These are challenging times we live in! The events over the past several months have left a feeling of uncertainty over an otherwise generally healthy conference center industry. Market inconsistencies seem to have never been more pronounced, from the difficulties facing centers in the New York market, which had a significant portion of their market derived from financial services firms, to the strength of centers in the “oil patch” where the economy is booming. Overall, most centers seem to be holding their own but are starting to see meetings being postponed or cancelled due to corporate fear of deeper economic problems. In addition, the problem of attrition is surfacing for the meetings that are being held.
Fortunately, there seems to be a growing sense, as of this writing, that a bottoming out may be occurring in the financial markets which is the first step in an overall general recovery. In addition, the historically low value of the dollar is making our industry more desirable for foreign visitation, while international meetings for US firms are economically unviable. New supply of conference centers is being greatly restricted due to the tight financial markets. This only serves to make existing centers more valuable, even though capitalization rates on asset transactions are rising. As a practical matter, new development in the near term will be largely focused on academic or government subsidized projects as that type of economic boost will be necessary to achieve the required capital to move a project forward.
The industry’s response to these difficult headwinds once again will require discipline, courage and commitment to the concept. Should a true recession result from this stress in the financial system (and the media’s unending assertion of disaster), we must do all we can to avoid the pitfalls we hopefully learned from other slowdowns; namely, cutting rates, lowering service levels and deferring capex. Management and owners have the challenge of not overreacting for the long term benefit of the asset. Hopefully, the positive forces at work will counter the negative and we will maintain an overall balance to the market.
The 2008 Trends in the Conference Center Industry report contains 61 pages of operational, marketing, labor, and financial statistics for this specialized niche within the lodging industry. To purchase a copy of the report, please visit our webstore at www.pkfc.com/store.
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Dave Arnold is C.E.O. East of PKF Consulting and is located in the firm’s Philadelphia office. He also serves as an industry advisor to the I.A.C.C. Board of Directors.
