The Exhibition Business Is In the Dumper. So, Is That Good or Bad for Dallas?
Earlier this week, Dallas-based Center for Exhibition Industry Research released the latest bit of bad news for the exhibition biz: It was down 12.5 percent in 2009 -- or, "four times larger than the largest previous drop, which was 3.1 percent in 2008." Soon as I saw that, I called its president and CEO, Doug Ducate, to ask him for more specifics -- as in, how'd Dallas fare amidst such a significant downtown?
It took him a while to get back to me, but when he did, Ducate said, sorry, but he didn't have the individual-destination stats and wouldn't for a while. But, he said, "I don't think anyone had a good year last year." He laughed, and not because he found it hilarious. As I'd discover over the course of a half-hour conversation with Ducate, he punctuates everything with a laugh, good news or bad. He continued: "But given the recent numbers on hotel occupancy were also off, I can only speculate the [Dallas Convention Center's] days were down."
After the jump you'll find some highlights from my talk with Ducate, who's full of hot sports opinions about how the city should operate the Dallas Convention Center -- especially in light of convention center boss Frank Poe's departure for Atlanta -- and how Dallas is, in fact, well-positioned to take back the convention business that decamped for more exotic locales.
You, as well as anyone, probably know what's in store and what's at stake for the exhibition business here. I'd forgotten, till I was recently reminded during reporting on an item about Memorial Auditorium, that the city had hired HKS to do a facilities assessment at the Dallas Convention Center. What do you expect will come of that?
My understanding with the HKS study is that it's looking at how to convert some existing space at the convention center into usable meeting rooms, which has been one of the criticisms of the building for some time. It's an unfortunate trade-out. I told Frank we're one of only five buildings in the country with one million square feet in exhibition space, and we're going to turn some of that into meeting rooms. It takes the edge off, no question. We've always had on the agenda the need for more meeting space, and the hope was we could build 250,000 square feet into the convention center hotel.
But, frankly, losing Frank is the biggest disappointment. His coming back to Dallas was a huge coup and a real plus, and we got a good bounce off the PCMA [Professional Convention Management Association] being here, and Frank is so well-known and so well-thought-of it's a really sad loss. But lucky him. He got a nice opportunity. We're certainly going to be challenged by his departure. He has so many responsibilities when you really look at it: the hotel, the development around the hotel, the HKS study, Farmers Market and day-to-day oversight of the convention center and, now, the Super Bowl, which is the most time-consuming event. It just seems like the time when you'd like the guy who sits first chair in the orchestra running your building, and it's unfortunate he's leaving.
The city has said it will conduct a nationwide search to replace him. What do you think they should do?
Dallas has talked about privatizing the building, and if there was a time to do that it's now. You need so much talent in the sense of: Who do you know that's done all these things -- built a convention center hotel and a connector [to the convention center] and built out meeting rooms and developed four acres around a hotel? There may not be one Superman out there. There are only two guys in the industry who can do this: Frank and Tom Mobley, the former general manager of Chicago's McCormick Place Convention Complex who's now with Global Spectrum. I'd offer him a two-year deal to come back and get the Super Bowl running and the convention center hotel built and get meeting rooms built out while we figure out what the hell to do.
Despite the long-running downturn in the exhibition business, are you optimistic it will rebound sooner than later?
From the standpoint of going forward, yes. The bigger question is: Do we think the industry will return to pre-2000 levels? It grew at 7 percent compounded annual growth rate from 1986 to 2000, and we believed it would continue beyond that. We had the setback of '01 and '02, and looking at '03 to '07 we were back on track, and once again all the energy and all the belief was we were back to that historic growth rate of '86 to 2000. And now, bam, we're down again, and you get leery of that long-term forecast. [He laughs.]
I'm not ready to say Heywood Sanders is right, but I am sure right now he's celebrating. He's one of the frew people I know who takes joy from bad news. [He laughs.] But the issues for us are just huge, and there's obviously more competition for marketing, there's more emphasis placed on limiting travel as opposed to expanding travel, and there's consolidation within industries.
One thing I've been seeing quite often in recent days -- especially after you released your numbers this week -- is that telecommuting companies are once more making a push to replace the dying exhibition business.
Certainly it's gotten a lot of momentum, but this is about the third time they've tried that. Maybe the third time's a charm, but I remember when Holiday Inn put in all those rooms with teleconferencing capability and thought everyone would flock to that. But it's not a replacement for face-to-face, and what's happened is the exhibition industry is the last place for face-to-face marketing. Companies aren't putting people on the road going door to door to tell 'em they love them. They do that every day with e-mail. And the customers don't want quarterly visits. And you put that together and say, "Well, then, when do buyers and sellers see each other?" And that's at the annual meetings of associations and at the big trade shows. If it all winnows down to that, the business will still be here.
But in terms of what the growth of that industry will be, most of the evidence is trending toward boutique events that are more specialized as opposed to mega-events. Who knows what's going to happen? We're in uncharted waters. There's no way to tell what the hell's going to happen. When you consider that two-thirds of the B2Bs are owned by associations, they're going to continue to meet. I don't care what happens with technology. They are going to continue to gather, and in that sense that base of the business is probably protected. That part funded by private equity money. I can't gather they have the appetite for this end of the business any longer. ...
We've always laughed about this industry. We do things the same way today we did 40 years ago. But in the next 26 months, things will change. We don't know how, but they will. I don't think there's a question.
As to how Dallas fits in, we've got a great opportunity. With all the emphasis on efficiency, Dallas jumps off the map sitting in the middle of the country with great weather and a great airport and a new hotel. As everyone pulls back from more exotic destinations, this is the time for Dallas and Atlanta. We were killed back when everyone loved Orlando and Las Vegas, but the benefits here now outweigh what those cities have to offer.
Sure, and if only we had casinos here, imagine.
That's the one thing Laura Miller did want to do. She did want to tear down Reunion Arena and put a casino there.
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