Supply of Conference Centers - Research Paper Example

? Supply of Conference Centers- Review of Existing, Planned Development, Individual Respective Capacities at Each Center Table of Contents Supply 3 References 12 Supply Data exists relating to an accounting of convention/conference center venues and their individual capacities as of 2010, that includes all spaces with gross floor areas of upwards of 25,000 square feet. The data includes floor space for the total of exhibition and conference/convention space, city of location, number of meeting rooms, total meeting space floor area, and meeting space that includes the total exhibition floor space. The top convention centers ranked by total floor space area are detailed below (Red7Media, 2010): Table Source: Red7Media, 2010 As can be gleaned from the table above, many of the top convention centers by floor space are located in Toronto, which is to be expected given the prominence of the city in trade, business and mind share. Among the top five convention centers by floor space size, Toronto holds the top four spots. Convention centers in Calgary, Montreal, Vancouver, Regina and Edmonton are also represented in the top 15 largest convention centers by floor space. The table below details the rest of the top convention centres in Canada by floor space, together with mean and median figures for floor spaces and meeting spaces (Red7Media, 2010): Table Source: Red7Media, 2010 In the table above, the mean and median figures are markedly different, indicating that on the whole the conference spaces are smaller compared to the average by a factor of two. When it comes to total floor space though, the mean and median figures diverge less, meaning that on the whole there is some similarity in the total space available for many of the conference centers on offer in the list (Red7Media, 2010). On the other hand, such data excludes hotel capacity, and does not include prospective data on planned development, which are also key data for this particular part of the study. Moreover, the data above does not cover Atlantic Canada exclusively, which strictly must include data on New Foundland and Labrador, Nova Scotia, Prince Edward Island, and New Brunswick. Fast forward to 2012, and among the biggest that have cropped up in Atlantic Canada is certainly the World Trade and Convention Centre in Halifax, Nova Scotia, certainly likewise getting a lot of attention and debate regarding the merits and long-term value of such a large convention/conference centre in the area. This space is the subject of proposal requests from the government authorities for a new facility measuring 120,000 square feet of convention space (Trade Centre Limited, 2010). The existing facility in that place, aged 25 years, has a total floor space of about 50,000 square feet. To put this in perspective, the total floor space for the conference centers industry is pegged currently at 70 million square feet in 2012, increasing from 53 million square feet at the turn of the millennium, and up from 40 million square feet from twenty years prior to the present estimate (Power, 2012). The table below, meanwhile, details capacity expansion for the facility through to 2014, alongside revenue and takeup projections matching the increase in capacity and in step with the planned capacity additions for that centre (PKF Consulting, 2009): Table Source: PKF Consulting, 2009 As can be gleaned from the above table, capacity additions will be made up in justification by increases in demand and in actual consumption of capacity space, even as in the short term the capacity additions will result in operating losses. Given that the time span for revenue and income projections justifying the expansion of space is for a time period much longer than what the table covers, the investment in new capacity makes sense (PKF Consulting, 2009) In New Brunswick the lone convention centre is located in St. John, called the Saint John Trade and Convention Centre, with a total floor space of 17,000 square feet, and with additional space for meeting rooms totaling 6,464 square feet (The Hardman Group Limited, 2012). Fredericton has new space for conferences totaling 36,000 square feet, which became operational in 2011 (CBC News, 2012). Data on future capacity demand tells us that without new capacity additions and growth, the demand growth for conference space will outstrip supply growth, justifying the present expansion in some of the facilities including those in Halifax for the large convention centre there (PKF Consulting, 2009): Table Source: PKF Consulting, 2009 From the table above, it can be seen that supply growth will be negative to zero through to 2015, even as demand growth will continue to outpace the negative to zero growth in supply growth through the planning period. This bodes well for the industry in general, and counters arguments of new conference spaces being unjustified and being in danger of turning into white elephants, as discussed earlier (PKF Consulting, 2009; Power, 2012). On the other hand, data also exists that seem to go against the wisdom of expansion, given that for the large convention centre at St. John, through to 2015 overall utilization will continue to remain below 25 percent, even as it peaks at around 23 percent in 2015. Again, while the trends is for a slow increase in the rate of utilization, the upward trend nevertheless bodes well for the future improvements in utilization rates for the facility, given normal conditions of a long-term improvement in the economy and the long-term natural increase in demand that goes along with that (PKF Consulting, 2009): Table Source: PKF Consulting, 2009 From the table above, one can see that even with the minimum facility improvements as opposed to the larger expansion recommendations, there is a marked trend towards increasing utilization of the facility space through time, and certainly for the longer planning period the trend justifies the expansion of space. With the recommended expansion, moreover there is a slight advantage in terms of the utilization rate for the near term, through 2014 (PKF Consulting, 2009). Taking a step back and examining all of the existing and planned conference center facilities and spaces on offer in Canada moving forward, the literature notes that the trend is towards an increase in the total space and the total number of facilities for conferences. More and more places in Canada are coming to internalize the profits that are to be had from spin-off activities associated with the successful hosting of conferences and events in such facilities, contributing to the economic activities in their locales. In the Maritime Provinces in Canada, for instance, there have abounded several new conference facilities, two from 2010 to 2011 in Brunswick; one in Moncton, and one in Fredericton. Meanwhile, as discussed above, the main conference center located at St. John continues to remain unfazed by the competition arising from the operation of the new facilities. If anything, the creation of new facilities reinforces the business model of the conference center at St. John, and reflects optimism by residents in the long-term prospects of the region and of the economy, as well as the long-term prospects for such conference spaces and assets. Elsewhere competition is budding to, in the form of new facilities. One such example is a new facility in the pipeline for conferences, to be built in Nova Scotia in Halifax. This latter is in the stage of initial and exploratory studies as of 2010. Charlottetown, meanwhile, in Prince Edward Island, is the location of a plan to build a convention center, with the funds and monies already allocated and earmarked, and with the plans already being baked as of 2010. This latter facility is to be tied physically to a hotel in the area, called Delta Prince Edward. There are also planned facilities in Kelowna; in Peterbourgh-Kawartha, Ontario; and in Niagara Falls, the latter to be called the Scotiabank Convention Centre and already operational as of April of 2011 (An Exploration of Change, 2011, pp. 9-10). References An Exploration of Change: Canadian Convention Centers Destination Marketing Methods. (2011). University of New Brunswick. CBC News (2012). Saint John convention centre plan faces funding crunch. CBC News. Retrieved from http://www.cbc.ca/news/canada/new-brunswick/story/2012/07/16/nb-saint-john-convention-centre-916.html Red7Media (2010). An Overview of Convention and Tradeshow Demand for a New Halifax World Trade and Convention Centre: Focused on the Impact of Additional Ballroom and Meeting/Breakout Room Space. Trade Centre Limited. PKF Consulting (2009). Business Case Study and Analysis for the Recommended Expansion of the St. John’s Convention Centre Final Report. PKF. Power, B. (2012). Convention centre no ‘white elephant’. The Chronicle Herald Business. Retrieved from http://thechronicleherald.ca/business/49066-convention-centre-no-white-elephant Trade Centre Limited (2010). Market Projections for a Proposed New Convention Centre. Internal Staff Report. The Hardman Group Limited (2012). Saint John Trade and Convention Centre. Market Square. Retrieved from http://www.marketsquaresj.com/convention-centre.php Read More