According to the recently released Trends in the Conference Center Industry report prepared by Colliers PKF Consulting USA, the average conference center in the survey sample reported a decline in net operating income of 43.5 percent in 2009.
That compares to an average hotel income decline of 35.4 percent for the nation as a whole.
“During economic recessions it is not uncommon to see associations and corporations cut their meetings budget,” said Dave Arnold, CEO East, for Colliers PKF Consulting USA. “However, never before have we seen the stigma attached to organizations that attempted to hold valuable training and planning conferences. With the average conference center occupancy level falling below 50 percent, the negative impact is obvious.”
Since the majority of conference center guests stay as part of a package plan, total conference center revenue is typically measured on a dollar-per-occupied-room basis (POR). In 2009, the conference centers in the Trends survey sample reported a 9.2 percent decline in total revenue POR. Executive and resort conference centers, the two property types most dependent on business organizations as the source for their meetings, suffered the greatest declines in total revenue POR. On the other hand, total revenue POR at college/university centers fell just 2.4 percent, suggesting the relative stability of educational institutions during the economic recession.
To combat the drop in conference demand, conference centers turned to local organizations for business. Locally based conference attendees increased 2.4 percent in 2009. Conversely, guests attending conferences of a national scope declined 1.9 percent. The greater dependence on locally based business contributed to the decline in rooms occupied.
Consistent with historical recovery patterns, conference center managers expect occupancy levels to rise, but room and package rates to lag. On average, the managers in the survey budgeted for a 4.8 percent increase in occupancy in 2010. On the other hand, their expectations for CMP rate movement are a minimal increase of just 0.5 percent.
“It is still a buyer’s market in the short term. This is good news for meeting planners, but still presents challenges for property owners and operators,” Arnold said.
