Any list of current trends in meeting planning includes the use of second-tier cities to help control costs. But is this really a trend or just validation of what industry experts have already been saying for over a decade?
The internet has a never-ending supply of articles on the subject. This is not surprising. What is a bit unexpected is that the articles date from this year to as far back as 1992. Maybe the idea is not the trend, but effectively selling it to meeting stakeholders who traditionally use only top-tier cities is.
WHAT IS A SECOND-TIER CITY?
Perhaps the best place to start is with a definition of a Second-Tier City (STC). Academia defines STC’s based on economic structure, growth and labor – differentiating these distinct areas from suburbs or large metropolitan areas. But a location viable for a new plant or distribution center may not offer the proximity to major airports crucial to meeting destinations. Alternatively, the Meeting Planners Association sets population parameters for STC’s that range from 300,000 to 1 million. By the MPA’s standards, Washington, DC, Miami and Las Vegas are second-tier destinations (1), but these locations are not generally associated with cost savings.
It seems neither filter really offers a complete list of what stakeholders would consider realistic second-tier destinations that can suit their meeting’s needs. So for our purposes, STC’s will be defined with a broader brushstroke. Focusing specifically on domestic locations and excluding the ten most populous U.S. cities, think of cities characterized by affordability, accommodating residents, unique recreational happenings, easy air-access and first-rate hotels and convention/conference facilities. A few examples include: Indianapolis, IN; Charleston, SC; Nashville, TN; St. Louis, MO, San Jose, CA, Salt Lake City, UT and Louisville, KY.
As a sidebar, the term “easy air-access” also has a definition in flux. As airlines merge (like Northwest and Delta), they boast offering better service to more cities. However, the industry as a whole is simultaneously announcing that the cost of jet fuel will dramatically impact the number of cities serviced and the frequency of flights to ALL destinations – as early as October of this year. For this reason, if air travel is a concern we would recommend focusing on cities with international airports. These airports are typically called such because they are equipped with customs and immigrations facilities, but they are also usually larger facilities with longer runways that can accommodate larger aircraft. While service will still likely be reduced, it is less likely it will be discontinued all together.
WHAT BENEFITS CAN A SECOND-TIER CITY REALLY OFFER?
Besides rising hotel costs, so-called “mega-cities” are also increasing their focus on strengthening transient business – meaning groups may no longer be able to achieve the perks and concessions to which they have grown accustomed. To maintain the proverbial “big fish” feeling, site selection in second-tier cities offers more small ponds from which to choose. (2)
Stakeholders and meeting attendees alike are looking for customized service, high-quality facilities, an experience memorable enough to make it worth the trip and of course, affordability. STC’s unique circumstances can provide all of these benefits for your group.
CUSTOMIZED SERVICE
One of the best service resources in an STC is the local Convention and Visitors Bureau or CVB. Eager to showcase their city, the CVB will often do whatever it takes to get your business – and keep it. Outstanding, customized service begins during the planning phase, but lasts through on-site execution. Not only do they often have regional sales forces that sit locally in other cities, but a CVB offers an unparalleled-network of local suppliers and avenues for cross-marketing your event. The staff at a CVB is generally happy to act as an extension of your meeting planning and logistics-company. They can also provide access to unique spaces like museums, city parks or historical venues. A CVB’s connections to and relationships with local talent and attractions should be leveraged and not overlooked. These components offer tremendous added value and in smaller cities come at a much smaller price tag (3) than in say Manhattan, Chicago or Los Angeles.
Larger groups, especially, often take up the majority of the available meeting and hotel space in smaller cities. Without competing distractions for the venue’s on-site staff, these groups are essentially guaranteed undivided attention and a high level of service. No request or need is ignored. From event-branded signage throughout the city to designated public transportation vehicles, the city’s doors are opened. In this way, not only meeting planners but also attendees witness how keen these cities are for your business. (4)
HIGH-QUALITY FACILITIES
Luckily for today’s meeting stakeholders, the idea of smaller cities getting an increased market share of the events business is not new. As Katie O’Bryan, Director of Midwest Sales for the Louisville CVB says, STC’s “have been consistently popular for education, nursing, agriculture and religious groups for a long time”. Hence improvements to the infrastructure of these cities – including the building and expansion of state-of-the-art conference and convention centers, hotel inventory and airports – have been in the works since the early 1990’s. (5) First-class amenities in these cities are the norm far more often than the exception. Now, however, they are finally drawing the attention of industries that traditionally looked only to top-tier cities for meeting destinations.
To get the word out about new, top-notch facilities, many markets have teamed the sales forces of their convention center with that of the local CVB. In this way, the smaller cities remain competitive by offering a more customizable product than larger cities. The San Jose Convention Center for instance offers a flexible pricing structure based on a group’s overall economic impact on the community (including room nights, food & beverage, equipment rental, etc.). (6)
Also with a little bit of creativity, issues that might initially appear as obstacles may not be. Even though many smaller cities have added top-tier hoteliers to their portfolio, they often still cannot accommodate a large group under one roof. Nevertheless, these same destinations usually have a far more cohesive hotel community than in larger cities. Working as a unit instead of against each other, multiple property representatives develop a housing plan for your group and create a seamless transportation schedule for moving attendees between meeting facilities and guest accommodations. (7) This is just another example of how second-tier cities will do whatever it takes to get your business.
MEMORABLE EXPERIENCES
To truly make a meeting or event memorable for your group you must provide opportunities attendees would not have had on their own. This is why meeting planners seek out unique entertainment options in any location. But to obtain a competitive edge, STC’s see this as more substantial than a single activity – it is about developing a total branded experience.
Louisville, KY is a great example of this. O’Bryan explains that “what Napa is to wine, Louisville is to bourbon.” Her colleague Lisa LeCompte, Senior Sales Manager Louisville CVB, explains that their close access to the “Kentucky Bourbon Trail” creates great entertainment options - even beyond just distillery tours - such as an “Urban Bourbon Tasting Tour” through some of the more storied taverns of Louisville or a keynote by Bill Samuels Jr., President & CEO Maker’s Mark.
What is unique about your destination? What is its historical significance? What are the cultural assets of the city and how can they parlay into something attendees will never forget? These are the questions smaller city CVB’s are asking themselves and their Chambers of Commerce before designing a message to sell to meeting planners.8 Playing to these strengths and linking them to the needs of the client’s industry can actually make STC’s more appropriate for a meeting than traditional mega-destinations. (9)
The combined efforts of convention centers, hotel communities and CVB’s are also very effective for reinforcing your meeting’s brand throughout a city. According to Greg Deininger, VP of Sales & Marketing for the St. Louis Convention & Visitors Commission, they are “one team speaking with one voice, which makes it easier for the customer. We have one board, one sales and marketing force, one group of people looking at the value of a group in terms of room (tax and hotel occupancy), as well as convention center revenue." (10) He further explains that they “put banners on the streets, place signage in the malls and give the hotels welcoming ribbons." This sort of welcome into a city is bound to have a positive impact on your brand and make a lasting impression on your attendees.
AFFORDABILITY
For groups that traditionally use top-tier destinations, affordability is generally the major contributing factor in looking to STC’s for their programs. This is especially true in a struggling economy. But “affordability” is really more of an umbrella term. It can encompass broader strategic moves such as holding regional meetings to limit/eliminate travel and overnight hotel costs or reducing the length of the meeting to reduce lost productivity because employees are not out of the office as long. It can be indicative of the overall impression of the expensiveness of a city/destination, or more specifically refer to itemized costs like airfare, ground transportation, hotel rates or catering expenses. Below is a sampling of cost-comparisons for the budget line-items just mentioned. With a few exceptions, STC’s offer notable savings.
AIRFARE
Chicago to St. Louis - $159/Southwest; $165/American
Chicago to Louisville - $157.50/Southwest; $164/United
Chicago to New York - $285/United and American
Chicago to Miami - $350/American
Chicago to Las Vegas - $366.50/Southwest; $474/USAir
Chicago to Minneapolis-$373/United, American & NWA
(Prices published on Orbitz.com and Southwest.com for non-stop, roundtrip airfare as of June 23, 2008. Flights are departing at approximately 8:00am, August 4, 2008 and returning at approximately 7:00pm, August 6, 2008.)
HOTEL COST
Denver - $189
Cleveland - $229
St. Louis, MO - $299
Boston, MA - $395
San Francisco - $469
New York, NY - $645
(Prices published on RitzCarlton.com for the nightly rate for a standard guestroom with 1 King or 2 Double beds at the Ritz-Carlton in each city for the night of July 1, 2008.)
HOTEL OCCUPANCY/TOURISM TAX RATES
Las Vegas, NV – 9%
San Jose, CA – 10%
Little Rock, AR – 11.5%
Charleston, SC – 12.5%
New York, NY – 13.375% plus $3.50/night
Los Angeles, CA – 14%
GROUND TRANSPORTATION
Charleston, SC - $30
Cincinnati, OH - $70
Louisville, KY - $75
New York, NY - $168
San Francisco, CA - $175
Chicago, IL - $199
(Prices provided are for one-way sedan service from the relevant city airport to downtown hotels.)
GALLON OF COFFEE, SERVICE CHARGES AND F&B TAX
The Shore Club, Miami Beach, FL - $48.00, 20%, 7%
Westin Atlanta Airport, Atlanta, GA - $50.00, 22%, 7%
Westin Bonaventure Hotel & Suites, Los Angeles, CA - $60.00, 22%, 8.25%
Ritz-Carlton Reynolds Plantation, Greensboro, GA - $65.00, 20%, 7%
Charleston Place, Charleston, SC - $78.00, 20%, 9.5%
Marriott Marquis Time Square, New York, NY - $104.00, 22%, 8.375%
(Prices published in each property’s current catering menus.)
One important thing to keep in mind too is that smaller markets may be more willing to negotiate on meeting space rental, hotel and food and beverage charges in order to win your business. They may also have more flexibility with concessions such as complimentary upgrades, VIP amenities or designing packages that will be attractive to attendees and your bottom line.
SUMMARY
Even as prices continue to escalate in major hub locations destinations and tight budgets further constrict meeting spend, stakeholders still want to exceed their attendees’ expectations. Hence, the use of second-tier cities as meeting destinations will emerge as a key business strategy in more and more industry verticals. This may require a leap of faith to start, but if you can demonstrate that you have taken into account criteria that are important to both participants as well as stakeholders you will get their attention. With proper research and partnership with CVB’s, the quality customer service, meeting facilities, memorable experiences and economic benefits will speak for themselves.
SOURCES
1. Sweeney, Mark M. “Second-Tier Cities: The Right Size at the Right Cost”. Business Facilities: The Location Advisor. February 2004.
http://www.businessfacilities.com/bf_04_02_cover.asp2. Tesar, Jenny. “Second-Tier Cities: Do they still have the "big fish-small pond" advantage?”. Medical Meetings. February 1995.
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