San Francisco Pins Mtgs. Growth On Moscone Expansion

With a proposed expansion to its convention center that could help the city better compete for citywide events still years away, San Francisco is cutting deals to bring short-term meetings into the city and eyeing a rebound.

Despite the so-called Great Recession, San Francisco's meetings industry remains active and fairly well-supported.

Officials at the San Francisco Convention and Visitors Bureau are hopeful that after 2010—which looks soft, said executive vice president and chief customer officer Leonard Hoops—conditions in the city's meetings' marketplace will improve dramatically.

"We know this will not be fixed in just one year, but we're seeing signs that the situation will begin to turn around in 2011," Hoops said, adding that the bureau books groups up to 15 years out, so for the long term the demand is there, regardless of the current downturn.

"San Francisco is somewhat more resilient than other places because of the popularity of the destination," according to Hoops.

"It's a premium product with a relatively low number of hotel rooms—33,000 in the city itself—so occupancies have remained rather high, at 78 percent in 2007 and 2008, but room nights are down since fewer attendees are coming to town, including corporate clients."

Occupancies at the Moscone Center, San Francisco's largest convention venue, were at 74 percent to 78 percent for the last two years, Hoops said. A proposed expansion of the center, "Moscone East," would increase contiguous space from 260,000 to 361,000 square feet and boost overall space to 540,000 square feet.

Hoops said a task force formed 18 months ago formally recommended the Moscone East plan to the SFCVB over two other expansion scenarios after a July 31 meeting. The SFCVB board met Aug. 5 to formally support the task force's recommendation, Hoops said.

If city officials approve the recommendation and project financing can be secured, ground could be broken around the mid-2010s, he said.

Group room-night minimums have been relaxed through 2014, according to Hoops, so that a group that might have needed to supply a minimum of 1,800 room nights now could qualify with just 800, for example. San Francisco's hotels, according to Hoops, are fostering a value-added concept, and are much more willing to negotiate on group rates and cancellations.

"We've been slow this year, like the industry as a whole," said Garry Hallinan, senior partner with Benchmark Destinations, a meetings management firm with primarily corporate clientele. "We're doing even more short-term business than usual, something I expect will continue in 2010, which, however, is looking better overall than 2009."

This year, he said, a handful of large incentive travel programs have booked short-term. "Companies still have to entertain their best clients and reward top employees," he said.

Hallinan is finding somewhat lower prices and more concessions from venues and vendors than before, but noted hotels still will walk away when pricing becomes a sticking point. "Their costs are steep today, and if they feel they're giving away too much and it's not going to be profitable for them, they will not do the business," he stressed.

"We've been in a slowdown since the fourth quarter of 2008, but we're starting to see things pick up a bit for this fall," said Glenn Allison, managing director and partner of destination management firm Mana, Allison & Associates. "However, it still looks soft for 2010 on the whole. It's going to be a slow climb back to more normal levels."

Allison has seen a few meeting cancellations from the financial sector. "Groups are dealing with much tighter budgets, and we're handling fewer incentives because there are fewer qualifiers now," he said, noting that venues are more willing to negotiate and that his company is booking events, 90 percent of which come from outside California, not more than one year out.

"While our demand has dropped, we're absolutely seeing a great demand for 2010," agreed Mary Carvotta-Trexler, partner and creative director of destination management company Perfect World Events. "It won't be as good as 2008, our best year ever, but it is well above 2009, in part because companies are starting to relax and lift travel restrictions for next year."

Carvotta-Trexler expects to see short-term bookings continue and rebookings by groups that cancelled, thanks to incentives like breaks on cancellation fees. "I'm very optimistic about the future," she said.