A new study by the Chicago Convention and Tourism Bureau suggests the city is making progress in trying to reduce convention costs while still offering more exhibition space than Orlando or Las Vegas.
You may remember that 18 months ago, Mayor Richard Daley, the Metropolitan Pier and Exposition Authority and the convention and tourism bureau trumpeted the news that labor and the city’s convention hotels were uniting to hang on to the billion-dollar convention industry.
Labor unions working at McCormick Place agreed to work-rule changes that would allow some exhibitors to set up their own displays, reduce overtime charges and generally create a more collegial atmosphere between workers and exhibitors.
The city’s convention hotels agreed to cut their room rates by 10 percent and set aside larger blocks of rooms for shows that occasionally overwhelm the city’s supply.
Competition from Orlando, Atlanta and Las Vegas made it imperative that major steps be taken to prevent events like the just-concluded International Housewares Show from packing their collective bags and heading south.
In addition, the impact of the Internet was only beginning to show. Increasingly, some industries are turning to virtual shows via computer, which allows them to reduce costs for their members. No hotel rooms, meals or transportation expenses are incurred for the on-line shows.
In its study of the nation’s convention industry, the convention bureau found that McCormick Place offers more exhibit space than either Orlando or Las Vegas–and will still offer more space when those two cities complete expansions within the next three years.
More than 80 cities responded to the study produced by Rich Carollo, senior manager of research for the convention bureau.
“The information they provided allowed us to take a closer look at the overall trends throughout 1999 within the nation’s convention and trade show industry and ultimately understand where Chicago is positioned,” he said.
The study found the budgets of most convention bureaus are significantly larger–Chicago’s $10.5 million budget ranks it 15th. More significant, the study showed that Daley’s efforts to contain labor costs are having an effect.
Two years ago, Chicago’s labor costs were the fifth highest in the country. Last year, the study found Chicago had dropped to seventh place. San Diego, Atlantic City and San Jose, Calif., had passed Chicago, the study found.
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In 1999, the top seven cities were New York, San Francisco, San Jose, Atlantic City, Philadelphia, San Diego and Chicago. Costs ranged from an average of $73.43 an hour in New York to Chicago’s $62.52.
In 1998, the top seven were San Francisco, New York, Philadelphia, Anaheim, Calif., Chicago, Boston and Los Angeles. Costs then ranged from San Francisco’s average of $72.60 an hour to Los Angeles’ $55.56.
More important, the study found that labor cost increases have slowed in Chicago. Labor charges rose 3.7 percent in Chicago in 1999, compared with 13.7 percent in New York, 29.9 percent in Atlantic City and 42.5 percent in San Diego. Even Philadelphia’s costs rose more than Chicago’s.
In addition, Carollo found the city’s restaurants have done their part to contain costs. The study found that the average meal cost, which includes breakfast, lunch, dinner and a 15 percent tip, fell almost 1 percent to $80.78 a day. That helped drive the city’s ranking down to eighth place from third as other cities’ costs escalated.
The same cannot be said for the city’s hotel industry.
The study found that room costs jumped 12.4 percent last year to an average of $199 per night despite the industry’s pledge to Daley that its members would trim rates by 10 percent.
In addition, the study found the city’s hotel costs remained in fourth place. The three cities that cost more two years ago, New York, Boston and Washington, still cost the most.
Perhaps an explanation is in order.
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