Hospitality business is waning

December 6, 2009
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The head of the Convention and Visitors Bureau said last week that business in the local hospitality industry should be flat for the coming year. But that lackluster projection hasn’t deterred CVB President Doug Small from outlining his organization’s strategy for 2010.

“We need to zig when everyone else is zagging,” he said.

Small told the Convention and Arena Authority last week that the bureau will become more aggressive in pursuing business for the convention center and that the sales team expects to reach 95 percent of its goals next near. He said meeting revenue was down by 7 percent here this year, but other comparable markets were down by more. Milwaukee, for instance, was off by 22 percent from last year, he said.

“We’re getting our looks, and more importantly, we’re getting our contracts,” said Small.

CVB Executive Vice President George Helmstead said the bureau has locked in 30 meetings at DeVos Place in just the last two months, worth 12,000 room nights for downtown hotels.

The largest of those meetings is the Fraternal Order of Eagles convention in July 2012. The FOE will bring more than 2,500 delegates to DeVos Place. They will spend an estimated $4.2 million over the four days they are here.

The FOE will bring more delegates and likely more money to the city than the Religious Conference Management Association did last January for its four-day annual meeting. About 1,300 attended the RCMA convention, which the CVB has designated as the most important meeting to come here to date because of the group’s potential for booking future meetings.

Helmstead said the bureau has been working to land the FOE meeting since 2003 — back when the Grand Center was being transformed into DeVos Place. But the FOE told the bureau then that downtown didn’t have enough hotel rooms to meet its needs. The JW Marriott didn’t exist in 2003.

Still, the bureau continued to pursue the FOE from 2004 to 2008, but Helmstead said the organization’s meeting planner felt the city was too small for its group. Then the FOE board of directors met here last month for one of its regular meetings and decided at that gathering to select the city as host for its 2012 convention.

Helmstead said board members toured the city, went to the Grand Rapids International Wine & Food Festival being held at DeVos Place, and attended a Grand Rapids Griffins hockey game at Van Andel Arena.

In his role as chief administrative officer and general counsel for the Van Andel Institute, a medical research and education facility, CAA Chairman Steven Heacock learned that most medical research areas have dozens of organizations working within very specialized sections. He said he also learned that many of those groups are open to holding their annual conferences here.

“We’re high on the list for any group under 5,000 (attendees),” said Heacock. “That’s an area that I think we will do very well.”

DeVos Place can use the additional business. A third of the way through the fiscal year, the convention center had lost $308,359 and is on track to lose $777,651 for the year. The building had been projected to lose nearly $840,000 for the fiscal year, but the losses through the first four months were lower than the initial forecast.

“What you’re looking at here is the worst possible number,” said SMG Regional General Manager Rich MacKeigan, also CAA executive director. “But it’s a lot better than what I’m hearing from other venues throughout the country.”

But SMG Finance Director Chris Machuta said DeVos Place had a strong performance in October. The building hosted 69 events, drew 48,756 people to those events, and generated a surplus of almost $127,000 for the month.

“It was a successful month,” he said. “Things are starting to point in the right direction. Spending seems to be coming back.”

Machuta said the arena had a solid October, too, as the building cleared $178,513 from just 10 events, which included a concert from Taylor Swift. After four months, the arena was $244,626 in the black and on track for a surplus of $911,550 for the year. The initial forecast had the arena’s year-long surplus pegged at $1.1 million.

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