Destination & Facility Marketing & Incentive Fund Survey ACME 2008 Conference Washington, DC Michael Hughes Associate Publisher & Director of Research

Destination & Facility Destination & Facility Marketing & Incentive Fund Marketing & Incentive Fund

SurveySurvey ACME 2008 Conference • Washington, DC

Michael Hughes

Associate Publisher & Director of Research Services

Introduction

• Key ThemesKey Themes

• Respondent ProfileRespondent Profile

• Incentive FundsIncentive Funds

• Optimal Booking Formulas & HotelsOptimal Booking Formulas & Hotels

• OutlookOutlook

Presentation Outline

In January 2008, ACME and Tradeshow Week Research teamed to develop a destination and facility marketing and incentive fund benchmark study.

• The goal was to provide data and information on destination and convention marketing and incentive best practices.

• Survey invitations were sent via email to 492 convention marketing executives and 120 responded for a 24.3% response rate.

Key Themes

• Incentive funds are growing.

• There's a lack of visibility on “who's doing what”.

• There's disagreement on what to call these:

• "Incentive fund"

• "Subsidy"

• "Opportunity fund"

• "Marketing"

• "Discount"

• "Rental Offset" etc.

• It once was “my convention center is bigger It once was “my convention center is bigger than yours”.than yours”.

• Then… “my hotel package is larger”. Then… “my hotel package is larger”.

• Now it’s… Now it’s…

““Our opportunity fund is bigger and better”.Our opportunity fund is bigger and better”.

Key Themes

About the About the RespondentsRespondents

ACME Member:

Source: Tradeshow Week & ACME survey

Survey Respondents

60%

40%Yes

No

Organization type:

1. Convention Center / Venue 59%

2. CVB / Destination Marketing Org; & Other 41%


City “Tiers” That Best Describe Participant’s Destination

21%

56%

23%

0% 10% 20% 30% 40% 50% 60%

First tier / Gateway market: over 500,000sq. ft. convention center space

Second tier / National market: 100,000 to500,000 sq. ft. convention center space

Third tier / Regional market: less than100,000 sq. ft. convention center space

Incentive FundsIncentive Funds

Why The Rise of Incentive Funds?

• Growing supply – venues, hotels, etc.

• Constrained demand; very few new large association events are launched annually.

• Fragmented market – cities and venues don't merge.

• Lack of information makes the "incentive fund market" inefficient.

• The funds are raised and deployed based on partial competitive information.

• Your fund is likely too large or too small.

Facts On Discount Funds

• Average incentive fund: $414,000


• 55% of destinations maintain a separate fund to cover discounts and incentives for qualified conventions, exhibitions or other groups: (In 2007, the percentage was 53%.)

• Percentage of clients offered incentives, rebates, etc. (Average): 27.4%

• 72% of destinations that DO NOT maintain a separate discount fund offer discounts off of published facility or other services rates.

• Range in sample: $10,000 to $3,000,000

Fund Size Ranges


31%

22% 22%

13%11%

0%

5%

10%

15%

20%

25%

30%

35%

Under$100,000

$100,000 to$249,999

$250,000 to$499,999

$500,000 to$999,999

Over $1Million

Criteria Used To Qualify Groups For Funding or Discounts

16%

38%

41%

48%

52%

59%

68%

68%

82%

96%

0% 20% 40% 60% 80% 100%

Other

Prestige of group

What the client requests

Overall destination revenue potential

What the competition is offering

Repeat business potential

Time of year/availability

Convention center revenue potential

Total economic impact estimate

Total room nights


Source of Incentive Funds

CVB /DestinationMarketing

Organizationbudget

Conventioncenter budget

Hotel taxsegregated for

incentives

Special fundallocated by

hotel &hospitalitycommunity

Municipal /other

governmentgeneral fund

Other

57%

26%22%

19%

13%

20%

0%

10%

20%

30%

40%

50%

60%


Use of Incentive funds


ConventionCenter rent

Transport. Food &Beverage

Pre-signingsales

activities

AV Cashincentives

Other

93%

75%

35%

22%20% 20%

13%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Organization Responsible for Managing Incentive Fund / Voice in How Fund is Raised, Managed, Deployed

7%15%

38%0%

11%5%

20%5%

64%11%

80%64%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

CVB or similar destination marketing organization

Convention Center/Venue

City, county or other government department oragency

Authority

Hotel or hospitality organization (other than thebureau)

Other

Voice in How Fund is Raised, Managed, DeployedManages Fund



Incentive Funds Today

17%

24%

33%

26%

0% 5% 10% 15% 20% 25% 30% 35%

Was never adequate

Was adequate, but has not kept pace

Adequate for our needs, stays the sameeach year

Adequate and increasing regularly

On average, incentive funds have been in place for 7 years.

Fund Years in Existence Range


42%

20%

10%

20%

8%

0%

10%

20%

30%

40%

50%

Three orless

Four to six Seven tonine

Ten tofifteen

Over fifteen


Importance of Incentive Funds

1%

13%

29%

57%

10% 20% 30% 40% 50% 60% 70%

Not at all important

Moderatelyimportant

Very important

Extremelyimportant, critical

Importance of discounts, rebates or incentive funds to book major conventions, exhibitions and events:


Future of Incentive Funds

12%

4%

46%

38%

0% 10% 20% 30% 40% 50%

Plan to revise deployment criteria

Plan to decrease it

Plan to increase it

Will likely stay the same size

No25%

Yes, BOTH free exhibit and

meeting space66%

Yes, free meeting space

only8%

Yes, free exhibit space only

1%

Subsidized Events

75% of the convention marketers offered totally subsidized (i.e., at no cost to the client) exhibition and/or meeting space to at least one event in the last year.


Rebates and Discount Rates

Convention center discounts:


Range Response Rate

Not applicable, we do not discount 11%

1% to 4% 2%

5% to 10% 15%

11% to 20% 24%

21% to 30% 17%

More than 30% 31%Typical hotel room rebates to offset convention center rent:

Range Response Rate

Not applicable 11%

$1 to $4 10%

$5 to $10 67%

$11 to $15 9%

More than $15 3%

Optimal Booking Optimal Booking Formulas & HotelsFormulas & Hotels

Ideal Event Bookings: Size and Scope


Metric(Average)

Total peak night hotel rooms 1,776

Total hotel room nights, entire event period 7,187

Total attendance 6,893

Gross square feet of exhibit space required 174,834

Estimated economic impact $3,726,655

Venue gross revenue $574,947

Time of the year (month) January (Most commonly mentioned)

One event with 3,000

attendees26%

Don’t know31%

Three events with 1,000

attendees each43%

Ideal Event Booking Scenarios

Preferred Event Bookings: one event with 3,000 attendees or three events with 1,000 attendees each (but held throughout the year)?


Hotel Rates and Discounts

Which of the following have you or another organization done (or plan to do) differently related to working with hotels in your market?

Response Rate

Communicate the competitive issues related to convention, tradeshow and major event bookings

80%

Worked with owners/ managers/ investors to make the case for the need for more hotel properties or rooms

51%

Asked for hotel room rate decreases 44%

Asked for contributions or participation in incentive funds

43%

Asked for more information related to their pricing formulas and decisions

35%

Asked for hotel facility to reduce their hall or meeting space rent or services pricing

23%

Other 19%

Risks

• Competing just by buying business may reduce organizational culture, strength and innovation.

• Event producers need to realize they will increasingly lose power to marketers and buyers (exhibitors and attendees) - incentives inflate their sense of power.

• The exhibit and meeting space race is slowing, will incentive funds be the next wave of competition?

• Local press may start to follow this trend.

Growth & OutlookGrowth & Outlook

Slowdown1 – 2 Years

Expansion3 – 4 Years

Peak

Recovery2 – 3 Years

Where is industry in the cycle today?

Exhibition Industry Growth Cycle

Recovery:• Attendance grows faster than net square footage• Slow merger and acquisitions market• Negative national and local press

Expansion:• First attendance grows faster than net square

footage, then at about the same rate• Strong corporate travel and meeting spending• Hotel rates rise• More business-to-business events launched• Positive press – “events are back”

Peak:• Net square footage grows increasingly faster than

attendance• Strong exhibition and event mergers and

acquisitions• Strong corporate travel and meeting spending• Harder to launch business-to-business events• Strong convention hotel development

Slowdown:• Net square footage demand increases faster than

slowing attendance growth• Marginal new shows cancelled or postponed

Source: Tradeshow Week Research

Key Economic Indicators

• Corporate Profits

• Consumer Spending

• Unemployment

• Hotel Occupancy and RevPar

• Corporate Meetings

• Public Companies in Your Industries; Public Companies in the Exhibition/Events Industry

Today’s Positive Economic Factors

• International Growth and Weak Dollar

• Slowing M&A Environment, Reduces Consolidation

• Show Management Pricing Power

• “Still-buoyant lodging sector” (Financial Times, November 29th)

• Marketers are in Turmoil; Hard to Reach Buyers

• Significant Change Driving Attendance, Education Needs

Q&AQ&A

About Michael Hughes

• Associate Publisher & Director of Research Services, Tradeshow Week

• As head of Tradeshow Week’s Custom Research, Michael produces proprietary research, consulting and marketing projects for leading exhibition industry organizations around the world. He works closely with exhibition industry leaders, corporate exhibitors, entrepreneurs, investors and real estate developers to provide high-value strategic information, analysis and recommendations. His client’s include nearly all industry leaders in every segment of the industry as well as leaders in the investment and consulting community. Michael is frequently quoted by major newspapers and national magazines such as The Chicago Tribune; The Los Angeles Times; Newsweek; The New York Times; and The Wall Street Journal. In January of 2003, he was selected as a “Person to Watch” by min’s btob newsletter. Since 1999, Michael has been a presenter at over 70 industry conferences. He is also the research director and editor of Tradeshow Week’s syndicated Executive Outlook research surveys.

• Tel: (480) 483-4471• Email: [email protected]

Documents

Destination & Facility Marketing & Incentive Fund Survey ACME 2008 Conference Washington, DC Michael Hughes Associate Publisher & Director of Research