San Francisco Customer Advisory Council December 3-4, 2009
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1 San Francisco Customer Advisory Council December 3-4, 2009 Council Members Marty Balogh Kathy Doyle Cele Fogarty Gia Garunchio Sandra Toms LaPedis Bill Lynch Rob Mesirow Cathy Nash Robin Preston Victor Robinson Germaine Schaefer Janet Skorepa Chris Wehking Johnnie White Council Members Nancy Elder Elaine Howard Kathy Kellett Jodi Morrison Steve Pitt Lori Silva Brenda Weaver (in attendance) American Bar Cisco Systems SmithBucklin Semiconductor Equipment and Materials International RSA Security National for the Specialty Food Trade CTIA The Wireless American Psychiatric National School Boards American College of OB/GYN American Diabetes American Urological American Society of Plastic Surgeons Cardiovascular Research Foundation (unable to attend) American Society for Microbiology Mortgage Bankers Apple Oracle Corporation National Automobile Dealers United Business Media American Geophysical Union Local Partners & Speakers Joe D Alessandro Leonard Hoops Walden Agustin Scott Baublitz Hilton San Francisco Patricia Breslin Hotel Council of San Francisco Michael Borosky Eleven Chris Clark Joe Curran Hotel Nikko Murat Eskicioglu Moscone Center Matt Field TMG Partners Melinda Franklin United Airlines Ernie Garcia Lanie Griffin Starwood Hotels Rob Gauthier Parc 55 Karen Halstead Eleven Kathryn Horton Tamra Howes San Francisco Marriott Ethan Hughes Starwood Hotels & Resorts Melody Lendaro Moscone Center Kimberly Lee Lysa Lewin Deidre Lewis Brenda Ly Kimpton Hotels Matthew Martinucci Parc 55 Kenley Moy David Nadelman Grand Hyatt John Noguchi City & County of San Francisco Leonie Patrick Anna Marie Presutti Hotel Nikko Wendy Ramirez Bob Sauter Moscone Center Matt Stiker Roxy Stone Grand Hyatt Gordon Thompson Cappa & Graham Jenny Toomer Kimpton Hotels Joan Varadi Moscone Center Facilitator David Kliman The Kliman Group 1
2 SAN FRANCISCO CUSTOMER ADVISORY COUNCIL MEETING MINUTES December 3-4, 2008 Confidential Thursday, December 3, 2009 The Council was welcomed; and its goals and objectives were outlined (providing specific and usable feedback regarding ways in which San Francisco can improve how it sells, markets and services meetings and events). The Council was asked to speak openly and candidly on behalf of their respective organizations and as meeting industry leaders. New and returning Council members and San Francisco hosts were introduced. Rob Gauthier and the Parc 55 team were thanked for hosting the meeting. Joe D Alessandro s Good Morning America live clip was viewed by the group. CVB and Destination Updates - Leonard Hoops Key updates were provided; the following summarizes the comments: Tourism Investment District (TID) went into effect on January 1, 2009 Significant Moscone Center capital improvements are planned (budgeted at between $50 to $70 million, final amount based on future TID revenues); air walls in Hall E are being replaced now, completion expected in January See action report for complete list of Moscone capital improvements Moscone virtual tour is now online Attendance building toolkit has been revised Disney Family Museum now open in the Presido SFO Terminal 2 under complete renovation (seeking LEED certification) and is scheduled to reopen in late 2010 with 13 new domestic gates SFO passenger loads and lift are up slightly vs. most other destinations which have seen double digit decreases Exploratorium is moving to new location on the Embarcadero New cruise terminal located at Pier 27 will open in 2013; expected to offer 100,000 square feet of dramatic event space New Bay Bridge is expected to open in 2013 Mission Rock (located in Lot A at ATT Park) is being redeveloped and will offer 180,000 square feet of new event space Construction will begin 2010 on the $2.2. billion Central Subway; it will provide new north/south transportation link from ATT Park to Chinatown with a stop one block from Moscone Center New $4.2 billion Transbay Transit Center is expected to be completed by and 2
3 United Airlines Update - Melinda Franklin United Airlines was thanked for their sponsorship of Council members transportation. Melinda outlined key issues at United; the following summarizes her comments: 2009 YTD losses of about $1 billion; 2008 losses of $6 billion Premium international markets are significantly depressed Compressed lift primarily in smaller markets; The Council commented that this negatively impacts ability to use smaller destinations for groups (e.g. Monterey) UAL committed to providing service to major hubs including SFO 2,400 less flights within or originating in California Airfares are forecasted to remain flat in 2010 The Council recommended that UAL allow name changes for certain group tickets (i.e. speakers) and Melinda was asked to share this recommendation with UAL headquarters Union Update - Toni Knorr Toni provided a summary regarding Union related issues based on her role as President of the Hotel Council; the following outlines her comments: Contract expired in August 2009 Healthcare costs are the key issue (now $1,080 per month per employee, was $600) Negotiations are currently stalled Hotels have been (and will continue to be) well prepared to manage strike conditions even with full occupancy Hotel Council site offers the most current information Hotel Updates San Francisco Marriott Marquis (note name change to include Marquis brand) is undergoing a $22 million ballroom renovation due for completion in February 2010 Grand Hyatt will undergo a $38 million renovation of all guest rooms in 2010; expects completion by year end 2010 (work will be done on 4 floors at a time); a further $3.5 million lobby renovation is also planned; meeting space and suites renovation planned during Allergy friendly Pure rooms are now available Kimpton Hotels - Brenda Ly is new contact for meeting customers Action Items - Report of Progress since March 2009 meeting - David Kliman See web link for update on the Council s recommendations and action items: 3
4 What Went Wright What Went Wrong - Johnnie White - Cardiovascular Research Foundation Other Customer Reports are found at September 21-25, 2009 first time meeting in San Francisco 11,802 attendees from 116 countries - 16% increase over 2008 meeting in DC o 6,679 attendees from USA - 4% increase over 2008 o 5,123 attendees from outside US - 37% increase over 2008 o Attendance driven by meeting content and San Francisco s overall appeal Booked to return to San Francisco every other year through 2015 Multidimensional educational experience focused on: o Evidence-based medicine o Technology and Technique o Live transmissions o Extensive case reviews 100 live cases from 22 international sites offered in 3 halls Hotel Block: o San Francisco Hilton (HQ) o Grand Hyatt o Handlery Hotel o Hotel Nikko o Intercontinental o Monaco- Kimpton o Palace Hotel o Palomar Hotel - Kimpton o Parc 55 o Experience & judgment o Increasing coverage of regulatory & social issues o Prescott Kimpton o St. Regis Hotel o San Francisco Marriott o Serrano - Kimpton o Sir Francis Drake - Kimpton o Triton- Kimpton o W San Francisco o Westin St. Francis Moscone Center o Center decor isn t appealing, decorators added pizzazz, but cost is high o Draped entire area outside Halls D-E o Used extensive draping, up lighting and florals in 100 rooms o Advertising walls are very unappealing o Quality and service was very good, but very pricey o Budget challenges forced innovative ways to manage F&B service Negotiate pricing Ticket system Distribution of gift cards valid for concession stand merchants High costs resulted in reduction of amount of food served; this was a revenue loss to Moscone o Live cases were very successful o Phenomenal attendance numbers, but overcrowded meeting rooms o Great Moscone staff o Excellent attendee feedback regarding layout of the city in relation to Moscone Center Moscone Center Opportunity Areas: F&B pricing is 30% higher than Chicago Improve public announcement system between North and South buildings Develop more innovative ideas for F&B service 4
5 Create proactive system to address overcrowding in meeting rooms Find creative ways to make Moscone look more appealing Need convention center expansion $250 Union broadcasting fees are not communicated transparently Key Industry Trends - Customer Advisory Council The Council discussed market trends, key issues impacting the meetings and convention industry and how San Francisco is viewed by the marketplace; the following outlines their feedback: F&B and labor cost differential for meeting in San Francisco is too high and not sustainable over short or long term Customers and key stakeholders do not compare convention center and hotel pricing; they expect higher level of quality and service from hotels Managing and reducing cost is a key focus for association and corporate planners There is enormous opportunity to move meetings to less expensive destinations which have significant appeal and attendance building capabilities; San Francisco can t afford to rest on its laurels; and must take this issue seriously San Francisco s Union regulations are especially unfriendly for exhibitors; noncompetitive when compared to many other destinations especially outside the USA; inability to affordably entertain customers on the show floor etc. Las Vegas hotels and Convention Center are effectively buying new business which previously would not have considered using Vegas McCormick Place s Union Liaison position communicates transparently all key points and is considered very effective; Philadelphia s Union Broker is totally ineffective Attrition and rooms outside the block are increasingly important; attendees are less interested in booking inside the block; last minute buying decisions have become the norm; loyalty is a diminished factor in the buying decision; attendees demand value and competitive pricing; some planners are considering blockless citywides ; example of CAC member who produces 7,900 rooms peak but blocking only 5,000 peak due to attrition concerns and expecting 40% to go around the block Hotel which don t respect contracted lowest rate guarantees are creating havoc Moscone Center Development - Matt Field, TMG Partners Matt discussed potential concepts to expand Moscone Center; this report purposely does not summarize the proposed concepts in order to maintain the project s confidentiality. However, the Council recommendations regarding the proposed plans are noted below: Expand registration areas in North and South lobbies Create Food Concession areas with fixed and mobile concessions Ensure new space has lockable doors Two rows of pillars in new space is better than a single row down the center Attempt to minimize underground feeling to exhibit halls and meeting rooms Ensure technology is cutting edge Review New Munich Trade Fair Centre and Stuttgart Convention Centers meeting and press rooms as best practice examples 5
6 Review McCormick Place West s model as a best practice Create a series of divisible meetings rooms ranging in size from 1,000 to 2,000 square feet with appropriately scaled ceiling heights as well as larger meeting rooms Effective Destination and Consumer Marketing Program - Matt Stiker, Chris Clark, Michael Borosky, Karen Halstead & the Customer Advisory Council The Council discussed effective DMO and consumer marketing programs and talked about ways in which San Francisco can enhance its marketing tools and programs; the following outlines their comments: Cities have become uniform and boring (offering the same Starbucks, Capital Grill etc.) Need to continually reinvent the destination to appeal to attendees who return regularly as their meetings rotate Very hard to stand out and cut through the clutter, I build a wall around myself to protect me from the barrage of marketing material Destination DC s client luncheons cited as a best practice and highly effective; they match existing and potential customers; I didn t feel like I was being pitched Knowledgeable and persistent sales professionals who do effective research and understand customer needs make all the difference Critical that all marketing efforts create relevance. Even with San Francisco's great drawing power, efforts that makes my meeting feel special can win the business. Boston's history of supporting Education cited as a best practice example Pragmatic and emotional appeal have about equal weight in marketing a destination Customer events which have a strong educational component are highly effective San Francisco is perceived as arrogant; sometimes it s like an 8 year old pretty girl who constantly tells everyone how gorgeous she is! Don t rest on your laurels! Don t get stale Need to create new and appealing added value features to counter real and perceived value offered by competitive set Houston model cited; uses subtle methods such as sending a destination centric magazine to a CEO in effort to spark a conversation don t forget the importance of the boss What Happens in Vegas, Stays in Vegas still very effective Share success stories; peer to peer testimonies are very powerful Conde Nast and other awards aren t meaningful to sophisticated meeting professionals, but do have cache with consumers, attendees and stakeholders Most CAC members inherited San Francisco as part of their rotation Social Media The Council was asked to comment on social media; the following outlines their feedback: Everyone is moving toward use of social media Outcome measurement is critical Technology will augment live events, not replace them San Francisco will experiment and partner with customers using social media Apps are key; must offer targeting networking with strong cost benefit 6
7 Friday, December 4, 2009 Breakfast Meeting The Council briefed Joe D Alessandro regarding the pricing and labor discussion held on Thursday; the following outlines the discussion: Customers are scaling back due to cost escalation; San Francisco must repackage its messages and rework pricing to ensure it doesn t lose customers Chicago has lost several major customers due to price inflexibility; story covered in the mainstream press Perception that SMG has limited leverage ( hamstrung ) with the Unions; while some customers have excellent experiences with SMG; they feel their hands are tied regarding F&B and labor costs Seattle Center s catering operations are extremely creative Unions in Chicago offered flexibility during recent Floor Covering show which was moved away from Orlando. San Francisco s Unions need to show similar flexibility and understanding regarding the huge economic impact convention business has on San Francisco Perception that City and Hotel leaders don t accept responsibility for the terms of the contracts signed with Unions; they believe it s all the Union s fault General concern expressed regarding hotels maintaining their product and standards during tough economic conditions Nancy Elder and Cathy Nash were recognized for their service on the Council (this meeting marks the end of their terms); all Council members were thanked for their ongoing commitment to San Francisco. ACTION ITEMS AND RECOMMENDATIONS Create solution to feeding large groups using fixed and mobile concessions Create Task Force to address F&B and Labor cost issues; Gia Carunchio, Bill Lynch & Janet Skorepa volunteered to participate along with Joe D Alessandro, Leonard Hoops, Bob Sauter and John Noguchi Send Moscone cost and policy comparison template to Council for input; then develop business model comparing Convention Center costs; use in discussions with Union and City leadership Invite a city official from the Board of Supervisors to a portion of the next meeting to discuss and hear feedback regarding increased costs of labor and F&B in San Francisco Ensure correct wording is used when communicating hotel strike related information ( informational vs. strike etc.) Communicate all Union costs transparently Use Council members more strategically; e.g. peer-to-peer marketing and references; help close market specific new group business Create customer events which offer strong educational content Develop messages which market San Francisco as fresh, a reinvented experience Future Council meetings should begin with an afternoon business session on Wednesday afternoon followed by all day meeting on Thursday; next meeting dates to be advised; expect sometime in August or October Council requested we avoid meeting during September 7
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