Convention Bureau calls for more funding

A review of the Perth Convention Exhibition Centre, due to be completed this month, is expected to scrutinise industry claims that WA government support falls short of the assistance provided to centres in other states.

The Department of Treasury & Finance commissioned accounting firm KPMG earlier this year to review ownership and operating models for the loss-making PCEC, which is the only privately-owned major convention centre in Australia.

PCEC owner The Wyllie Group, and operator Spotless, are both concerned about the poor performance of the centre and have already cut spending to try and contain losses.

The KPMG review comes just two years after the centre opened with much fanfare, heralding Western Australia’s arrival on the world stage of big events.

The centre has never been far from controversy, with its ownership, its location and its design all being criticised.

But this time its inquisitors wonder if the centre might be a lame duck.

The calls for extra government assistance have been enough to bring the return of the doomsayers, many of whom have objected to the project – which was given a $122 million leg-up from the state – since the start.

The Perth Convention Bureau, though, believes the centre is performing its role, and that everyone must try to come to grips with the bigger picture rather than focusing on the operational issues.

The bureau, whose role is to promote Perth as a convention destination, believes the centre has already contributed $141.45 million to the state’s economy in direct delegate expenditure.

It has also put Perth on the radar screens for the larger convention and incentive groups, which traditionally would have gone to the eastern states.

In order to maintain and grow that contribution, the bureau believes the government should invest more resources into marketing WA as an attractive destination for business events, a sector which is generally regarded as one of the highest yielding inbound tourism segments due to its high per-delegate spend.

Again, there is research to support this point. Government funding into this sector has already provided a good return on investment.

It is estimated that for every dollar of Tourism WA funding, an extra $30.20 is generated through direct spending by conventions and incentive travel groups.

In comparison, every dollar of Tourism WA spending on major events generates just $3.80 in direct spending in WA.

The issue of government involvement is at the centre of the increasingly fierce debate regarding the future viability of the convention centre.

Tourism WA says the state government's funding to the Perth Convention Bureau, which also receives funding from the private sector and members, is in line with other states given WA's population base.

But PCEC chief executive Paul D’Arcy claims that compared to the funding other state governments allocate to the marketing of their respective convention and exhibition centres, and to attract business events visitors to the state in general, the WA government’s commitment falls way short.

He wants at least an extra $2 million from the government.

This would be on top of its current annual commitment of $1.4 million, which includes about $330,000 per year for the Convention Bid Fund, and $1.1 million for the Perth Convention Bureau.

The majority of the extra money, according to Mr D’Arcy, should go to the Perth Convention Bureau so it is adequately resourced to attract business tourism to WA in what is a highly competitive industry.

 “All other convention centres in Australia, apart from one, are government owned, and directly or indirectly funded by the government,” Mr D’Arcy said.

“So when you look at government funding you need to take into consideration what the centre receives in total, not just what the bureaus receive.”

Mr D’Arcy says that the Victorian government currently allocates approximately $8 million each year to the marketing of the Melbourne Exhibition and Convention Centre through the Melbourne Convention and Visitors Bureau.

The New South Wales government allocates approx-imately $5-6 million for marketing the Sydney Convention and Exhibition Centre.

The Queensland government allocates $5.1 million to its  convention bureaus, and the South Australian government allocates approximately $3 million to marketing the Adelaide centre.

Perth Centre operator Spotless slashed its international marketing budget by 25 per cent in June, switching its focus to attracting domestic business.

Mr D’Arcy says that if resourced properly, the centre could make a valuable contribution to the state’s tourism industry.

“Every time there is a spate of negative publicity we have had letters from event organisers saying ‘will it be bulldozed’ or ‘is the event still taking place’.”

“It’s there whether people like it or not, and it has the potential to make a significant contribution to the state economy.”

Perth Convention Bureau executive chairman Graham Muir says the bureau is already starting to see the fruits of a 35 per cent increase in government funding this year, in the form of a Convention Bid Fund.

“The number of leads we have received has actually increased. The challenge now for us is how we can allocate our resources to properly tackle them,” he said.

Mr Muir added that it was also up to private industry stakeholders, as well as the government, to increase their funding.

“The centre needs to find ways to increase its resources, not just from government. We are looking to work cooperatively with all industry stakeholders so we have the resources to be able to convert major leads.”

But according to tourism analyst Alan Boys, a director at Transocean Consulting Services, Perth, the convention centre’s problems run much deeper than just money troubles.

“There are more fundamental problems to be addressed. The issues go far deeper than the amount of money spent on marketing,” Mr Boys told WA Business News.

He lamented the failure of the previous government to foresee how the convention centre would be able to effectively interface with the rest of the industry.

“Most other centres are owned by their respective governments, and work alongside industry,” he said.

“The issue that has to be addressed is, how do you operate the only privately owned convention centre is what is typically a government owned sector?”

Mr Boys said that the big conventions market is highly competitive both globally and regionally, and that the convention centre needed to look at its long term position in a competitive sense, as well as how it could function with the entire industry.

“You’re competing against facilities in Singapore, new facilities in Macau and elsewhere. It’s a very competitive market.”

“If people were brutally honest with themselves, the reality is that [big convention] business can be secured, but can it be sufficient to maintain the centre?”

Other major issues which need to be addressed, according to Mr Boys, include the centre’s design, location and supporting accomm-odation on-site.

He does not support the government subsidising Spotless’ operating losses, viewing that as more of a commercial issue for the company to deal with.

“Operating losses are to be expected… [Convention] centres aren’t run to make big profits,” he said.

“This is a serious issue for the government.

“More funding is part of the solution, but there needs to be a more fundamental analysis of the deeper issues.”