Trade Show Executive

“The traditional
model of operating
a convention center at
a loss with the premise
of bringing outside
dollars into a community
is not sustainable,” said
James Rooney, executive
director, Massachusetts
Convention Center
Authority (MCCA).
The model was
created during the last
half of the 20th century when
trade shows expanded dramatically
in the U.S. Cities of all sizes built
first-class convention centers, and the
inventory of meeting and exhibit space
skyrocketed to meet the demand.
“Destinations bought into the idea
that all the economic impact generated
by events is reward enough for building,
maintaining and upgrading facilities.
It was acceptable for convention centers
to operate as loss leaders,” said Rooney.
However, demand slowed noticeably
after 9/11 and the recession, as growth
dropped from the high double digits to
single digits, or fell into the red. Domestically,
new show launches were rare. Some
shows in sectors under pressure fell by the
wayside. As sales and other tax revenues
lagged during the recession, the pressure
from local government officials increased
as cities sought ways to decrease expenses
and increase revenue.
Today, lower
sales and tax revenues
continue to plague cities.
To make up for the shortfalls,
budgets for city services such as
police, fire, education and road maintenance
continue to be slashed. “Many
destination leaders originally agreed to
invest in building many of these centers
as economic generators, not net revenue
generators,” said Victoria Isley, executive
vice president and chief operating officer,
Destination Marketing Association International
(DMAI). “Somehow that was
forgotten between the economic downturn
and a saturation of new buildings.”
At the same time, some associations
have dealt with decreasing membership
and lower attendance at their annual
conventions. Trade show managers, facing
cost pressures of their own, are driving
hard bargains including demands for
highly discounted rent or free rent — or
they will take their show elsewhere. “These
groups are looking for more concessions
in rent as they focus on increasing revenues,”
said Rooney. “I don’t blame them.
They are just trying to make the best
business decisions for their organizations.”
“Meanwhile, government officials are
questioning the convention center lossleader
model, and it’s getting harder and
harder to justify the value,” said Rooney.
“It’s getting tougher to sustain subsidies
and maintain top-notch facilities with
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