Hawai‘i Convention Center focuses on future offshore bookings

The Hawai‘i Convention Center is on track to achieve one of its strongest revenue-generating years since opening in 1998.

Teri Orton, convention center general manager, said the facility is re- forecasting gross revenue of $24.1 million, which includes $1.4 million of interest income, and a facility net loss of $1 million, which is $4.3 million under budget.

“Even adjusting for the removal of $1.4 million of interest income, we continue to forecast a strong year financially that outperforms budget expectations and hits a record high in revenue,” Orton said.

Orton said the revenue gain is “a combination of citywide and offshore business as well as the growth in local business.”

“We just aren’t up to pre-pandemic levels. We were averaging about 28 conventions per year, and this fiscal year we are looking at 19, and the next year roughly about the same,” she said, but added that on the whole, fiscal years 2024 and 2025 are expected to be good.

Orton said the center also is on the path to break even in fiscal year 2024, which will be the third year since ASM Global has managed the convention center that it has achieved a break-even or positive bottom line. She said that in 2017 the center achieved net income of more than $1.3 million and gross revenue of more than $17.5 million. In 2016 the center’s net income was $808,245 with gross revenue of more than $16.05 million.

“It’s a big deal when we break even, as we save the state subsidies,” she said.

Orton said the center is still coming back from a COVID-19-related drop in large conventions and meetings. Through the first 11 months of 2023, some 378,547 visitors to Hawaii came to attend a meeting or a convention or to take an incentive trip. That was up 28.4% from the same period in 2022. While conventions and incentive trips were up 34.9% and 42.1%, respectively, corporate meetings were down 2.6%.

Despite the drop in “citywides,” the industry term for large events that spread business across multiple venues, she said the center has been seeing its return on investment figures improve. In November, she said, for every dollar spent, the center returned $20.63 to the state, versus $5.40 in December 2022.

Orton said the center was built to support offshore business, which fills hotel rooms. She said offshore business, which comes from outside Hawaii, always will be the center’s focus and purpose. However, she said business ebbs and flows due to recessions, pandemics and natural calamities, including the economy in the U.S. and abroad.

“ASM Global, the building operator, took the approach of diversifying our strategic business plan for short-term business to help offset the expenses to keep the center subsidy from the state to a minimal,” Orton said. “Creating new market segments to diversify our business at the center has helped to generate revenue in times when offshore business was not strong.”

For example, she said indoor sporting events such as volleyball, basketball and futsal; festivals like the Okinawan Festival and the Hawaii Food and Wine Festival; the Honolulu Marathon; concerts; and weddings are all contributing to an increase in business at the center.

“Ten years ago when ASM Global took over the management of the convention center, it was averaging roughly $4 million annually in local business revenue, which is now at a record high of more than $10 million,” she said.

Now the challenge is to increase citywides. Orton said a bright light for fiscal year 2024 is FestPAC, the 13th Festival of Pacific Arts & Culture, which is slated to celebrate its 50th anniversary by convening in Hawaii from June 6 to 16. Orton said the center will serve as the main venue for the event, which is expected to bring as many as 2,500 delegates from 28 nations and attract as many as 100,000 attendees.

“FestPAC is going to be huge for us. The Festival Village & Marketplace, where each nation has an opportunity to showcase their culture, will be here,” she said. “There are 100 delegates per nation participating, and I’m sure others will come to show their support. Hopefully, there will be opportunities for spinoff business with smaller-type conferences that allow us to share best practices.”

Orton said Hawaii’s group business got a boost after the state hosted the Asia- Pacific Economic Cooperation in 2011 and the IUCN World Conservation Congress in 2016.

Still, Orton said the pace report from the Hawaii Visitors and Convention Bureau shows that there are challenges ahead as Hawaii’s meeting, convention and incentive market moves into 2026 and beyond.

She said that as of November the report showed only three definite citywides on the books for 2026, with only six scheduled for 2027, two for 2028 and one for 2029.

“Normally, we’d be in the double digits,” Orton said, adding that the drop in booking pace reflects pandemic-related softening and labor shortages in the sales force that sells Hawaii group business travel.

“Due to the increase in labor cost, utilities and other building-related expenses including leak repairs and moisture mitigation due to leaks, we find it much more challenging to keep our financial bottom line positive without the offshore business supporting our operation,” she said.

HCC also is managing $145 million in repairs and maintenance projects, not including the $64 million rooftop repair, Orton said.

Still, she is optimistic that the center and Hawaii Visitors and Convention Bureau will turn current challenges into opportunities.

“We are still on the road to recovery from the pandemic, but we are starting to see positive developments,” Orton said.

For starters, she said the center is seeing more inquiries and bookings in a three- to five-year window for citywide events from associations and meetings.

“Traditionally, the booking window was seven to 10 years out. So the booking window has shortened. That’s great for us because we need short-term business,” Orton said.

Moreover, she said that there is “more traction in site inspections for prospective business that would potentially consider us in their top three cities that they are going to select from. We are starting to see more queries coming in for Hawaii as one of the options.”

Orton said there also are signs that more people are ready to meet face-to-face again and that virtual meetings, which grew in popularity during COVID-19, are taking a back seat.

She said the continued recovery of the Japanese market also has helped bolster arrivals for the incentive market.

“Our return of our first repeat Japanese-based group Daito was this year,” Orton said. “We hosted 2,000-plus delegates for a banquet dinner that happened in two waves for a total of 4,000-plus from Japan. This was a promising sign that this market will return soon.”

Orton said the center also is seeing one of its highest conversion rates for turning tentative bookings into definites for the 2024-to-2027 time period.

Orton said another new development is the acquisition of ASM Global by Legends, whose client roster includes many top sports brands such as the Dallas Cowboys, Real Madrid, SoFi Stadium, One World Observatory, FC Barcelona, University of Notre Dame, New York Yankees and Ryder Cup, as well as leagues and properties such as the NFL, MLB, NASCAR, PGA of America and FIFA World Cup.

“The acquisition will take place over the course of the next six months,” she said.

Ron Bension, ASM Global president and CEO, said in a statement, “We’re thrilled to join Legends, which shares our client-first approach and advances our goal of offering our partner organizations a truly seamless experience while driving the growth of their businesses. Our clients will benefit from Legends’ robust services, innovation, technology, and global partnerships which, combined with ASM Global’s venue management and content and event booking expertise, will provide our clients with locally tailored solutions and cutting-edge technologies to achieve outstanding fan experiences and improved venue owner results.”

Keith Vieira, principal of KV & Associates, Hospitality Consulting, said ASM Global has worked hard to bring HCC out of the pandemic- related lull and that Legends has a reputation as a good operator. But he said HCC needs the state Legislature’s support to fully recover the market, which tends to be regenerative.

“Once the pandemic hit, the budget was cut, and they got rid of some of the people who were selling the convention center. That’s the challenge of having year-to-year asks of the state Legislature without multifunding plans,” Vieira said. “The large-group business market is one market we should be pursuing during downturns. But we stopped (booking) because we didn’t have enough sales people.”

Jerry Gibson, president of the Hawai‘i Hotel Alliance, said the convention center’s achievements are critical to visitor industry success.

“They’ve done a good job booking short-term business. Right now we are worried about the pace of citywides,” Gibson said. “Citywides fill different holes at different times. We build our base of business off of these conventions, which help us plan for next year’s budget season.”

Group travelers are coveted because they tend to spend more than leisure travelers, he said.

“The big groups also bring in a lot of banquet and catering business, which helps our bottom line and gives our employees hours,” Gibson said.

He added that a high percentage of group travelers bring friends and family with them for pre- and post-trips and return to Hawaii for vacations.

“It’s a market with a lot of potential to give back,” he said.

BY THE NUMBERS

Offshore events at the Hawai‘i Convention Center during fiscal year 2024, which runs through June, helped bolster performance.

>> Offshore events: 19

>> Total contracted hotel room nights: 118,810

>> Total attendees: 56,600

>> Total economic impact value: $363,151,377

>> Total tax generation: $42,488,711