Bigger than Auto
By Craig Guillot
It’s not a well-known fact, but meetings have a bigger economic impact than the auto or gambling industries. Just ask the boat captains, restaurant servers and small business owners in cities such as New Orleans and Grand Rapids.
As a fifth generation boat pilot, Troy Manthey knows very well the impact that meetings and conventions have on the economy. His family has been operating tourist passenger vessels since 1884. Manthey entered the business in New Orleans in 1978 and for the past 10 years has run a 150-passenger and a few 20-passenger yachts out of Tampa, Fla. Conventions alone account for up to 40 percent of his business.
Those in the industry have long appreciated the economic impact meetings provide, but a recent study painted a clear picture of just how important the industry is to the welfare of many Americans. In 2009, meetings generated a total economic impact of more than $900 billion. In terms of contribution to the GDP and number of workers employed, that makes it bigger than high-profile industries such as air transportation, gambling and auto manufacturing—a fact not many people are aware of, except the millions of people who work in the industry every day.
Behind the Numbers
Manthey is one of the 1.7 million workers the industry supports, according to this year’s Economic Significance of Meetings to the U.S. Economy study by the Convention Industry Council. And his business is one of hundreds of thousands of small businesses around the country that exist largely off the support from meetings. The numbers in the survey are important. They provide empirical evidence of the importance of meetings and events to local economies. But it’s the people behind the numbers—the fishing boat captains, restaurant servers and small business owners—who really matter.
Barry Freed says his Michigan-based company, Art Craft Display Inc., depends on the meetings industry. Art Craft has been in business for 55 years, providing event furnishings, displays and support services such as floor-plan design, convention management freight handling and labor to event planners. Freed’s company has more than 160 employees and three locations in Detroit, Grand Rapids and Lansing.
“At least 85 to 90 percent of our business is with conventions and meetings,” he says. “We wouldn’t be here without it. It’s so important for so many companies, especially the service industry.”
Art Craft Display works with an average of 700 to 900 meetings per year in its three market cities. Freed says the industry has always been important in Michigan, but it often has been underappreciated and overshadowed by the auto industry. But now that industry has taken a nosedive, and the impact of meetings and conventions is becoming more apparent.
“People working on the auto industry lines likely had no idea what conventions or trade shows brought [to the state],” he says. “It is an economic key in Michigan and a lot of people aren’t aware of it.”
In Florida, travel and tourism is the state’s number one industry. More than 80 million people visit the state each year, accounting for 22 percent of total tax revenue, according to Visit Florida, the state’s tourism marketing corporation. Tourism employs more than 1 million workers in the state, many of whom are part of the meetings industry.
Manthey’s tour company, Yacht Starship, has 40 employees. He relies on weddings and regular visitors, but said the ease of booking groups from conventions in Tampa plays a large role in keeping his yachts afloat. The Tampa Convention Center sits on the bay in downtown Tampa, and Manthey pulls his yachts up to the dock to take groups out for dinner cruises and receptions. Group business provides more stability for his company. “Conventions are just easy. It’s the most cost-effective convenient part of our business,” he says.
“We likely wouldn’t have enough business to survive without the meeting component,” he adds. “That accounts for almost half of our business and we adjust our schedules to cater to them.”
One job certainly wouldn’t persist without meetings: planners. Michelle Minyard has been in the industry for 20 years, most of them spent at the New Orleans CVB and Ernest N. Morial Convention Center. She started her own meeting planning business two years ago and helps companies find hotels, facilities and transportation in the Big Easy. Her clients have included Rotary International and the American Physical Therapy Association. She says that while those in the industry have long appreciated what meetings and events do for the city, some didn’t understand the full impact of the industry until 2005. After Hurricane Katrina, New Orleans didn’t host any major conventions for almost a year.
“Conventions are the economic engine of New Orleans’ tourism and the trickle effects of it are monumental,” Minyard says. “It is my lifeline. People finally realized what it meant when they saw Bourbon Street empty.”
In some cities that live off tourism, it’s often hard to distinguish meeting and convention delegates from regular tourists. Las Vegas, for example, hosts more than 18,000 business events per year, from 10-person meetings to the annual Consumer Electronics Show that attracts 120,000 attendees. In total, more than 4.5 million delegates come to Vegas every year, bringing with them more than $4 billion in non-gaming revenue that helps support more than 35,000 jobs, including that of Chris Meyer, CMP, vice president of sales for the Las Vegas CVA. While gaming and tourism are tremendous visible economic drivers in Las Vegas, Meyer says meetings keep the neon lights glowing.
“When they travel to a destination, they just spread money around because they’re doing so many activities,” he says. “We use an average of $1,059 per convention delegate, and that is a conservative number.”
As Minyard suggests, in New Orleans, tourism and conventions are the lifeblood of the economy. The city hosted 725 meetings last year that collectively brought more than 900,000 people to town. Nikki Moon, vice president of convention sales for the New Orleans CVB, says the meetings spend flows into all types of businesses, even during low season: “The impact meetings have on the economy and employment is massive. It touches so many people and businesses beyond just the hotels and restaurants.”
Like many convention cities, New Orleans reinvests in its convention infrastructure to keep groups coming to town. The constantly expanding Ernest N. Morial Convention Center is the sixth largest facility of its kind in the country and features more than 1.1 million square feet of exhibition space. It stretches 11 blocks and is more than a half-mile long.
Meetings can make an even bigger impact in smaller cities such as Grand Rapids, Mich. Doug Small, president and chief experience officer of the Grand Rapids CVB, sees his organization as an economic development agency. Measured by room revenue, 2010 was the city’s biggest year for tourism, up 11 percent over 2009.
“It is amazing how those dollars turn over and continue to affect the small businesses,” Small says. “It’s not just hotels and restaurants; it’s second- and third-tier businesses that see a big impact.”
Businesses benefit from direct spending at events, but they also benefit indirectly from the exposure they get from visitors during their stay or a trade show. Houston often hosts events in the oil and gas, tech, medical, education and finance industries, which also are prevalent industries throughout the city. “[Events] allow local companies that are exhibitors to get a home field advantage and to showcase their products at greater cost efficiency,” says Greater Houston CVB President and CEO Greg Ortale. “A lot of people don’t understand how much business happens at trade shows. Last year, Houston hosted 237 conventions that attracted more than 480,000 delegates and translated into an economic impact of almost half a billion dollars.
While large conventions generate local buzz, Ortale points to the importance of more frequent, smaller conventions and meetings. The 1.8 million meetings included in the study averaged 114 participants per meeting.
“A lot of people don’t realize the majority of conventions are not the big monsters. They’re going to be a lot smaller with people spread out all over town,” he says.
In mid-sized cities like Grand Rapids, the impact of small meetings and conventions is a lot more visible and recognizable. The annual ArtPrize event, which attracts artists and art fans from around the world, has an average $4 million impact on downtown businesses. Small says the publicity from the event is priceless: “It’s only two years old, but the press and media coverage of this thing is unbelievable. It puts a spotlight on Grand Rapids that I can’t buy with 10 years of budget.”
Getting the Word Out
At the beginning of the economic downturn, politicians quickly came to the rescue of America’s automakers, bailing out failing corporations such as GM and Chrysler. Yet at the same time, government officials cracked down on the meetings and events industry. The media demonized large corporations such as AIG and Wachovia for spending taxpayer dollars from bailout funds to pay for meetings and events. In 2009, the meetings industry contributed $106 billion to the GDP. By comparison, the auto industry contributed $79 billion.
“It’s a quiet giant and a very powerful thing for people to get their arms around,” Meyer says. “Until this point, we never had the empirical data to point to.”
The auto industry has a footprint in every American home, but meetings and conventions are rarely in the public eye. Because conventions usually take place in centralized locations in market cities, locals aren’t always aware of their presence. And though their impact reaches so many businesses, it isn’t always visible. Deborah Sexton, president and CEO of PCMA, partly attributes the industry’s invisibility to a lack of promotion and educating the public.
“As an industry we haven’t done the best job of articulating the importance of what meetings mean to the overall economy: Why people meet, the reasons they meet and the benefits connected to that,” she says. “We need to better educate the public on the fact that meetings provide benefits not only to our economy but to U.S. productivity. I’m committed to [making] sure we get this clear concise message out so they can really understand what this industry means.”
On a local level, some organizations already have begun to convey that message.
In Grand Rapids, the CVB works with the local media to host meetings and press conferences to present findings and announce new conventions it’s landed. “We’re very transparent and want to show to the community that we’re out there working. And [the local media] seems to be very interested in talking about what we produce for the community,” Small says.
In New Orleans, the CVB established the Tourism Matters campaign. The CVB publishes a bimonthly, 16-page publication celebrating the people and success stories of the city’s $5 billion tourism industry. It lets locals know how conventions find their way to New Orleans, highlights CVB member companies and lets readers know what meetings are coming to town.
“We’re trying to get the word out locally and bring home the importance of visitors and the dollars that they bring,” Moon says.