Detroit, July 1, 2010 – The Detroit Regional Convention Facility Authority voted unanimously today to accept the results of a strategic plan for the renovation of Cobo Center, commissioned by the Authority, and conducted by Convention, Sport and Leisure International.
The CSL considered four areas of research in preparing its recommendations: historical Cobo Center event performance; convention and trade show industry trends; comparable and competitive facilities; and event planner demand.
Cobo currently ranks fourth in the market in exhibit space and does not appear to be losing events due to facility size, according to CSL. Research also concluded that: the existing Cobo space can accommodate approximately 90 percent of the existing national convention and tradeshow industry; significant additions of space should not be a near-term priority; however, additional 25,000 to 50,000 square feet of flexible space is recommended to better accommodate exhibits, general sessions and food functions such as:
- Reconfiguration of Cobo’s south end
- Extensive renovations and upgrades to other areas throughout Cobo, particularly in the vicinity of the Michigan Hall
- Back-of-the-house, particularly in servicing meeting and ballroom space
Authority Chairman Larry Alexander said that an expansion of 25,000 square feet provides a more efficient footprint for operations and customer service without significantly increasing operational cost immediately.
“The Authority has worked hard on this plan, and now, we look forward to seeing the timeline established and adhered to, as well as assuring flexibility in the plan to expand further down the road as needed,” said Rod Alberts, Executive Director of the Detroit Auto Dealers Association/North American International Auto Show, who was a participant in the strategic planning process.
“The CSL’s careful study of Cobo Center has given us much needed data and insights,” said Alexander. “However, revenue for Cobo is also key to our long-term viability.”
Pursuant to the enabling legislation, Cobo must operate a balanced budget. However, prior to the Authority assuming control of Cobo, the City of Detroit provided an annual subsidy of $15 million to cover an approximate $20 million operations budget. Now that the subsidy no longer exists, the Authority has been focused on ways to ensure the facility operates more efficiently while seeking additional revenue sources to close the gap.
The financial findings of CSL’s research show that revenue generated at Cobo Center is very low relative to the other centers reviewed.
The DRCFA currently relies on various revenue streams to support Cobo Center operations including state contributions and Center operating revenue. The state contribution is currently set at $11 million, but will decline over time to $5 million, and under current plans will eventually be discontinued.
Alberts said that the present plan to expand by 25,000 square feet, by no means achieves the major expansion that (Wayne County Executive) Robert Ficano and the NAIAS had vied for last year, “however, it does provide, in the near term, the facility upgrades and operational improvements that translate to cost savings for its customers,” he said. “That is a major step in the right direction and I believe the Authority’s goal is to improve Cobo’s bottom line and make our city more competitive and that, in itself, translates to greater income for the region.”
“We’ve always known that the money allocated for Cobo would have to be carefully and wisely spent,” said Authority Treasurer Michael Carroll. “This strategic plan allows us to maximize the community’s investment and get the most bang for our buck.”
With respect to operations, the CSL survey research found that enhanced customer service is the most referenced element of improvement, followed by aesthetic upgrades to the Center. It also found that there appears to be a general sense that some type of new approach to Center management is necessary to represent to the broader convention and tradeshow industry that important changes to Cobo Center are being undertaken.
The CSL analysis also addressed Cobo Center Sales and Marketing. Findings suggest that Cobo’s current sales department, which consists of a single manager and one part-time support position, be boosted with four sales professionals and a support position.
Event Planners weighed in heavily in the CSL research. Based on survey results, national conventions and tradeshows have a 45 percent positive response rate for Cobo Center. This positive response rate is similar to the overall positive response rates for numerous large markets throughout the country.
Also, research demonstrates that the areas surrounding the Cobo Center, the district in which the Center sits, need to be considered as part of long term efforts to improve the Detroit convention and tradeshow product. The importance of creating an active district inclusive of entertainment, restaurants, hotel inventory and other visitor assets in a walkable environment is cited by national event planners as the top emerging characteristic in terms of creating a desirable event destination.
“This plan has given the Authority and the people of metro Detroit a lot to consider and to get excited about,” said Authority Vice Chair Juliette Okotie-Eboh. “The renovation of Cobo Center clearly must go hand in hand with an investment in our riverfront and our community’s amenities as a whole.”
Recommended next steps for the Authority include establishing available funding capacity; finalizing key Cobo enhancement/expansion parameters; retaining project architects; soliciting feedback from event planners; creating a customer advisory board; preparing a destination development plan; retaining a contract management firm; formalizing sales and marketing agreements with the Detroit Convention and Visitors Bureau; and evaluating revenue projections and potential public- and private-sector support.
“An immediate needs expansion in the short-term allows us to best serve our customers today while paying close attention to market demands,” Alexander said. “The next step is to transform Cobo Center into a destination location for local residents and national visitors, which will generate more revenue for the facility to operate well into the future.”