TECHNOLOGY SPECTATOR: O'Farrell gambles Sydney conventions
The NSW government risks losing major conferences to other capitals as it embarks on a three-year refurbishment of Darling Harbour, including its convention centre. It's a move which the industry says may not pay off.
The NSW government’s shock decision late last month to close the Sydney Convention Centre for three years from the end of next year for refurbishment throws the plans of IT conference organisers into turmoil and opens a wedge through which rival interstate venues hope to lock in long-term business.
NSW Premier Barry O’Farrell said in April that the popular Darling Harbour precinct would be closed to extend it from 27,000 square meters to 40,000 sqm and offer additional services to keep globally competitive but it wouldn’t reopen until the end of 2016.
Hannover Faris managing director Jackie Taranto, organiser of CeBIT, at the time raised the prospect of moving Australia’s biggest international conference interstate or overseas from the Darling Harbour venue but has since met with Infrastructure NSW representatives who told her they would have facilities to cater for the 30,000 visitors and 500 exhibitors CeBIT expected next year.
"We’re working strongly together with (Infrastructure NSW) to continue our commitment even through this stage that they're redeveloping so we’re looking to find a solution to continue building our event in Sydney and Australia,” Taranto told Technology Spectator.
"We see it as a long-term commitment. They’re committed to finding alternative venues and infrastructure in light of closing down the convention centre for three years. I’m quite confident that will be worked out quite well for us.”
Taranto’s threat to move the event that she estimates has injected $2 billion into the state’s economy over its 11 years – $170 million last year – would have put a noticeable dint in the state’s budgets and projections for Australian in-bound conference tourism, which Tourism Australia projects to be worth $16 billion by 2020 from $8.5 billion last year.
At a recent industry briefing, the redevelopment’s project manager, Tim Parker, was confident the job would be delivered on time.
But Taranto isn’t sure where the NSW government will put her conference while the jackhammers are down at the harbour. Sydney Showgrounds, about a 30 minute drive west of the CBD, is a possibility – it accommodates 7000 for plenaries. If CeBIT were to move out of the centre, then extra and faster trains would be needed, she said.
Business Events Sydney, which promotes NSW on the world stage, says there are 50 locations around the greater Sydney area to pick up the slack, including Australian Technology Park (maximum capacity 3000) and Olympic Park (maximum capacity either 1300 or 21,000).
"There are plenty of venues here and in NSW and the clients are very loyal to Sydney and obviously they are very loyal to Darling Harbour, however we want to work with other states" to relocate events, Business Events Sydney chief executive officer Lyn Lewis-Smith said.
Conference organisers face three issues when accommodating delegates – keynotes that need up to 7000-seat auditoriums, breakout rooms, and an exhibition floor. They must be near hotels of varying quality and on rapid, reliable public transport spines to shift delegates. And they must book years in advance for several years at a time to secure the venue’s calendar.
Spreading wings interstate
Virtualisation software maker VMware stages one of the biggest IT vendor conferences in Australia, attracting 5000 delegates and 77 exhibitors last year. It has used the convention centre for Vforum, the local flavour of its flagship US event, VMworld, but is now looking farther afield for 2014-2016.
VMware marketing director Peter Di Pietrantonio says it will stay in Australia. Its contract with Sydney convention centre ends this year and the vendor is "having discussions with other cities” about relocating.
"Vforum is a multifaceted, integrated event so it’s not just the conference, it’s all the surrounding activity,” Di Pietrantonio says.
"One of the things that has made Vforum so successful is we bring the technology to the event – customers do hands-on technical labs, there's workshops going on around the event. We’re hosting hundreds of sessions at a time so we need a venue to cater for a one-on-one labs environment to a conference that has 2000 to 4000 delegates in a room.
"There's not many places in Australia that can cater to an event that size.”
He says the NSW government is yet to provide alternatives.
"We’re not in a position to say” if Vforum will move from Sydney, he says. "But because of the size of Vforum and commitment and investment we've made we want to continue that.
"But if there isn’t a (Sydney) venue that can do that we’ll look to move to Brisbane or Melbourne. We’re in discussion with both of them.”
Sydney "too expensive”
Analyst group Gartner moved from Sydney’s convention centre to the Gold Coast, a global strategy to hold its gilt-edged Symposium conferences for chief information officers at resorts. Delegates said they wanted a relaxed environment away from the office to concentrate on the gathering.
Gartner vice president for events Claire Herkes says Sydney is on the cusp of pricing itself out of contention on the global stage irrespective of what happens at the convention centre.
Gartner runs an Australian calendar of events that includes security, infrastructure, business intelligence and supply chain but the high cost of operating in Australia, and especially in Sydney, is an impediment to bringing more conferences here, Herkes says. Last year, it held 60 events worldwide attracting 42,748 delegates and generating $US148.5 million ($143.7 million), a lift of 21 per cent on the year before – but Australia only gets a subset.
"Sydney is the most expensive place for us to operate,” Herkes says.
"I've travelled to Sydney for the last 12 years and in the past four years it’s become astronomical and the value isn’t directly aligned to the cost.
"Even just eating out – the conference rates I think are very expensive. If I compare it to the value I’m getting in the rest of the world, it’s really expensive.”
The three-year closure of the convention centre is "very brave”, she says.
"Sydney has to be careful, particularly if the convention centre is taken out of commission and people see better value elsewhere it will be hard to bring people back. They're in danger of pricing themselves out of the market and they should be a little careful around that.”
But she has had a good experience with the Sydney Hilton for smaller events and is keen to stay in the city.
She warns Melbourne is leading the charge to migrate business investment south of the border.
"The most aggressive people right now are the Melbourne Convention Centre – we don’t have a lot of communication with the Brisbane Convention Centre but Melbourne is very much on our case.”
She says her team visited Cisco’s March Live! event at "Jeff’s Shed” and were impressed with the creativity, flexibility and value it offered.
Salesforce is also investigating Melbourne for its annual chinwag, Cloudforce, after next year, it says. It attracted 1600 delegates last year and projects this to double next year.
Symantec, which had 2000 delegates to its Vision event in Sydney last year, is taking its show on the road to reach those who can’t afford to travel.
The information security vendor’s Australian vice president and managing director Craig Scroggie says it is yet to solve the problem of what to do with the closure of the Darling Harbour site.
"It’s something we’ll have to talk to other providers, whether it's NSW government, about the other options they have in NSW,” Scroggie says.
"Our other option is to do our large-scale event in Victoria – if we wanted to do one very large-scale national event they have suitable venues.”
But all the pain and lost business may be in vain, warns a 42-year veteran of the conference industry.
Roslyn McLeod, managing director of professional conference organiser Arinex, says demand will outstrip the new Sydney Convention Centre within a handful of years. She says it needs to be double the size of the planned redevelopment and the closure will put people out of work; she will trim her 117 staff by a quarter.
"There was not real thought" for the future "25-year plan in conferences", she says.
"If we build this site with 40,000 sqm of space, that part of the building will be at capacity by 2019 – it doesn't make sense to put us out of business for three years only to be in same position in 2019," McLeod says.
"If they built an 80,000 sqm centre they would find ways to use it.”