Consultants predict people will flock to conventions again in search of human contact, Cleveland convention center seeks $30m to accommodate them

Hotel consulting firm CBRE issued a paper on Friday on “When Will Convention and Group Demand Come Back?”, and its answer, unsurprisingly, isn’t “never, we should all find a different line of work.” The report acknowledges that the U.S. hotel industry is “facing its largest decline in demand in history,” with revenue per room in top U.S. markets down more than 80% compared to last year. But it then goes on to argue that the hotel business “may be out of the hole in a matter of three years.”

The reason for the optimism? No, it’s not the imminent arrival of Covid vaccines, nor a new hotel partnership with Lysol or Clorox, nor a sudden burst of public enthusiasm for hotel restaurant meals served in sealed plastic containers. “Once the pandemic ends, and it will end, these employees will need to come back and visit the office to collaborate with co-workers and build culture,” says the report, arguing that business and their employees will get so fed up with Zoom meetings, the wonders of Microsoft Teams, and Cisco WebEx that they will “demand more opportunities to connect in person … and conferences and conventions are ripe to benefit from the increased demand.”

After a lengthy review of the calamity the coronavirus pandemic has inflicted on hotels — particularly the large, big city downtown hotels that rely on group and convention business — the CBRE report then pivots to insisting that more people working at home will in fact stimulate more business travel. Remote workers, it notes, often feel isolated and miss non-verbal cues from coworkers, things that presumably can be cured with a quick weekend trip to a convention hotel.

The report then goes on to assert that “major conferences have already seen unbelievable growth over the past decade.” The evidence for that assertion? Exactly two cases: Salesforce’s annual “Dreamforce” conference South By Southwest in Austin, Texas.

The Dreamforce event, reports CBRE, has grown from 20,000 to 170,000 attendees in just seven years, in parallel with the success of Salesforce’s software and services. That’s been great news for San Francisco hotels and the Moscone Convention Center. But the actual story is a little more complicated. You see, Salesforce reported 171,000 attendees at the 2019 event. And 171,000 at the 2018 version. And for 2017, yes, it reported attendance of 171,000. Which was exactly the same number of attendees that the Salesforce blog said were there in 2016. It turns out that Salesforce reported 150,000 attendees in 2015.

So rather than booming growth over seven years, the Dreamforce conference has actually stalled out at the magical 171,000 for a bit. That’s still a whole lot of people, right? Yes — but not all of those people are visiting from out of town and filling San Francisco hotel rooms. The San Francisco Business Journal reported that the 2019 conference generated a total of 132,595 hotel room nights. That’s less than one room night per attendee — not what we’d see if most attendees were booking multi-night stays. In fact, a great many of the Dreamforce attendees are from Silicon Valley to the south, and the greater San Francisco metro area. They can drive, or train, or BART to the conference, and go home at night. And in 2020, they didn’t have to do even that — the 2020 conference was fully virtual.

Still, Austin’s annual South by Southwest event makes the case that people want to get together, doesn’t it?  SXSW’s “Event Statistics” for the 2019 two-week collection of conferences, events, and live music performances do show a total attendance of 417,400, although that may double-count some who attended more than one of the main conference, the music showcase, the film festival, the gaming event, the Wellness Expo, and SXSW EDU. But that same SXSW statistics summary shows a total of 55,339 hotel room nights booked. Again, lots of the attendees at SXSW are locals and daytrippers, not distant overnight visitors.

Indeed, the larger stories of Dreamforce and SXSW make precisely the opposite point from what the CBRE authors had intended. Americans do like to get together, for a variety of events and experiences. But that doesn’t necessarily translate into hotel demand. And the single best-attended portion of the whole SXSW enterprise is the music festival — accounting for 232,258 attendees in 2019, or 56 percent of the total — making it a better indicator not of business travel demand, but rather a measure of the demand for live music.

All this matters because even amid a pandemic that has turned a slow decline in convention demand into a total collapse, the convention industry is still seeking more public money to fund expansions. Just look to Cleveland, where the local convention bureau is arguing that Cuyahoga County should spend $30 million to refit its failed “Global Center for Health Innovation” to work as part of the adjacent convention center. Chicago-based Merchandise Mart Properties had promised some 300,000 medical meeting attendees annually and $990 million a year in “economic impact”; when that didn’t transpire, MMPI bailed on the project, and Cuyahoga County renamed the mart building the “Global Center” and added a $230 million Hilton-branded hotel fully owned by the county to promote conventions.

Now, the infamous Conventions, Sports & Leisure International (CSL) — the same consultants who once projected that Montreal would be an excellent baseball market without bothering to account for Canada and the U.S. using different dollars — have forecast that turning the failed showroom building into more meeting space for the Huntington Convention Center would bring $110 million in annual economic impact to the area. And all from an investment of just $30 million in county money, which would come from … somewhere. Because if one thing is a given in the convention industry, it’s that if at first you don’t succeed, just keep doubling down in hopes that doing the same thing and expecting different results will surely work eventually.

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