Uncertain Future for Authority Built on Convention Business
By: Eric Convey
Article was first featured on WWLP.com
With a 1,000-bed field hospital for COVID-19 patients occupying its main hall, the Boston Convention and Exhibition Center is full for now, but numerous analyses suggest that once the hospital closes it will take the BCEC months or longer under a best-case medical scenario to resume its role as a major driver of Boston’s tourism economy.
Business travel will return slowly after COVID-19 begins to loosen its grip on the country, analysts said, and the large-group excursions that support the BCEC and the clusters of hotels that serve it will be among the last sectors of the economy to recover.
“If we all need six feet of separation, how do you do a ballroom? How do you a large plenary session?” asked Jan Freitag, a senior vice president at travel consultancy STR. His firm expects the travel business to return in three waves: leisure, business and, finally, groups and meetings. The last category includes conventions, Freitag said.
Travelers to Massachusetts directly spent more than $24 billion in the state in 2018, according to a study prepared by a travel industry trade group for the state Office of Travel and Tourism. A rule of thumb widely accepted in the industry is that the travel market for a city like Boston is roughly one-third conventions and exhibitions, one-third business-related and one-third tourism.
Three different officials at the Massachusetts Convention Center Authority, which runs the BCEC, didn’t respond to numerous phone calls from State House News Service seeking information about the economic impact COVID-19 would have on the quasi-public authority.
“Future is Unknown”
The authority, which also operates the Hynes Convention Center in Boston, MassMutual Center in Springfield and the Boston Common Parking Garage, is still posting press releases about its field hospital, called Boston Hope, and highlighted the early May announcement that the national NAACP was postponing its planned July convention at the BCEC, but the last posted board of directors meeting was March 12. Its events page still lists eight scheduled conventions in July and ten in August, but it’s not clear how many of those events will actually occur.
In Boston, the discussion has at least temporarily shifted away from the authority’s plans to sell the Hynes and invest in an expansion of the BCEC to a more fundamental question: when can the convention business realistically expect to return to pre-pandemic levels of activity?
The Association for Medical Imaging Management, for instance, still plans to hold its mid-July annual meeting at the Hynes, which the authority estimates will bring 1,400 people to Boston. But the association is making contingency plans in case large group gatherings are still prohibited by Gov. Charlie Baker into the summer. “The situation is dynamic, and the future is unknown,” the group says on its website.
Following the early March cancellation of just one convention, albeit a big one — the annual Seafood Expo at the BCEC, authority executive director David Gibbons issued a statement saying the result would be “a significant financial loss for the Massachusetts Convention Center Authority, our vendors and contractors, hotel and restaurant partners, and thousands of tradeshow and hospitality workers who participate in putting on a show of this magnitude.”
Gibbons did not quantify the extent of the damage, but the Convention Center’s dependence on events is detailed in its public financial statements. Most convention activity occurs from spring through fall, so the pandemic is striking at what usually is a busy time for venues.
For the fiscal year that ended June 30, 2019, the BCEC reported operating revenue of $43 million. Roughly half came from rent charged to event organizers; the other half came mostly from fees for services such as staging charged to exhibitors and sales of beverages and other items to event attendees.
Among the largest expenses for the BCEC’s parent, the Massachusetts Convention Center Authority, is payroll, which came in at $24 million for fiscal 2019. Payments to contractors providing everything from carpet cleaning to security services totaled $28 million in fiscal 2019. The Convention Center Authority has about 430 employees and in 2019 hosted 336 events with over 830,000 attendees, generating 800,000 hotel room nights and $870 million in economic impact.
One of the challenges the convention industry faces grappling with any threat that forces the postponing of events is that a long-term disruption will pit convention-organizers seeking to reschedule against each other in the pursuit of slots. Often, organizers opt to cancel — a decision that costs the industry’s suppliers business forever.
During the current crisis, a survey of 164 convention executives conducted by the Center for Exhibition Industry Research (CEIR) found that more than half of events that couldn’t be held when originally scheduled because of COVID-19 have been canceled outright rather than postponed.
Cathy Breden, the group’s chief executive officer, said as bad as current cancellations are, the prospect for even greater damage looms. “If there’s another lockdown in the fall, shows may not resume until June of next year,” she said.
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