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%
Source: Tradeshow Week & ACME survey
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
Source: Tradeshow Week & ACME survey
• 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
Source: Tradeshow Week & ACME survey
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: Tradeshow Week & ACME survey
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%
Source: Tradeshow Week & ACME survey
Use of Incentive funds
Source: Tradeshow Week & ACME survey
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
Source: Tradeshow Week & ACME survey
Source: Tradeshow Week & ACME survey
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
Source: Tradeshow Week & ACME survey
42%
20%
10%
20%
8%
0%
10%
20%
30%
40%
50%
Three orless
Four to six Seven tonine
Ten tofifteen
Over fifteen
Source: Tradeshow Week & ACME survey
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:
Source: Tradeshow Week & ACME survey
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.
Source: Tradeshow Week & ACME survey
Rebates and Discount Rates
Convention center discounts:
Source: Tradeshow Week & ACME survey
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
Source: Tradeshow Week & ACME survey
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)?
Source: Tradeshow Week & ACME survey
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]