Puerto Rico Poised for Growth

SANDI CAIN, NEWS EDITOR
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San Juan, Puerto Rico -With more than $1 billion in public/private tourism investment, including the two-year-old Puerto Rico Convention Center, Puerto Rico is poised to make a run at snagging a bigger share of the trade show market. Its U.S.-based economy, tropical location and cruise ship port already make it a tourist destination. Now officials are rolling out the red carpet to position the commonwealth as an offshore option without the need for a passport—a marketing technique also used by Hawaii.

“We want to position Puerto Rico for global competitiveness and make tourism an economic engine,” said Gov. Aníbal Acevedo-Vilá at a recent tourism investment conference to which industry journalists were invited.

Other factors also work in its favor. The Puerto Rico Convention Center in San Juan—Puerto Rico’s largest city—is the largest in the Caribbean. The convention center has 152,700 square feet of prime exhibit space, along with 28 breakout rooms and two ballrooms. The three-year-old Coliseum de Puerto Rico nearby adds another 34,000 square feet of potential exhibit space to the mix. Both are operated by Philadelphia-based SMG. The $432 million convention center already has hosted 764 events with 651,000 attendees. It has another 1,171 events on the books for years through 2015. “It has surpassed all expectations,” said Manny Sanchez Biscombe, executive director of the Puerto Rico Convention Center District Authority.

That performance compares favorably with other similarly sized centers in the U.S. that opened or expanded around the same time. Palm Springs, CA has nearly doubled its business since its convention center expansion opened in January 2006. Hampton Roads Convention Center in Virginia, which opened in Spring 2005, has 838 events on the books through 2015 and saw a year-over-year increase of more than 300 events between 2006 and 2007.

The Puerto Rico Convention Center currently sits alone on a 113-acre parcel that is the anchor of its convention center district. A 500-room Sheraton headquarters hotel is under construction next door and a 200-room Crowne Plaza nearby was announced at the investment conference. Both are expected to open in 2009.

San Juan currently has about 13,000 hotel rooms, but the closest to the convention center are a 10 to 15-minute walk away. By 2012, there will be 1,000 new rooms near the convention center and another 2,000 to 4,000 new rooms citywide. But Puerto Rican officials are acutely aware it will take more than that to become a major trade show and convention player. “Our goal is to reach between 18,000 and 20,000 total rooms,” said Ramon L. Sanchez, executive vice president and COO of the Puerto Rico Convention Bureau.

In positioning itself as an attractive offshore option for convention business, Puerto Rico follows another model already successful in Hawaii: pursuing business from groups that draw both international and U.S.-based attendees to their shows. In Hawaii, the draw is from Asia; Puerto Rico is aiming for more European delegates.

“Our mission is to be the preferred meetings destination for the Americas,” said Ana Maria Viscasillas, president and CEO of the Puerto Rico Convention Bureau. Roughly 85% of its business already comes from the mainland, generally from Florida and the East Coast. In 2006, visitor numbers reached 5.5 million. Now the bureau is making an effort to broaden the appeal with a new office in Dallas and marketing efforts targeted to California and Canada.

From a California traveler’s perspective, the nonstop flight from Los Angeles to San Juan was just about one hour longer than a flight to Honolulu. But though the airport already is the main connection point for Caribbean destinations, nonstop flights from the West Coast and major European cities such as London or Paris are rare. The commonwealth hopes to remedy that with the addition of a $400 million third terminal expansion that will allow the airport to add service.

“Having a convention capital in the Caribbean is ‘long overdue’ said Jim Burba, president of Burba Hotel Network in Costa Mesa, CA. who moderated the Tourism Investment Conference. Burba said it’s difficult to find a location even for the 400 or so people who attend the annual Latin American Investment Conference. “I have to believe there’s a market for larger meetings and conventions (in Puerto Rico).”

The Commonwealth has a natural convention and trade show base in the lucrative biotech and pharmaceutical markets. It produces 11 of the 20 best-selling drugs in the U.S. But amid recent cutbacks at some pharmaceutical plants, Puerto Rico is seeking to broaden its biotech and biologic convention and trade show business. Toronto-based Shoppers Drug Mart will hold its annual convention for 5,000 there this year (2008).

The Biotechnology Industry Organization (BIO) most recently held a Council of State Bioscience Associations meeting there and considers it a mainstay of the industry. “We recognize that Puerto Rico is third in its capacity for biologics,” said BIO director of events communications Tracy Krughoff.

On another front, Puerto Rico is setting its sights on association business that typically rotates locations. Among recent recruits, which held events geared to the Hispanic market: Washington, DC-based AARP, which staged an inaugural Hispanic festival that drew 8,000 attendees and the U.S. Hispanic Chamber of Commerce, which brought 5,000 delegates to its annual convention in San Juan last year.

Puerto Rico also hopes to build on its sports connections—something that management company SMG began doing on the mainland more than a decade ago. The Coliseum is a mainstay for sporting events and concerts and can hold up to 18,000 for a general session. There’s also an outdoor plaza and private suites available for events. Some citywide events, such as the World’s Best 10K race, include a trade show component. Other sporting events include the new ESPN Tip-Off for NCAA Basketball, World Wrestling Entertainment and Arena Football. In all, the Coliseum has hosted 325 events and 1.8 million attendees in its three-year history.

One caveat for show organizers: don’t expect rock-bottom rates. Puerto Rico’s hotels—like those on the mainland—are enjoying high occupancy and rates. According to Smith Travel Research, Puerto Rico’s hotels as of Oct. 2007 had an average occupancy of 71.3%—10% higher than other Caribbean islands—and an average daily rate of $192.75. Plus, high leisure demand may present challenges for organizers who need a large room block on specific dates. Hotel taxes can add 15.5% to a hotel bill on top of the 5.5% sales tax.

Trade show organizers also need to be mindful of the 6.6% excise tax on inbound shipments of anything sold, given away, or consumed in Puerto Rico.

As Puerto Rico continues to develop its convention infrastructure through dedicated public and private efforts, there’s no question it has the potential to become a key player for mid-sized shows in the Western Hemisphere.

Reach Manny Sanchez Biscombe at (787) 722-3309 or msanchez@prcda.com; Ramon Sanchez at (787) 725-2110 or rsanchez@prcb.org; Ana Maria Viscasillas at (787) 725-2110 or aviscasillas@prcb.org; Jim Burba at (714) 540-9300 or jburba@burba.com; Tracy Krughoff at (202) 312-9274 or tkrughoff@bio.org.

 

Sidebar: Hotel Development

San Juan, Puerto Rico hotels that have undergone recent renovations include:

  •  The historic El San Juan Hotel & Casino, now an LXR property, near the airport.
  • The San Juan Marriott, which completed a $35 million renovation in March.
  • A $67 million renovation of the 570-room Condado Plaza Hotel & Casino, also by LXR Resorts.
  • The 248-room La Concha Renaissance Resort, which reopened in December.
  •  A $35 million makeover of the former Westin, now a Wyndham hotel.
  • The Pierre Hotel at Gallery Plaza in midtown that is in the midst of redoing all its guest rooms and public space. It will be converted to the island’s first Doubletree Hotel when renovations are complete.