Transcript 'Public-Private Partnership and other Critical Success

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Public-Private Partnership
and other Critical Success
Factors for Investing in and
Operating a Conference
Centre: The International
Experience
Presented By:
Rob Hunden, Vice President
Johnson Consulting
November 4, 2005
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Facility Growth Fuels Competition
Largest Facilities by Region
Region
Europe
Nuovo Polo, (Milano)
Messegelaende, (Hannover)
Messe, Munchen GmbH
Square Meters
Region
Square Meters
530,000
496,000
440,000
Middle East
Riyadh Exhibition
Dubai World Trade Center
Dubai International Congress Centre
40,000
37,000
8,700
North America
McCormick Place (Chicago)
Orange County Convention Center (Aneheim)
Las Vegas Convention Center
220,000
205,382
198,475
Africa
Zimbabwe International Exhibtion Center
Sandton Convention Centre (South Africa)
Cairo International Convention Centre
65,000
23,476
10,629
Australia
Melbourne Exhibition and Convention Centre
Sydney Convention and Exhibition Centre
Brisbane Convention & Exhibition Centre
35,866
32,520
24,991
South America
Rio-centro (Rio De Janeiro)
La Rural (Buenos Aires)
Santa Cruz Fexpocruz (Bolivia)
99,964
49,510
46,000
Source: Major Exhibit Hall Directory, Johnson Consulting
Asia
Modern International Exhibition (China)
Impact Exhibition and Conv. Center (Bangkok)
Tokyo International Exhibition Center
150,000
84,800
81,300
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European Meetings Market
International Association Meetings by Country
Rank
1
2
3
4
5
6
7
8
9
10
22
Country
United States
Germany
Spain
France
United Kingdom
Netherlands
Italy
Australia
Japan
Austria
Greece
Source: ICCA
# Meetings
288
272
267
204
196
181
170
145
132
129
79
International Association Meetings by City
Rank
1
2
3
4
5
6
7
8
9
10
22
City
Barcelona
Vienna
Singapore
Berlin
Hong Kong
Copenhagen
Paris
Lisbon
Budapest
Stockholm
Athens
Source: ICCA
# Meetings
105
101
99
90
86
76
75
67
64
64
39
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Greek Venues
Largest Greek Meeting Facilities
Property
Helexpo Palace- Attica Exhibition & Conference Centre
KICC-Kos International Convention Centre
Sofitel Capsis Rhodes
Creta Maris
HELEXPO
Capsis Beach Hotel & Sofitel Capsis Palace Hotel
Sofitel Capsis Hotel & Conference Center Rhodes
Hilton Athens
Divani Caravel Hotel
Divani Apollon Palace
Athens Holiday Inn
Athenaeum InterContinental Athens
Hyatt Regency Thessaloniki
Source: Mpoint, Individual Properties, Johnson Consulting
Location
Athens
Kos Island
Rhodes
Crete
Thessaloniki
Crete
Rhodes
Athens
Athens
Athens
Athens
Athens
Thessaloniki
Total
Exhibit
(m2)
12,000
8,500
1,650
0
956
1,140
0
904
646
414
0
0
0
Total
Ballroom
(m2)
0
0
0
0
0
0
0
0
0
0
1,598
1,077
Total
Meeting
(m2)
2,260
5,200
3,562
4,296
3,013
2,815
3,803
2,166
2,328
2,166
2,410
613
360
Total
Function
Space (m2)
14,260
13,700
5,212
4,296
3,969
3,955
3,803
3,070
2,973
2,580
2,410
2,211
1,436
Trends
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Association Meetings continued growth
Europe continued dominance
Length of Meetings shortened
PCO’s relative dominance weakening
Travel Agents no longer used
Tour Companies Dominate Certain Segments
Exhibition Mgmt. Companies less used
Conference/Exhibition Centres strong
Hotel meeting facilities strong
University use flat
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Location Trends – Rising Cities
 Robust Economies fueling growth of ‘acceptable’
destinations
 South America – Santiago, Montevideo, Sao Paulo, Rio,
Buenos Aires, Santa Cruz
 Caribbean/Mex. – Puerto Rico, Cuba, Cancun
 Eastern Europe –
 Africa – Cape Town
 Asia – Singapore, Hong Kong, Seoul, Beijing, Kuala
Lumpur, Bangkok, Shanghai
 Australia – Brisbane, Cairns, Adelaide
 North American Growth Cities – Vancouver, Chicago,
Orlando, Las Vegas, San Diego
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Ownership Differences
Europe
Varies. Gov’t sponsored companies own many facilities. Exhibition companies often make
money promoting shows, but also own facilities to help control situation. Governments more
willing to take on losses.
Largest Centres are privately-owned:
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Fondazione Fiera Milano
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Deutsche Messe AG, Hannover
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NEC Group, Birmingham
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Jaarbeurs Holding, Utrecht
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BolognaFiere Group
North America
Generally expo halls private, convention centers public. Las Vegas adopting European model.
Sands Expo, Mandalay Bay, World Market
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57% Public, 36% Private, 7% Other
Other
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Australia, South America, Middle East, Africa – Government
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Asia – Private and Public
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Public-Private Relationships
US Models
 Public/Special Authority Owns
 Private Sector manages, caters, etc.
 Also, public sector often manages, but not
recommended
Ownership and Management of US Exhibit Halls
Type of Entity
Private
City
County
State
Combination Government
Non-Profit Organization
Other
Ownership
Management
36%
34%
10%
8%
5%
0%
5%
58%
22%
5%
5%
2%
0%
8%
Source: Tradeshow Week - Major Exhibit Hall Directory, Johnson Consulting
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Private Investment
 Opportunities – Contractually Obligated
Income (COI) for building
 Naming Rights (Midwest Express Center)
 Pouring Rights (Pepsi/Coke)
 Catering Rights - Purchase kitchen equipment
 Management
 Risks
 Operating deficits
 Rents do not always support expenses
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Public Management
 Pros
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Ability to move mountains if necessary
Can absorb financial losses without emergency
 Cons
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Lack of Expertise
Lack of Accountability
Lack of Performance Incentive
Dumping ground for political jobs
Response Time is Slow
Marketing
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Private Management
 Pros
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Trained Managers
Speed
Customer Service
Accountable to owner
Incentive to perform well - $$$
No tolerance for “dead weight” in workforce
Quick response time
 Cons
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Can lack transparency
Financial flexibility
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Financial Performance
 US & Canada
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Facilities lose money as supply of space has
increased. Subsidized via other sources.
Rents do not support operations
Roller-coaster calendar
Debt service covered by hotel/other taxes
Debate: Are they worth it?
 Europe
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Model is different – used to promote shows
Rents higher, shows longer
Operating profit is possible
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Development Trends
 Larger Ballrooms (up to 10,000 sq. meters)
 More breakout meeting rooms for medical
conference training, etc.
 Attached hotels of 200 to 1,500 rooms
 Focus on design aesthetic
 Focus on local flavor
 Higher food standards
 Quality over Quantity – Hotel Standard
 Rooftop Garden, Solar panels
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McCormick Place West - Chicago
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2:1 ratio of exhibit space to meeting rooms.
Includes 470,000 square feet of exhibit space
and 250,000 square feet of meeting space,
including a 100,000-square foot ballroom.
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Ease of navigation, with meeting rooms in
close proximity to exhibition hall.
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Flexible registration space allows for multipurpose use.
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Transportation center provides a central
arrival area for attendees of multiple events.
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Unique central concourse – "Main Street
America" – that creates an inviting feeling of
bringing people together.
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Dedicated roadways for freight with direct
connection to truck marshalling.
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A full range of food services including table
service restaurant, food court, food service on
the exhibit floor and fine catering.
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Rooftop Garden
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Viva, Las Vegas!!
Most Convention Space
of any City outside
Europe – 150,000 Hotel
Rooms
 LVCC – 200,000 sq. metres
 Sands/Venetian – 110,000 sq. metres
 Mandalay Bay – 90,000 sq. metres
(12,000 rooms in three hotels)
 World Market Place - Euro model.
 $7 Billion Gaming Revenue
 $7 Billion Convention Revenue
 $35 Billion Total Tourism Spending
 $175 million marketing budget
 Macau’s Cotai Strip copying success
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Milan’s New Fair Complex
 530,000 square
metres
 150 – 200 shops
 10,000 parking
spaces
 Multiple Hotels
 Privately-owned
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Marketing
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 Success is a stool with 3 legs:
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Proper Facility
Proper Hotel Package
Strong Marketing
• Local Destination Management Org. Budget
• Venue Budget
• Association, Tradeshow budget
Marketing is critical to venue success.
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Long lead times
Heavy competition
Local Organizing Committees more important. Selling
the City.
Technology & Service Trends
 Secure Wireless access points
 Solar and other “green” energy solutions
 Audio/Video expectations high
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Meeting rooms permanently equipped
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Video conferencing
 Larger business centers
 Central computer for loading multiple presentations
 Networked Conference Signage
 On-site concierge
 Expanded translation services
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What’s Next?
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 Continued rise in expectations
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Hotel package onsite, higher quality, invasion of brands
Technology. like you never left the office
Shopping, Restaurants, Spas and Entertainment within walking distance
Price competition; internet RFPs
Private venue management
 As costs go up, cities choose to be in or out of the business. If “in”
then continued spending, coordination, political support. If not, put
resources to different uses – general tourism, economic
development.
 Mass Customization – If all destinations have the same amenities,
must make experience unique
 Pressure for regional cooperation. No longer just central city.
 Higher customer service expectations
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Taxi courtesy enforced; must accept credit cards
Hotel and restaurant workers
Local police and airport agents
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Questions