Monday, September 27, 2010

McCormick Place Adjusting to Convention Center Rules

Photo: McCormick Place,  Chicago, Illinois

It has been widely reported that cities are losing hotel and restaurant business due to strong arm tatics of their local convention center. People were being doubly and tripply charged for services from AV, staging, lighting and other technology vendors and installers. The McCormick Place was no exception. In fact the McCormick place was one of the worst violators of convention attendee rights in the country. Here is a Chicago Tribune editorial on corruption and overcharging by unions. The costs are so outrageously higher in Chicago that large conventions are fleeing in droves. It took the state of Illinois to pass new convention center rules for the convention centers to do anything about it.

Still, most work is to be performed by the unions, but with 'labor savings'. Here is what David Causton, general manager of McCormick Place said in an interview by Bill Mickey of :
On the electrical front,when you look at the labor savings and you just take the fact that we’ve reduced the cost of a straight-time hour from $103 to $79, that’s over 23 percent savings for the customer. And since most of the billing we do is in straight time, you’re going to see that 23 percent flow through to the bottom line of the exhibitor.
On the service side, we took our competitive set that includes many of the national players and also looked at regional convention centers in the Midwest and we took every price that we offered for services and if we were below those costs of the competitive set we kept those costs; if we were not, we lowered our price to the competitive set. So from the exhibitor’s point of view, what they’re paying for the service should not be different than what they’re paying for the competition—and the electrical labor is now 23 percent cheaper.
On the food front when you go to our food courts that we operate with our in-house caterer, those costs have dropped 20 percent. When you order a catering function, those menus have dropped by 10 percent. In addition to that, for a gallon of coffee for example, we’ve lowered that cost to below our competitive set. That’s what I call the ‘All-In’price, which includes the menu price, the cost of gratuity and taxes.
While I agree that this is a step in the right direction, it still isn't enough and is it too late? After all Chicago has lost millions of dollars in convention business in 2010. Locations have already been picked for shows in 2011 and some for 2012. Chicago is no longer a 'must' on the many convention planners agendas.

Other Related Reading:

When Hotels and Convention Centers Overcharge

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