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ACME_TSW_Incentive_Fund_Survey2008

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					Destination & Facility Marketing
   & Incentive Fund Survey

    ACME 2008 Conference • Washington, DC


                     Michael Hughes

    Associate Publisher & Director of Research Services
Introduction
In January 2008, ACME and Tradeshow Week Research teamed to develop a
destination and facility marketing and incentive fund benchmark study.


   •       The goal was to provide data and information on destination and convention
           marketing and incentive best practices.

   •       Survey invitations were sent via email to 492 convention marketing executives
           and 120 responded for a 24.3% response rate.


Presentation Outline
       •   Key Themes

       •   Respondent Profile

       •   Incentive Funds

       •   Optimal Booking Formulas & Hotels

       •    Outlook
Key Themes

  • Incentive funds are growing.

  • There's a lack of visibility on “who's doing what”.

  • There's disagreement on what to call these:

         • "Incentive fund"
         • "Subsidy"
         • "Opportunity fund"
         • "Marketing"
         • "Discount"
         • "Rental Offset" etc.
Key Themes


• It once was “my convention center is
 bigger than yours”.

• Then… “my hotel package is larger”.

• Now it’s…

   “Our opportunity fund is bigger and
                 better”.
 About the
Respondents
Survey Respondents

ACME Member:



          40%
                                                                 Yes
                                                                 No

                                                      60%


 Organization type:

          1. Convention Center / Venue                59%
          2. CVB / Destination Marketing Org; & Other 41%


                                          Source: Tradeshow Week & ACME survey
City “Tiers” That Best Describe Participant’s
Destination


  Third tier / Regional market: less than                     23%
 100,000 sq. ft. convention center space

Second tier / National market: 100,000 to                                         56%
500,000 sq. ft. convention center space

First tier / Gateway market: over 500,000                    21%
     sq. ft. convention center space

                                            0%   10%   20%   30%    40%   50%   60%



Source: Tradeshow Week & ACME survey
Incentive Funds
Why The Rise of Incentive Funds?

• Growing supply – venues, hotels, etc.

• Constrained demand; very few new large association
  events are launched annually.

• Fragmented market – cities and venues don't merge.

• Lack of information makes the "incentive fund market"
  inefficient.

• The funds are raised and deployed based on partial
  competitive information.

• Your fund is likely too large or too small.
Facts On Discount Funds

• 55% of destinations maintain a separate fund to cover discounts
  and incentives for qualified conventions, exhibitions or other
  groups: (In 2007, the percentage was 53%.)

       • Average incentive fund: $414,000


       • Range in sample: $10,000 to $3,000,000


       • Percentage of clients offered incentives, rebates, etc.
         (Average): 27.4%


• 72% of destinations that DO NOT maintain a separate discount
  fund offer discounts off of published facility or other services
  rates.
                                 Source: Tradeshow Week & ACME survey
Fund Size Ranges

        31%
35%
30%                  22%         22%
25%
                                               13%
20%                                                          11%
15%
10%
5%
0%
       Under     $100,000 to $250,000 to $500,000 to      Over $1
      $100,000    $249,999    $499,999    $999,999        Million

                                 Source: Tradeshow Week & ACME survey
 Criteria Used To Qualify Groups For Funding or
 Discounts

                   Total room nights                                                    96%

     Total economic impact estimate                                              82%

Convention center revenue potential                                       68%

             Time of year/availability                                    68%

          Repeat business potential                                 59%

     What the competition is offering                         52%

Overall destination revenue potential                        48%

            What the client requests                   41%

                   Prestige of group               38%

                                Other      16%

                                     0%   20%    40%          60%          80%         100%
Source: Tradeshow Week & ACME survey
 Source of Incentive Funds

    60%          57%


    50%


    40%


    30%                         26%
                                           22%
                                                         19%                      20%
    20%
                                                                       13%

    10%


      0%
              CVB /     Convention      Hotel tax   Special fund    Municipal /   Other
           Destination center budget segregated for allocated by
                                                                      other
            Marketing                  incentives      hotel &     government
           Organization                              hospitality   general fund
             budget                                  community




Source: Tradeshow Week & ACME survey
 Use of Incentive funds

       100%        93%

        90%
                              75%
        80%

        70%

        60%

        50%
                                          35%
        40%

        30%                                            22%
                                                                20%      20%
        20%                                                                         13%

        10%

         0%
              Convention Transport.     Food &    Pre-signing   AV       Cash      Other
              Center rent              Beverage      sales            incentives
                                                   activities



Source: Tradeshow Week & ACME survey
 Organization Responsible for Managing Incentive
 Fund / Voice in How Fund is Raised, Managed,
 Deployed

                                 Voice in How Fund is Raised, Managed, Deployed
                                 Manages Fund


                                                                                      64%
   CVB or similar destination marketing organization                                        80%
                                                                 11%
                           Convention Center/Venue                                   64%
      City, county or other government department or            5%
                                                                        20%
                           agency
                                                             5%
                                            Authority             11%
     Hotel or hospitality organization (other than the     0%
                                                                              38%
                          bureau)
                                                                     15%
                                                Other           7%

                                                         0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Source: Tradeshow Week & ACME survey
  Incentive Funds Today

             On average, incentive funds have been in place for 7 years.




      Adequate and increasing regularly                                    26%

   Adequate for our needs, stays the same                                        33%
                each year
   Was adequate, but has not kept pace                                 24%

                         Was never adequate                    17%

                                          0%   5% 10% 15% 20% 25% 30% 35%


Source: Tradeshow Week & ACME survey
Fund Years in Existence Range

         42%
50%

40%
                      20%                      20%
30%
                                  10%
20%                                                           8%

10%

0%
      Three or   Four to six   Seven to      Ten to     Over fifteen
        less                     nine        fifteen

                                 Source: Tradeshow Week & ACME survey
Importance of Incentive Funds
  Importance of discounts, rebates or incentive funds to book major
  conventions, exhibitions and events:



       Extremely                                                      57%
    important, critical

       Very important                               29%

            Moderately                  13%
            important

  Not at all important          1%


                         10%           20%    30%    40%   50%   60%        70%

Source: Tradeshow Week & ACME survey
  Future of Incentive Funds



     Will likely stay the same size                              38%

                Plan to increase it                                    46%

               Plan to decrease it          4%


Plan to revise deployment criteria                12%

                                       0%   10%    20%   30%   40%     50%



Source: Tradeshow Week & ACME survey
Subsidized Events
 75% of the convention marketers offered totally subsidized (i.e., at
 no cost to the client) exhibition and/or meeting space to at least
 one event in the last year.

      No
     25%




                                                                Yes, BOTH free
                                                                  exhibit and
                                                                meeting space
                                                                     66%
              Yes, free         Yes, free exhibit
            meeting space         space only
                 only                  1%
                 8%

                                                    Source: Tradeshow Week & ACME survey
 Rebates and Discount Rates
 Convention center discounts:
                           Range                     Response Rate
            Not applicable, we do not discount            11%
            1% to 4%                                      2%
            5% to 10%                                    15%
            11% to 20%                                   24%
            21% to 30%                                   17%
            More than 30%                                31%
  Typical hotel room rebates to offset convention center rent:

                          Range                  Response Rate
              Not applicable                         11%
              $1 to $4                               10%
              $5 to $10                              67%
              $11 to $15                              9%
              More than $15                          3%
Source: Tradeshow Week & ACME survey
 Optimal Booking
Formulas & Hotels
 Ideal Event Bookings: Size and Scope

                                                          Metric
                                                        (Average)

   Total peak night hotel rooms                            1,776

   Total hotel room nights, entire event period            7,187

   Total attendance                                        6,893
   Gross square feet of exhibit space required           174,834

   Estimated economic impact                           $3,726,655

   Venue gross revenue                                  $574,947

   Time of the year (month)                              January
                                                  (Most commonly mentioned)



Source: Tradeshow Week & ACME survey
Ideal Event Booking Scenarios

Preferred Event Bookings: one event with 3,000 attendees or three
events with 1,000 attendees each (but held throughout the year)?

   Three events
     with 1,000
  attendees each                                         One event with
        43%                                                   3,000
                                                           attendees
                                                              26%




                        Don’t know
                           31%

                                            Source: Tradeshow Week & ACME survey
Hotel Rates and Discounts
Which of the following have you or another organization done (or plan
to do) differently related to working with hotels in your market?

                                                              Response
                                                                Rate
   Communicate the competitive issues related to                80%
   convention, tradeshow and major event bookings
   Worked with owners/ managers/ investors to make the          51%
   case for the need for more hotel properties or rooms
   Asked for hotel room rate decreases                          44%
   Asked for contributions or participation in incentive        43%
   funds
   Asked for more information related to their pricing          35%
   formulas and decisions
   Asked for hotel facility to reduce their hall or meeting     23%
   space rent or services pricing
   Other                                                        19%
Risks
 • Competing just by buying business may reduce
   organizational culture, strength and innovation.



 • Event producers need to realize they will increasingly lose
   power to marketers and buyers (exhibitors and attendees) -
   incentives inflate their sense of power.



 • The exhibit and meeting space race is slowing, will
   incentive funds be the next wave of competition?



 • Local press may start to follow this trend.
Growth &
 Outlook
Exhibition Industry Growth Cycle

                                                     Recovery:
                                                     • Attendance grows faster than net square footage
                                                     • Slow merger and acquisitions market
                                                     • Negative national and local press
         Peak                          Slowdown
                                                     Expansion:
                                       1 – 2 Years
                                                     • First attendance grows faster than net square
                                                       footage, then at about the same rate
                                                     • Strong corporate travel and meeting spending
                                                     • Hotel rates rise
                                                     • More business-to-business events launched
                        Where is                     • Positive press – “events are back”
                     industry in the
                                                     Peak:
                      cycle today?                   • Net square footage grows increasingly faster than
                                                       attendance
                                                     • Strong exhibition and event mergers and
                                                       acquisitions
                                                     • Strong corporate travel and meeting spending
       Expansion                        Recovery     • Harder to launch business-to-business events
       3 – 4 Years                     2 – 3 Years   • Strong convention hotel development

                                                     Slowdown:
                                                     • Net square footage demand increases faster than
                                                        slowing attendance growth
                                                     • Marginal new shows cancelled or postponed


Source: Tradeshow Week Research
Key Economic Indicators

• Corporate Profits


• Consumer Spending


• Unemployment


• Hotel Occupancy and RevPar


• Corporate Meetings


• Public Companies in Your Industries; Public Companies in the
Exhibition/Events Industry
Today’s Positive Economic Factors

• International Growth and Weak Dollar


• Slowing M&A Environment, Reduces Consolidation


• Show Management Pricing Power


• “Still-buoyant lodging sector” (Financial Times, November 29th)


• Marketers are in Turmoil; Hard to Reach Buyers


• Significant Change Driving Attendance, Education Needs
Q&A
About Michael Hughes
•   Associate Publisher & Director of Research Services, Tradeshow Week

•   As head of Tradeshow Week’s Custom Research, Michael produces proprietary
    research, consulting and marketing projects for leading exhibition industry
    organizations around the world. He works closely with exhibition industry
    leaders, corporate exhibitors, entrepreneurs, investors and real estate
    developers to provide high-value strategic information, analysis and
    recommendations. His client’s include nearly all industry leaders in every
    segment of the industry as well as leaders in the investment and consulting
    community. Michael is frequently quoted by major newspapers and national
    magazines such as The Chicago Tribune; The Los Angeles Times; Newsweek;
    The New York Times; and The Wall Street Journal. In January of 2003, he was
    selected as a “Person to Watch” by min’s btob newsletter. Since 1999, Michael
    has been a presenter at over 70 industry conferences. He is also the research
    director and editor of Tradeshow Week’s syndicated Executive Outlook
    research surveys.

                              • Tel: (480) 483-4471
                     •   Email: mhughes@reedbusiness.com

				
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