting a final decision; the larger the group, the more likely it is a move will take place. For the most part, groups with meetings from September through December 2006 are trying to remain in New Orleans.

We also presented to our major chain hotel partners a case for holding “tentatives” at new locations, so that our clients would have a backup if New Orleans was not going to be ready on time. To their credit, everyone understood why conditions warranted this move from standard practice — that we were trying to keep business in New Orleans or within the chain.

Lessons Learned: While our response was quick this time, we believe that we can be even more effective in keeping clients informed and helping them make important decisions.

We have created an emergency response team headed at the executive level, and the elements of an action plan are in the formative stages. Communication will be the first thing — an employee phone chain and teams set up to gather information. Second, we’ll address the immediate health and welfare of employees and clients, such as who’s on the road and in the disaster area, and then the business issues — what has to move, and how do we move it? 

Future Impact: We’ve encountered much extra work during the relocation process, but we have deepened our client relationships because of the way we’ve handled the crisis.

There always has been some risk in going South during hurricane season, but until now the thought was that the impact would only be the week the hurricane hit. For the first time, the impact is very long term. I’m sure some groups will evaluate the likelihood of this occurring again when they make their site selections.

There will be a tough time period when the hotels and city feel they are ready but when the market is not in agreement. That gap will cause the industry problems. In order to get business to come back to New Orleans, especially in spring, I predict that hotels will probably drop all attrition requirements and remove the risk [for groups].

But the people of New Orleans need our help, and by sending business back to the community, we can speed its redevelopment and recovery. Many of our clients whose meetings moved have expressed a desire to re-book in 2007 or later. This may mean that we need to “swap” dates with other cities where they’re currently booked. This obviously takes much time in achieving, but it’s worth the effort.

The Convention Center
Luther Villagomez, General Manager
George R. Brown Convention Center, Houston
www.houstonconventionctr.com
First Response: Once we received notice that the center had to serve as a shelter, we were up and functioning in 10 hours, receiving and registering evacuees. The sleeping area at peak level probably handled 5,000 people, to whom we served three meals a day. We had a full triage setup and pharmacy, and we set up a zip code so evacuees could receive mail. We created an activity center for children, enrolled them in the local school district and actually moved them from center to school. The outpouring of support through volunteers and product donations was amazing.

On the day we moved the last evacuees from Katrina to more permanent living quarters, we had to react to an evacuation order for Houston itself. The facility turned into a transfer point for evacuees from the local community. The airport brought in the TSA (Transportation Security Administration) to check in and screen individuals, who then boarded buses that took them directly to their flights. And just hours post-Rita, we had 100,000 square feet set up as a shelter of last resort. Our staff had already connected showers and laid medical, registration and food areas for Katrina, so they knew what to do.

Lessons Learned: This first-ever drill worked amazingly well. All of our staff in operations, communications and support teams and in-house vendors had to be at their best, and they came through.

In mid-October, about 15 individuals from every area in the facility — management, audiovisual, food and beverage, IT, telecom and security – met to recap our response and how we would approach the challenge more effectively the next time around. We actually addressed lessons learned from Katrina and Rita in separate meetings. The resources and needs for Rita were different; since we were the ones evacuating our community, only our essential staff stayed.

As always, there needs to be a clear line of command. We brought in a former colonel, who directed and worked with the various groups — from city services to volunteers. The command center had to run 24 hours, and the entire shelter program was a challenge, especially when you add a lot of variables beyond the required basics. Because the media was very interested in activities at the facility, we had to be careful about protecting the privacy of evacuees in getting out information.

We were fortunate we had very little [business] to clear out. I think our clients were comfortable with the contingency plans we were able to work through in rescheduling their events. We discussed a scenario if there’s a show in the building. Do we move them out? How do we move them? What if there is an evacuation order? What if there’s no decorating contractor available to help the move?

Future Impact: With working plans in place, we’re now much better prepared to respond to public needs in a disaster. We’ll be able to set up a shelter, identify needs, and use pre-designed layouts for showers, cots and supplies. Similarly, I believe the experience level of this staff to do the things we did in less than 12 hours gives groups the confidence that we can support any challenges or special needs their shows face.

We’ll outreach at a later date to the police and emergency management services on the dynamics of how we work with one another in certain situations. We had contingencies to help the police force and fire department house some of their equipment during the storms so they could move out quickly after. However, we may need to reconsider whether we can accommodate those needs, in case we become a shelter in the future.

The General Services Contractor
Carrie Freeman Parson, Vice President of Marketing
The Freeman Cos.
www.freemanco.com
First Response: Disaster recovery is a two-tiered effort. Our three-inch binder outlines steps and procedures for branch teams, from media response to what to take with you. Our risk-management/safety team was in operation within 24 hours. The plan worked extremely well because it’s thorough; there’s a lot of effort to remind employees that the plan exists; and we’re active with training sessions on a regular basis. Still, a couple of days were chaotic.

We also implemented a corporate task force to support the branch teams because the magnitude of this event was so large. It took a major effort to get payroll immediately to displaced employees, and we never anticipated relocating so many employees. We’ll pay much more attention to these and other human resource issues in the future.

At the worst of the New Orleans disaster, when cell phones didn’t work, our employees quickly discovered they could still text message. We’re now incorporating that action into our plan.

The financial impact for us will be in the millions of dollars. Some shows have relocated to other locations, with revenues transferred to other branches. But there are additional costs to reconfigure floor plans, change pricing structures, re-let contracts and work with exhibitors. And the show managers must convince attendees and exhibitors to re-sign, especially when they have the option to not participate or cut back their space.

Lessons Learned: We didn’t anticipate the overwhelming challenge of internally communicating to employees, who are so emotionally connected to their fellow workers. It was hard to manage their expectations and frustration that they weren’t getting information from us fast enough. Three weeks later, when Rita became a threat, we were already implementing what we learned from Katrina.

We were able to pull our customer database from here and contact show managers. The big communications miss was with exhibitors. Many called our customer support desk for the status of their show, but exhibitors were unclear as to who was the official communicator. It should be show management.

Future Impact: Certainly on a short-term basis it will take considerable internal resources to get shows relocated, when preliminary work may have to be replicated.

The bigger issue is the cost of petroleum-related products and services. Carpeting is the single largest capital expenditure; its cost is going up instantly. Also utilities; electrical rates are up 24 percent in Dallas. And we have to provide power and heat to more than 5 million square feet of warehouse space.

It’s a difficult decision how best to minimize the ripple effect of these business expenses on groups that already have budgeted for their event. It could dramatically impact our ability to deliver our services to customers, many of whom are not in a position to absorb the costs we would need to pass on.

Long-term, we must review our overall exposure. How do we ensure that we are protecting ourselves if we lose a significant chunk of revenues in a city? With SARS in Toronto, 9/11 in New York and now New Orleans, we recognize our vulnerability. If our revenues are dramatically reduced, how could we immediately cut expenses so the company is not jeopardized? Our executive team has started initial discussions.

The Hotel Company
Kevin Regan, Regional Vice President, Southeast and Caribbean
Starwood Hotels & Resorts Worldwide 
www.starwood.com

First Response: Starwood had $31 million in business and 212,000 rooms booked between Katrina’s arrival and April 2006. We notified every customer due in that the infrastructure will take some time to come back and the premises were not secure. We offered alternative locations in Florida, South Carolina, Atlanta and Houston. About 80 percent have rebooked at alternative Starwood hotels, and most customers are looking at future dates in New Orleans.

With the storm coming, we planned how much emergency water, food, back-up generators, and life and safety equipment were needed. After the levees were breached, we moved in an experienced crisis team that included adjusters and two recovery groups to assess our three hotels: the Sheraton with 1,100 rooms, W Poydras with 425 rooms, and the 98-room W French Quarter.

We’re probably spending $40,000 to $60,000 a day that we normally wouldn’t spend on 350,000 gallons of potable water to pump through the hotel, diesel fuel and generators, transportation, media coordination and public relations.
The positive side is that the hotels are getting back into the market quickly, housing the media, FEMA (Federal Emergency Management Agency) staff and many workers displaced from their homes.

Lessons Learned: I can take a storm, but the issue of a city out of control was the most unique and difficult situation I’ve ever had to undertake.

We learned that the hospitality community must make ourselves a part of emergency planning for New Orleans. The city had no plan whatsoever; it was so disorganized. They knew the storm was coming, yet waited too long to call an evacuation and parked buses in low-lying areas that were flooded. When hotels ran out of water, food and power, and put people on the street with nowhere to go, the police sent thousands of guests of our city to the convention center, where there was very little security.

With the increasingly difficult storms the past three years, though, we’ve gained experience in evacuation, organizing, rebuilding whatever gets damaged, and mitigating the growth of mold and mildew. That experience gave us the opportunity to be on the leading edge in New Orleans.

Future Impact: The hotels in my region do a billion dollars in revenue a year, with New Orleans a consistently steady driver. All that will change. We’re not going to host any major groups until after April 2006, when our salespeople will have to convince customers that the city will be able to roll. We don’t know if the Superdome will be a redo or teardown. We don’t know what the perception of the convention center will be. We have to deal with the reality of knowing that the city wasn’t well equipped to take care of us. Meeting planners will become more nervous about booking these areas at this time of year. And people abroad have gotten a bad picture of the United States.

Our first challenge, though, is to find alternative work opportunities for our staff in places like Atlanta, Chicago and Miami. Then comes the future of the business. It’s a phenomenal opportunity to rebuild in the right way. I was born here. To me it’s a personal thing.

The Convention Bureau
William C. Peeper, President
Orlando/Orange County Convention & Visitors Bureau, Inc.
www.orlandoinfo.com

First Response: We’ve done pretty well until the magnitude of the recent hurricanes. Whoever dreamt we would see the kind of tragedy experienced this year? Now we’re beginning a complete review of all procedures, including communication with visitors and with show and meeting managers who are going to be here when something may be developing.

It’s a massive job to tell people to turn the valve on or off, as we did last year [with Hurricane Charley], when we did not incur serious damage to commercial structures.
 
Redundancies are in place to communicate information from our offices in Washington DC, Chicago and New York with our international offices, as well as to keep in touch with the area parks, airport, city and county.

Lessons Learned: We’ve invited emergency management for the county to review our plans again with a second round of updates.

After 9/11, our community looked more broadly and specifically beyond natural disasters. All the entities here have strong, solid programs that have been reviewed by security experts, and there’s very purposeful uniformed and undercover policing. The convention center went through a restructuring of its safety procedures; there are dogs in the building and entrances were changed to allow more funneled access. A complete discussion of building safety issues takes place even before pre-cons with show managers.

We’ve learned to hold emergency management practice drills for various parts of the community before the hurricane season. Turnover can’t be avoided, so we have to have these tests. Everyone must be on the same page and understand what happens when the phone rings on their end.

Last year, the convention center was a strategic component for first responders. We had police on horses, helicopters, fire department equipment, ambulances, canine police dogs and personnel all there for Hurricane Charley. It was part of this community’s response plan to get critical equipment to the safest buildings we have. And while it proved not to be necessary for me to be in the Orange County emergency management bunker then, even that’s up for review.

Future Impact: The reality is that business must go on, and a lot of cities, like Orlando and Atlanta, have benefited [from the New Orleans disaster]. No one is gloating about the windfall business. It’s a tragedy, with everyone saying, “There, but for the grace of God, go I.”

It’s on everyone’s mind that people may not come [to the region] during hurricane season. Still, when it comes to crippling a show, there are hurricanes in North Carolina, snowstorms in Chicago, tornadoes in the Midwest. Last year was the first time in 45 years that Orlando was damaged by any kind of hurricane or tropical storm. Yet commercial buildings sustained only minimal damage, nothing to put that sector of the community out of business.