Conventions expected to become growth market in 2013
Tuesday, March 26, 2013
Many organizations are focused on what the remainder of 2013 will bring in terms of the corporate travel industry. While emerging markets in the Asia-Pacific region have long been of interest to companies pursuing aggressive expansion plans, other firms are looking a little closer to home for new opportunities. One area that is of particular interest to many service providers in the hospitality industry is the conference and convention space. In cities such as Chicago, Ill., competition for dominance in this crowded sector is heating up, according to Business Travel News.
Real estate developers in the Windy City are moving to reclaim some of the ground lost to cities such as Las Vegas, Nev., and Orlando, Fla., by introducing additional hotel room inventory as part of major expansion plans. The city's McCormick Convention Center looks set to become the beating heart of Chicago's burgeoning conventions sector, as construction of a major new adjacent property is currently underway. Owners of the McCormick Center hope the new building will boost Chicago's image as a destination for events and conferences, and they believe the addition of new hotel inventory will encourage organizers of midmarket conventions to use the facility. This, in turn, could bring an additional 80,000 conference attendees to Chicago every year, which would be a significant boost to the city's economy.
Officials at the Metropolitan Pier and Exposition Authority claim the expansion of the center will help Chicago become one of the premier cities for conventions in the U.S., and aid in the development of many downtown businesses. In the past, the Windy City has been eclipsed by smaller cities such as Indianapolis, Ind., which have proven fiercely competitive in the midmarket events industry.
"Chicago has been whipsawed," Mark Eble, consulting vice president of hospitality research consultancy PKF, told the news source. "Second- and third-tier cities are nipping at Chicago's heels in ways they never have before. When it comes to competing with Orlando, Las Vegas, Miami or New Orleans, with this huge space at the McCormick, there has only been several hundred hotel rooms at the Hyatt there. It is remarkable in some ways that Chicago has done as well as it has."
A bigger slice of the pie
While the addition of hotel inventory at the McCormick center will no doubt be good for Chicago's economy, it may prove less beneficial to executives flying into the Windy City for conferences. The new facility will no doubt offer business travelers a convenient downtown location, but this may adversely affect average nightly rates for corporate suites. As such, budget-conscious travel management professionals may want to explore viable alternatives to chain hotels, such as serviced apartments. With several properties in cities like Chicago, this competitive form of accommodation could become increasingly popular with organizations seeking to reduce their business travel expenditure.
Chicago is not the only city banking on the midmarket conference and events sector. According to the Nashville Business Journal, several organizations in Music City are campaigning for new tax incentives to encourage event organizers to bring their conventions to Nashville.
City officials are considering proposals to introduce a new tax on goods, such as alcoholic beverages and food, and offer discounts to groups considering using the city's convention center, but responses to the plans have been met with a mixture of enthusiasm and skepticism. Some local business owners have expressed their support for the new tax, provided additional traffic to the convention center will result in increased business.
There can be little doubt that the convention and conference sector is likely to remain one of the most competitive markets of the business travel industry in the coming months. Regardless of whether they are heading to New York or Nashville, savvy executives may want to explore alternatives to chain hotels like serviced apartments to minimize expenditure without compromising on quality.