Conventions centres $940m investment in new visitors

Conventions centres $940m investment in new visitors

New Zealand's efforts to gain a bigger slice of the global, multi-billion-dollar conventions industry will need expert marketing and relationship-building to succeed.

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Partner - Deal Advisory, Head of Infrastructure

KPMG in New Zealand

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With four new convention centres proposed - in Auckland, Wellington, Christchurch and Queenstown - the country has possible investment of up to $940 million aimed at creating centres tapping into the lucrative MICE (meetings, incentives, conferences and exhibitions) industry.

Two of the proposed convention centres in Christchurch and Queenstown are still in the pipeline. The government has earmarked $284m for a 2000-person Christchurch centre precinct while Queenstown's 1000-delegate project has yet to secure all the estimated $52m-$60m required to build it.

Auckland's $470m New Zealand International Convention Centre (NZICC) is slated to host 3500 people and to bring in $90m annually once completed.

Wellington's Movie Museum and Convention Centre will host 1100 people and cost $134m to build, with forecast returns of $38m per year.

Adrian Wimmers, Head of Infrastructure at KPMG New Zealand, says the opportunity is clear for New Zealand in a global industry which earned estimated revenues of US$650 billion in 2010 (IPK World Travel Monitor): "Last year, Ministry of Business, Innovation and Employment figures showed there were 19,000 meetings held globally; New Zealand hosted 45 of them."

Wimmers says convention centres usually do not generate sufficient funds on their own to cover construction and operation costs. Australia's four big convention centre cities (Sydney, Melbourne, Brisbane and Adelaide) are subsidised to the tune of A$5m-$8m annually by state governments, according to Conventions and Incentives New Zealand (CINZ) last year.

However, the deal between Sky City and the government means Sky City is covering the costs of Auckland's NZICC in exchange for relaxed gambling regulations.

Conventions and meetings visitors are wooed globally; they stay longer, return to the destination more than ordinary tourists and spend more - twice as much, say CINZ.

Other reasons such centres are keenly sought are wider benefits to local and national economies - like visitor spending, building desirable locations used by the public which generate more revenue, job creation, enhanced exposure of local businesses and the country as an international destination.

The NZICC means New Zealand will be able to tap into lucrative bigger meetings which Sue Sullivan, chief executive of CINZ interviewed last year, said the country is missing out on: "Our biggest competition is Australia. They are able to host big conferences of 2000 and 3000 people that we can't because we don't have the right venue right now; we can't host any more than 1000."

Wimmers says: "The key risk for any convention centre is under-utilisation, the white elephant syndrome - and New Zealand is trying to get into this game at the same time Australia is upping theirs."

Sydney's convention centre is becoming a "mega-complex" in a $1.5 billion revamp at Darling Harbour with the city's newest and biggest five-star hotel attached; the Adelaide Convention Centre is having a A$350m refurbishment and Melbourne a A$210m expansion of its centre.

New Zealand's also wants to raise its regional profile as a meetings destination which is lower than that of competitors like Thailand and Singapore.

In the latest figures available (year to June 2014), New Zealand attracted 57,000 MICE visitors, drawing in almost $500m. Compare that to Australia (1 million such visitors, $2.7 billion in spend; 2012 figures), Thailand (1 million visitors, $3 billion spent there; 2013 figures) and the acknowledged conventions king of Asia-Pacific: Singapore (175 events, 3.5 million MICE visitors and $5.5 billion in receipts, 2013).

Official estimates suggest, when the NZICC is well-established, it will attract new multi-day conferences, bringing in about 33,000 extra overseas visitors - bringing in an extra $90m from local and international visitors and an average annual increase of $49m in national GDP, of which $23m would be an increase in Auckland GDP.

"So you can see the opportunity," says Wimmers, "but it will depend on getting the centre established on the international circuit. They will need a quality marketing effort and networking and relationships will need to be very strong to make it succeed - as well as making sure the quality of the experience when visitors are in town is high. The experience they have outside the centre will be just as important when it comes to capturing the broader economic potential.

"We have a strong tourism industry and ministry who will be gearing up to do that, but it will require significant ongoing coordination across multiple parties. Building the centres only gets New Zealand to the start line of this economic opportunity - the real competition comes in the next few decades, building New Zealand's reputation as a conference destination, delivering quality experiences and regularly winning hosting rights against Australian and Asian competitors."

"We don't know enough about the regional convention centres yet but the question is whether we are big enough to support four major ones.

"Domestically, we risk a situation where local meetings just move to different venues - meaning some hotels and other conference hosts at the moment will lose out. Those centres will also need to be tapping into the international market if they are to be growing the economic pie. "

orgianally published in the NZ Herald

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