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Convention Fever

Puerto Rico’s tourism industry considers launching a new Convention and Visitors Bureau as island readies for exploding groups and convention business following a record-breaking 1999


August 17, 2000
Copyright © 2000 CARIBBEAN BUSINESS. All Rights Reserved.

Meet Puerto Rico

Puerto Rico Convention Bureau has banner year with the island’s group and convention business
generating $912 million in fiscal 1999. But with a new Convention Center ready in 2002 and a
new marketing approach, that may be just the beginning.

The manner in which Puerto Rico is marketed as a tourist, group, and/or convention destination may change even before the Convention Center at the Americas World Trade District opens for business in late 2002.

CARIBBEAN BUSINESS learned that key players in the island’s tourism industry are discussing the possibility of creating a new entity–a convention and visitors bureau (CVB)–to promote leisure and business travel, including meetings and conventions.

The CVB–a familiar entity in many stateside tourist destinations–would advocate improving and expanding Puerto Rico’s wide range of tourism offerings while creating economic opportunities.

Last year, the Puerto Rico Hotel and Tourism Association’s (PRHTA) marketing committee, headed by Milton Segarra, brought forth the idea of establishing a CVB at an industry strategic planning meeting.

The PRHTA’s board of directors approved the idea, and last month the committee created a task force to gather case studies and recommendations for the possible implementation of a CVB.

"I think the discussions have been positive," said Jorge Pesquera, executive director of the Puerto Rico Convention Bureau. "A CVB would provide a platform for further refining the idea of better integration in terms of destination marketing."

The CVB task force members include Teresa Caballero, deputy executive director of marketing at the Puerto Rico Tourism Co.; Erin Benitez, vice president of the PRHTA; Paul Ferguson, president of Travel Services; Mark Stevenson, general manager of The Ritz-Carlton San Juan Hotel & Casino; Fernando Rosado, marketing director of the PRHTA; Segarra; and Pesquera.

"We are looking for a CVB model structure that could be the most feasible for our industry," said Segarra, who is also the Caribe Hilton’s revenue director. "And we’re investigating what laws would need to be enacted to set up a CVB."

One issue that must be resolved before creating a CVB is to identify the common ground between the PRHTA, Tourism Co., and Convention Bureau.

"A CVB should help us cut down on marketing costs," said Segarra. "And it should allow us to maximize in the areas where there are synergies between the three organizations."

The Hawaii Visitors and Convention Bureau (HVCB) is an example that could be adapted by Puerto Rico’s tourism organizations.

The HVCB is a private, nonprofit corporation, organized by visitor industry members companies and associations.

Legislators decide annually how large Hawaii’s tourism marketing budget will be, and authorize the Department of Business, Economic Development, and Tourism to contract with the HVCB.

HVCB members, including airlines, attractions, hotels, restaurants, retail stores, wholesalers, travel agents, and other businesses interested in keeping Hawaii’s tourism industry strong. Members pay dues and contribute millions of dollars in services that support marketing. They also oversee the organization, choose directors, form committees of industry experts, and hire a professional manager to be its president and CEO.

Independent of its structure, implementing a CVB in Puerto Rico would require legislative approval. Even its task force members don’t know if or how a CVB would affect the Tourism Co. and/or Convention Bureau’s future.

"There are no recommendations at the moment of dismantling either organization, but we know CVB will be a marketing tool for the destination that will not deal with infrastructure development, like the Tourism Co. or the Department of Economic Development and Commerce," Segarra said.

Infrastructure development projects such as beach cleaning and building hotels, and regulatory functions such as overseeing casinos, will not be included in the CVB’s agenda.

"There is a possibility that certain things that are done individually may be integrated so there will be no marketing overlaps," Pesquera said.

Group business in Puerto Rico hotter than ever

Industry experts agree groups, convention, corporate incentive, and tradeshow business, known generally in the industry as "group business," is the fastest growing travel segment worldwide.

The world convention market is expected to grow 27% between 2001 and 2005, according to the Tourism Industry Intelligence journal. In the U.S. alone, group business revenue is expected to reach $56 billion by 2001 as a result of 5.7 million trips taken by individuals participating in conventions.

In anticipation of its annual meeting–to be held September 13 at the Puerto Rico Museum of Art under the theme "A work of art"–the Bureau shared the results of a record-breaking year with CARIBBEAN BUSINESS.

In fiscal 1999, the Bureau produced 218,464 room night bookings that generated a direct economic impact of $76 million, a 38% increase over the 157, 887 room nights booked in fiscal 1998 that injected $50 million to the local economy. Bureau figures show the direct economic impact of group business averages $350 per room per night.

Bookings refer to reservations made for transportation, entertainment, or lodging purposes.

By comparison, the island’s tourism industry as a whole, including hotels and paradores catering to the leisure, corporate and group business markets combined, produced a total of 2.5 million room nights during fiscal 1999 (2.4 million in fiscal 1998), according to Tourism Co. statistics.

But while Bureau-generated room nights represented roughly 10% of the island’s total room nights occupied in fiscal 1999, it is estimated that the Bureau produces on average 25% of the group business hosted by Puerto Rico’s major hotels.

Established in 1962, the Bureau’s mission is to sell Puerto Rico as a group destination for the benefit of its members, ultimately providing significant stimulus to the local economy. Its efforts compliment those of the Puerto Rico Tourism Co.’s, which aim to sell the island to individual travelers or tourists.

Pesquera estimates that total group and convention business in Puerto Rico, whether generated by the Bureau or not, had a direct economic impact of $304 million in fiscal 1999. It is estimated that another $608 million was generated in indirect economic benefits. That figure is expected to reach more than $640 million next year.

Combined, the direct and indirect economic benefit of group business is estimated at $912 million annually, with associations accounting for $383 million, corporate groups $374 million, and social, military, educational, religious, and fraternal (Smerf) business $155 million. That total is expected to reach the $1 billion mark by next year.

"Convention tourists spend three times more than individual leisure tourists," Pesquera said. "And 25% of these visitors stay at a destination beyond the normal five to six day convention period."

The number of Bureau-promoted "arrival groups" or conventions in fiscal 1999 came to 277, accounting for 140,560 room nights with an overall economic impact of $100 million. In fiscal 1998, the Bureau accounted for 269 groups for a total of 117,246 room nights with an overall economic impact of $82 million.

"If you compare the two years, there may not be many more groups, but there is a 19% increase in the number of rooms occupied which means we are selling bigger groups," said Ana Maria Viscasillas, vice president of business development at the Bureau.

"Arrival groups" refers to groups that arrive on a specific fiscal year, while "groups sold" refers to groups that have signed a contract on a given fiscal year to have a meeting in Puerto Rico in the future. The Bureau might have groups that arrived in fiscal 1999 but were sold three or four years ago.

In fiscal 1999, the Bureau sold conventions that are due to arrive from 2000 to 2003.

Definite vs. bureau assisted

For fiscal 1999, the Bureau reported 390 "definite bookings" of groups and conventions, surpassing its goal of 375 bookings. Definite booking refers to sales to groups or conventions that are provided, solicited, and secured by a Bureau sales person. The Bureau generates the original lead that is sent to hotels.

The Bureau measures its performance in two ways: the number of group meetings and conventions it gets from its direct marketing efforts, and the number of "assisted bookings" from hotels.

Bureau-assisted bookings–business not necessarily generated by the Bureau but in which a hotel or regional sales office (local or U.S.) requests some level of Bureau involvement to secure it–reached 55 groups in fiscal 1999, compared to 27 in fiscal 1998.

The group and conventions production by market segment is divided into three groups: association, corporate (which includes incentives), and Smerf.

Associations are groups of individuals, businesses or organizations that share some common interest, activity, or purpose, while corporate groups are people that meet for individual company business.

Meanwhile, corporate incentive travel refers to perks offered by corporations and other businesses to their employees as a compensation to stimulate productivity and performance.

According to Pesquera, in fiscal 1999, the Bureau helped increased corporate business to Puerto Rico by 86% from 41,880 room nights to 77,865 room nights.

"We have had a much more balanced deployment of staff in various marketplaces across the country," Pesquera said. "Also, corporate business tends to bring smaller groups and shorter term bookings than association."

On the other hand, the already solid association business in Puerto Rico increased only 0.97% (from 77,478 in fiscal 1998 to 78,222 in fiscal 1999) while Smerf business rose 33% in fiscal 1999 (from 26,324 to 35,029).

"We haven’t seen an increase in the hotel room supply," Pesquera said. "So we can only sustain the same size of groups. Association business had a boom when we had the big hotels open like the Westin, Ritz-Carlton and El Conquistador with nothing in their books."

Big fish come to Puerto Rico

Next year, the Bureau will have an important role to play–to play hosts to the gurus of the convention industry.

Washington, D.C.-based International Association of Convention & Visitor Bureaus (IACVB), an international trade association representing over 480 convention and visitor bureaus in more than 30 countries, selected Puerto Rico as the site for its next annual meeting.

The IACVB meeting will be held at El Conquistador Resort & Country Club from July 15 to July 18, 2001.

Pesquera says it took the Bureau almost 37 years to be able to host this event, which was awarded to Puerto Rico almost two years ago.

The IACVB, entering its 87th edition, will feature an event never presented in its entire history–a summit of destinations.

The summit will be held immediately after the IACVB convention in Puerto Rico. International leaders of the destination marketing organizations will discuss issues surrounding the global travel industry,

"We [Convention Bureau] have been working to bring that convention to Puerto Rico for a long time," Pesquera said. "Bureaus who participate in the IACVB conventions are always kept on the cutting edge of their field."

Pesquera projects that nearly 1,000 visitors will attend the IACVB convention, a record number, and it will have an economic impact of over $1 million, excluding expenses outside the hotel’s premises.

"There is a tremendous enthusiasm from IACVB members to come to Puerto Rico," Pesquera said. "We are even selling pre- and post-packages for those who want to stay longer on the island."

The most recent IACVB convention was held in July at Minneapolis and nearly 557 people attended, compared to the one held in 1999 at Las Vegas, which reported a record attendance of 900 people.

Not every great idea comes from within your own industry

The Puerto Rico Convention Bureau has invested heavily in intense, ongoing staff training to make sure its staff continues providing exceptional service to meeting and convention clients.

Part of the Bureau’s strategies include ongoing training needed for technical aspects, educational seminars, and its newest initiative–extraordinary customer.

The extraordinary customer initiative involves the Bureau’s staff of 42 employees to select a company that would exemplify extraordinary customer service.

"We asked our staff to write a summary with their findings and what they liked about the companies," Pesquera said. "In return, we took the ideas and developed a base about what it takes to perform extraordinarily for our clients."

As a result of the customer service exercise, the Bureau has also implemented a destination feedback initiative. Its purpose is to hire a third party consultant, who will call meeting planners that have come to Puerto Rico for a convention and ask them to give a candid assessment of their experience.

"We want to find out what their [meeting planners] experiences in Puerto Rico were," Viscasillas said. "Information is power and why not transmit the feedback to our members so we can become a better destination."

Out of 98 meeting planners, who visited Puerto Rico, about 78 said their expectations had been met, according to the Bureau’s most recent six-month report.

Another part of the destination feedback process is the site-inspection survey. The survey is used for clients that have not yet signed a contract to hold a convention in Puerto Rico. Bureau officials accompany undecided clients to hotels competing for contracts.

"The reason for our existence is to generate business and leads for all of Puerto Rico’s business members," Pesquera said. "Membership-based organizations tend to be agile and responsive to constituents because of the reality of serving customers."

Awards, awards, and more awards

The Puerto Rico Convention Bureau’s service and marketing were honored with six prestigious awards and recognitions by associations within the meetings and conventions industry.

"These awards recognize the outstanding commitment on the part of the Bureau’s staff who are dedicated to providing exceptional service to the meetings and conventions industry," Pesquera said.

Readers polled by trade magazines Meetings and Conventions and Incentives and Successful Meetings chose the Bureau for its outstanding ability to serve meeting and incentive industry experts.

The Bureau was also recognized by the American Society of Association Executives (ASAE) for its outstanding creativity and dedication to marketing within the association community.

In addition, it won two third-place prizes in the PRIMA awards for its website and print advertising–the second time the Bureau is honored for marketing achievements.

A recognition the Bureau is especially fond of is being selected the Puerto Rico Chamber of Commerce’s Affiliated Association of the Year and being re-elected to the Board of Directors of the Chamber.

"This honor is perhaps the most important to us in terms of our commitment to serving our community and our island’s business partners," Pesquera said.

This Caribbean Business article appears courtesy of Casiano Communications.
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