Cobo struggles to find winter replacements for auto show
Only one major event so far is moving into the newly available months created by the North American International Auto Show's move to June, but Cobo Center's manager is optimistic.
"If I’m being honest, it was a great benefit to us to have the auto show during less-attractive months with regards to weather and season," said Claude Molinari, Cobo's general manager. "We're trying to make the best of the situation."
The Detroit auto show, the convention center's largest event, is moving from January to June next year. Exacerbating matters, an accelerated setup and tear-down schedule for the auto show means Cobo will lose about $450,000 in rent — more than the publicly owned convention center made in profit last year before state subsidies.
Since June traditionally had some of the largest events, Cobo faces a challenge in making up those expected losses during what is a slower time of year for the business.
So far, the only major event to take advantage of the newly opened weeks in November, December and January is the Michigan Boating Industries Association's Detroit Boat Show. Instead of February, the 2020 event will take place Jan. 18-26. The show uses 75% of the center's convention space.
Amanda Wendecker, the boating association's vice president of marketing, said an expanding auto show previously pushed the boat show to February.
"When there was an opportunity to move back, we scooped it up," she said. "It extends the season for a few weeks and gives more time for boaters to order boats."
Beyond the boat show, Cobo is negotiating with three other "high-profile" conventions for December; Molinari believes Detroit could land them all. He expects to have news on those in the next month and a half.
Other bookings include a bridal show, dance conventions and a cheerleading event that can run concurrently with other major events such as the boat show. A volleyball tournament in February also is in the works.
"Cobo Center is very busy," Molinari said. "Rarely is there a day that doesn't have a move-in, move-out or show taking place. Sometimes we have all three."
Cobo and the Detroit Metro Convention & Visitors Bureau are taking a strategic approach to attract meetings and conventions by identifying organizations with annual meetings during those months and with missions that could lead to other opportunities, said Dave Beachnau, the bureau's senior vice president of sales, marketing and sports.
The American Bus Association, National Tour Association and Professional Convention Management Association are all on the "hit list," Beachnau said.
"What those events bring are convention planners and tour operators that are exposed to the city and the region and can drive their own incremental business to Detroit for future years," he said.
Beachnau pointed to a convention held by the American Society of Association Executives that brought meeting planners and organization leaders to Cobo in 2015; that led to a number of other events and increased awareness of the city's transformation.
2020 auto show
The Detroit auto show in the past represented more than 40% of Cobo's annual revenue and created thousands of jobs for carpenters, electricians, Teamsters and others. Plans in 2020 seek to make the event more visitor-friendly and hands-on with outdoor displays and activities in Hart Plaza, Campus Martius and other public areas as well as exhibits in Cobo. Despite a larger footprint, the show still fully booked the convention center, Molinari said.
Further details on what to expect at the rebooted auto show are expected in the coming weeks, said Amanda Niswonger, spokeswoman for the Detroit auto show.
“We look forward to making the 2020 North American International Auto Show the biggest and best in the industry," she said in a statement. "We fully believe moving the show to June will allow Detroit to sparkle on an international stage in ways it has not been able to in the past. This will provide an even greater impact to the city and to our show partners and sponsors.”
More than 774,000 people attended the 2019 auto show, which is estimated to have an economic impact of $430 million on the regional economy. That, however, was 35,000 fewer guests than in 2018.
With the auto show's move to June, automakers will have just three weeks to set up their exhibits instead of the traditional eight weeks on average. The change is intended to simplify stages and save on costs in hopes of bringing automakers back to the show after almost all European makes — except Volkswagen — ditched the 2019 event. But the reduced timeline means Cobo will get about $450,000 less in rent from it, more than the $400,000 it made in profit in fiscal year 2018, not counting its state subsidy.
"That's not so easy to make up," Molinari said, but "the strength and survivability of the auto show is critical. If the auto show does great, it's great for Cobo. The success of the show is our success."
Cobo traditionally kept June open for annually rotating events, which often were the center's second largest shows of the year. In the past, Cobo hosted the national conventions for the Service Employees International and the National Letter Carriers unions. Chinese retail e-commerce conglomerate Alibaba Group Holding Limited was in town in 2017. German automation company Siemens AG had an event there earlier this month.
Several major associations, Molinari said, were negotiating for June in future years, though that is no longer an option with the change in auto show dates. Two meetings, however, booked different months.
The Detroit Regional Convention Facility Authority, a board comprised of five representatives from the state of Michigan, the city of Detroit and Macomb, Oakland and Wayne counties, took over operations of the struggling venue from the city at the end of 2009.
Since then, the center has undergone a $279 million renovation and now annually attracts 1.5 million visitors. Its profits are a departure from the one-time drain on the city finances of $21 million annually. The authority's goal is to make the facility self-sustaining by 2024.
Detroit-based Chemical Bank also won a 22-year, $33 million naming-rights deal to the center in February. If the bank's merger with TCF Bank receives regulatory approval later this year, Cobo will become the TCF Center.
Still, to attract some of the largest conventions and events, Detroit needs more hotel rooms, Molinari said. That lamentation also is heard around attempts to lure national sporting events, especially after the NCAA last year rejected the city's bid to host another Final Four.
"They say, 'Hey, when you get up to 8,000 hotel rooms in the downtown, let us know,'" Molinari said, noting a recent event for the National Society of Black Engineers had visitors staying at hotels near the airport and in Southfield. "People want to walk to the center and downtown. If you have to bus every day, it's not as attractive."
Despite openings of the Shinola Hotel and the Element Hotel at the Metropolitan Building, Detroit is about halfway to that 8,000-room goal, Molinari said. Recent development announcements, however, have promised more is to come. Occupancy at hotels hovers around 70%, which makes them hesitant to promise a few hundred rooms for a convention a year or more in the future, he said.
"It’s always a buyer's market, but these shows, they know their value, and they want to receive a certain amount of financial consideration with convention center rates and hotel stays," Molinari said. "We're competing not just with North America, but internationally."