Venues to grow and diversify appeal - SPECIAL REPORT

27/01/2015 - 10:37

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With the convention market in Perth showing no signs of slowing, the focus has turned to the city’s largest venues and their capacity to attract major national and international events.

Venues to grow and diversify appeal - SPECIAL REPORT
ADAPTING: Nigel Keen says growth has been steady in the conference market, with news of additional hotels having a positive impact. Photo: Attila Csaszar

With the convention market in Perth showing no signs of slowing, the focus has turned to the city’s largest venues and their capacity to attract major national and international events.

The shift from construction to production hasn’t slowed the mining sector’s preference for Perth as a conference destination, with major events taking up the entire space at Perth’s largest venue last year.

Across the city, the focus for those venues bidding for events has turned to quality over quantity, with the Perth Convention Bureau targeting high-yield delegates in order to reduce its reliance on bids for major conventions.

The Perth Convention and Exhibition Centre is ranked first on BNiQ’s conventions list, ahead of its biggest competitor, Crown Perth, which sits fourth.

However, with the development of the additional conference space within Crown Towers, the complex will jump to equal third.

Jockeying for position near the top of the list will become more intense when Perth Stadium is completed, along with its range of conference spaces that will accommodate up to 1,500 delegates.

Business News reported moves were under way to expand the PCEC 12 months ago, however a year on, the groups behind the venue appear to be no closer to finalising a deal.

Wyllie Group, owner of the PCEC, reportedly began working with the state government, which owns the land, and centre manager, Spotless, on expansion plans before the state election two years ago.

“It’s very early days and there’s a lot of red tape and processes we need to get past,” Wyllie Group executive chairman Wayne McGrath said at the time.

Twelve months down the track from those comments and those involved appear no closer to expanding Perth’s largest venue.

“It is a long and complicated process as there are quite a few stakeholders involved,” Mr McGrath told Business News this month.

“At this stage it appears the government is focused on dealing with the waterfront development and has been reluctant to give any clear direction on how it would like to integrate the convention centre precinct.”

Tourism Council WA chief executive Evan Hall agreed the development of the PCEC should be integrated into the development of the Elizabeth Quay.

“They are by nature very co-dependent, but with very separate planning regimes at the moment,” Mr Hall said.

“What we definitely need is a very firm timetable to expand PCEC, because when you’re talking about events of (a very large) scale, the lead time on bids can be up to seven years.

“So we don’t necessarily need to build it tomorrow but if we know that we’re going to have it ready in five years’ time you need to start bidding for it now.”

The state government has invested $440 million into the development of Elizabeth Quay through the Metropolitan Redevelopment Authority, and the project is expected to attract $2.2 billion in private investment.

Crown land

Crown Perth is set to increase its banquet capacity from 1,100 to 1,500 once the development of the Crown Towers complex is complete late next year.

Crown Perth’s expanded conference space will provide an additional 3,700 square metres of conference space; bringing the total conference space across the resort to 9,600sqm.

“Due to the additional accommodation and convention options, Crown will be able to facilitate larger conferences from the association and corporate market both internationally and nationally,” a Crown spokesperson told Business News.

PCEC general manager Nigel Keen is confident the expansion of Crown won’t result in competition between the two venues, and will instead benefit Perth as a destination.

“There’s certainly space within the market to have two large players (PCEC and Crown),” Mr Keen said.

While Crown will be the source of the largest new space, smaller players will provide additional space within the hotel conference market.

The Ritz-Carlton at Elizabeth Quay and Westin Perth at the old Perth Fire Station site on Hay Street are anticipated to provide additional space when they open in 2018 and 2017, respectively.

Westin Perth will offer 800sqm of dedicated conference space, plus eight separate meeting and function spaces totalling 900sqm.

However, the availability and scale of conference space at Ritz-Carlton could not be confirmed as a development application is yet to be lodged with the MRA.

Up to eight hotels are currently in the planning stage in the Perth CBD, with an additional five under construction, including Crown.

“For every one who is claiming or planning to do it (build hotels), if they all did it, there’s no possible way that we could support that many hotel rooms,” Mr Hall said.

“Once they’re built, the demand for the next hotel disappears.”

He said the hotel builds on state government-owned land were far more likely to occur, given they had won a tender to do the build.

PCB chief executive Paul Beeson is confident the anticipated new accommodation stock will complement the venue market.

“To date, the capacity of the PCEC has matched the current available accommodation stock perfectly,” Mr Beeson said.

“As we move towards 2016 and the opening of Crown’s expanded venue space, there’ll be the simultaneous increase of accommodation both at Crown itself and within the CBD.

“So to this end, the accommodation space relative to venue space has been, and will be, well balanced.”

DESTINATION: Paul Beeson is confident in the strategy of marketing to high-yield delegates to maintain a positive financial margin. Photo: Attila Csaszar

Competition

The convention centre market across Australia has responded to the growth of some large international and national conferences, with major centres either currently expanding or having recently completed upgrades.

Brisbane’s convention centre reopened in 2012 after a $140 million Queensland government-funded expansion; an interim facility in Sydney opened last year to accommodate events until its new precinct opens in 2016; expansion of the Adelaide centre is set to be completed in two stages in 2015 and 2017; and the expansion of Melbourne’s centre was announced in October last year.

“Every single other state government in Australia has upgraded and expanded their convention and exhibition capacity over the last couple of years, so not only are we capped out, we have the oldest facility,” Mr Hall said.

Mr Keen agreed that expansion of our largest venue was needed in order to keep Perth competitive.

“Marketing of the destination is extremely important and we should be doing it now, not in two or three years’ time, otherwise we’ll miss the boat,” Mr Keen said.

“The market in Australia is very competitive. If the state of WA wants to compete, even within a national level, we seriously need to look at expansion.”

Mr Hall said the PCEC was at capacity for some major events, to the detriment of future growth plans for the sector.

“What that means is that we simply stop bidding for the major international conferences and conventions and exhibitions because we simply don’t have the means to put it in,” he said.

“We need an expansion of PCEC to grow events; otherwise we are capped out of the large conferences and conventions.

“This is a real issue because we’re having a lot of hotels built in Perth, which we did want, and they’re going to need to be filled up and at this point in time we’ve got a cap on the growth on the most important part of the market.”

He estimated that about 15,000sqm of new space would need to be added, taking the exhibition space from 16,500sqm to 30,000sqm, to allow the venue to host one ‘mega conference’ or two very large conferences at the same time.

One such large conference has already expressed that it is somewhat restricted by the space available at PCEC.

The annual Australasian Oil and Gas Exhibition and Conference will be held at the usual venue, the PCEC, in March.

The event is run by Melbourne-based Diversified Communications, and event director Bill Hare said it now took up the entire PCEC, with an expansion this year to the foyer space on level two.

“It’s a marginal increase on last year (but) we’re pretty close to being venue bound,” he said.

Mr Hare said despite no planned expansion of the PCEC, he didn’t foresee a move away from WA.

Exploring the market

Mr Beeson is confident in the conference market’s future in Perth, despite the largest venue reaching capacity for some events.

“Perth’s tourism product has matured and will develop further to such an extent that by 2017 it will be unrecognisable to that of two years ago,” he said.

However, this development is part of changes that are larger than the tourism sector.

With the downturn in parts of the resources sector, Mr Keen said the PCEC had experienced steady returns, rather than growth.

He said this was in part due to the move from construction to production phase in the resources industry.

Mr Hare agreed the shift in the sector would have an effect on conferencing; however it would not have a doomsday effect on exhibitor or visitor numbers.

“Clearly the industry is going through some quieter times with no new projects going to final investment decision, but in many ways it’s still at extraordinary high levels historically,” Mr Hare said.

He said despite the current market, the AOG event this year would be the largest ever with 620 exhibitors, up from 605 in 2014.

Mr Hare said this was expected to reflect in an increase in visitor numbers, up from almost 12,000 unique visitors last year.

“On one hand it’s a big-ticket investment by the oil and gas companies in exploration and development but complimentary to that is the growth of those companies who then service and supply the industry,” Mr Hare told Business News.

The event had an economic impact in 2014 of $23.7 million, up 22 per cent on the previous year.

Mr Hare is hopeful of 10 per cent growth in 2015.

“While the construction side of the oil and gas industry is suffering a downturn, the operational side of the industry will be at absolutely record levels and will be for some time to come,” Mr Hare said.

The shift in the resources sector triggered the PCB to seek out a way to manage the possible future risk of a reduction in mining conferences, instead turning the focus to the health sector.

Conferences in the health sector made up the largest portion, 39 per cent, of those secured by PCB in the 2014 financial year, surpassing the resources sector, which accounted for 32 per cent.

The high-yield delegate sectors of health, science and resources represented 68 per cent, or $73 million, of the total $108 million direct delegate expenditure for 2014.

“The strategy of marketing to high-yield delegates, within our venue and accommodation capacities, has ensured that the financial margin on the conferences secured for Perth is high, no matter what the size of the event,” Mr Beeson said.

This strategy has also benefited smaller-scale venues such as the Esplanade Hotel Fremantle by Rydges, which has a total venue capacity of 1,500sqm.

A spokesperson for the Esplanade said while there had been a reduction in the number of mining industry conferences at the hotel, this had been offset by an increase in the number of conferences in the medical industry.

Booking lead times were an issue for Broome’s Cable Beach Resort and Spa.

A Cable Beach spokesperson said larger business events were being booked 12 months in advance, as opposed to two to three years previously, while it could range from one to six months for smaller meetings.

“It’s definitely been a more challenging year, as far as conferencing. We’re probably operating on about 60 per cent of what we would in previous years,” the spokesperson said.

The resort can host up to 200 banquet guests and last year hosted 27 conferences, however this is expected to drop to 15 this year.


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