UB Insider #40: Filling the Hole Outdoor Retailer Will Leave Behind UB Insider #40: Filling the Hole Outdoor Retailer Will Leave Behind
UB Insider #40: Filling the Hole Outdoor Retailer Will Leave Behind

About this episode:

Last week, following a phone call between Gov. Gary Herbert and members of the Outdoor Industry Association about recent disagreements in regards to public lands, the Outdoor Retailer trade show announced it would be seeking a new host city. For the hotels, restaurants, venues and professional services businesses that have flourished under the regular biannual trade show since it came to Utah in 1996, its loss will leave a hefty hole. In this episode of UB Insider, Scott Beck, president and CEO of Visit Salt Lake, speaks with Utah Business’ Lisa Christensen about filling that hole including who will be hardest hit, how the state can recover, and how its departure clashes business and identity. Subscribe or download this episode on iTunes and Stitcher.

Transcript:

Lisa Christensen: Hello and welcome to UB Insider. I’m Lisa Christensen, Online Editor at Utah Business magazine. Since 1996, Utah has been host to the biannual Outdoor Retailers trade show, events that draw roughly 26,000 people, each of whom in turn spend nearly $1,000 in the state for a total of roughly $43 million injected into Utah’s economy.

Last week, following a phone call between Governor Gary Herbert and members of the Outdoor Industry Association regarding recent instances of political and ideological disagreement between the two in regards to public lands and outdoor recreation, organizers of the trade show announced they would be looking for a new host city for the event after their present contract runs out next year.

Whether the disagreement was the reason behind OR’s intent to leave or the show’s organizers were feeling like it had outgrown Utah’s facilities anyway is immaterial to the fact that the show will be leaving and that absence will leave a mark on some local companies that have thrived under its presence. Here to talk about what that means for local tourism and business is Scott Beck, President and CEO of Visit Salt Lake. Welcome.

Scott Beck: Thank you, it’s good to be here.

Lisa Christensen: So OR is leaving. Broadly, what does that mean for the area?

Scott Beck: So there’s several meanings. One is we’re going to lose a really good friend. I think both our tourism industry and specifically our convention industry really grew up around the Outdoor Retailer markets, as did the markets. When they came here in 1996 it was 5,000 people with 150,000 square feet of exhibit space. This last show in August was 29,000 attendees with 1.2 million square feet of exhibit space. So an industry that was primarily a very niche, kind of out of your garage, some people call it a dirt bag industry, really grew up and became part of our everyday culture. And that growth meant that over those 20 years there have been a lot of close friendships. So that’s going to be probably one part of this.

The second part is the economic impact. When a show of this size leaves a market, it leaves a hole. Now we’re not in a zero-sum game, it doesn’t mean that there is no backfill. It’s the size of that backfill that becomes relevant and part of the discussion that certainly we’re all engaged in in the community. And then I think on some other level it also impacts sort of our ethos and who we think we are. And that’s been one of the most beneficial parts of this discussion is both as a community locally, Salt Lake, Salt Lake County, Salt Lake City, our convention industry and who we are as a destination have had a lot of conversations about what this means in terms of who we are.

Lisa Christensen: So when you mention the backfill, as we were talking earlier in preparation for this you mentioned that the hotels and restaurants nearest to the Salt Palace which is where it has been held won’t necessarily fill the sting because of that backfill because someone will come in to fill that. But it would be the restaurants and other companies farther outside of that reach that would probably feel that a little bit more. Can you speak a little bit more to that?

Scott Beck: Sure. I think clearly everyone thinks that the hardest hit is going to be those restaurants and those hotels right in proximity to the convention center, and actually they’re not the hardest hit. Because whether it’s 25,000 people or 5,000 people, those hotels and restaurants have the same impact. They’re impacted by a 5,000 person show the same way that they are as a 25,000 person show. The people who aren’t are the hotels in Northern Utah Country, the hotels in Davis County, the hotels in Summit County.

We have over 50 hotels in the room block for Outdoor Retailer. Those hotels are going to feel the impact instantly. And then as a broader industry when you have a convention that size it creates what we call compression. So it allows hotels that don’t have a block of rooms for the convention, it allows them to have a higher rate because the people that would normally be downtown are pushed out. And so it does have an impact, a ripple effect that is larger in the extremities.

The other part that’s really impacted by a trade show versus a convention is the exhibitor services segment. So they’re going to be hit the hardest and the most immediate. So think of a company like Alphagraphics. Alphagraphics prints show signage for hundreds of the booths on the show floor. You have Ferrari Color. You have Laser Exhibit Services. You have people who drive fork lifts and the construction workers who build the booths and who run electrical and do all those types of things. Those people aren’t employed the same way in a traditional convention. So those are the industries that are going to be hit first and the hardest by this trade show leaving our community.

Lisa Christensen: Speaking more broadly, what impact has the show had on tourism in the state?

Scott Beck: Again, I think it’s multifaceted. In the sort of immediate what everyone sort of understands, we wouldn’t have a 700,000 square food convention center if it wasn’t for Outdoor Retailer. There has been an Olympic expansion in there as well, but we really have a convention center built as a strategy to retain the Outdoor Retailer markets in our community. And so that has enabled us to host trade shows and conventions that a city of Salt Lake doesn’t typically get to host because of the size of this facility. So it’s had a big impact on the convention industry.

The other impact is one that we certainly understand, but I think is sometimes hard to articulate to those that aren’t in our industry. Meetings and conventions are a really good way to expose people to your destination. As a leisure traveler you have one set of evaluation or criteria you use to select where you’re going to go on a vacation. When you are told by your industry that you are going to come to Salt Lake every year you are exposed to the destination. Whether you would choose it or not, you come. And then you see how cool it is and you see wow, it really is only three hours to Moab. It really is only 25 minutes to the mountains and then you choose to come back as a visitor. And so that impact has been really powerful on the state and specifically on the Wasatch Front.

Lisa Christensen: You mentioned the size of the convention center kind of being built for the trade show. There has also been talk about getting a convention hotel that would help accommodate more of these people and for these large trade show kinds of gatherings. What is the likely status of that if we lose a trade show the magnitude of OR?

Scott Beck: Well it’s still highly likely and probably even more important. The 10-year discussion about the development of a convention center hotel, while it has not been directly about Outdoor Retailer, clearly Outdoor Retailer would have benefitted from that hotel. But this hotel really relates to a strategy of ensuring the long-term viability of the convention center and the enormous public investment in the convention center and staying competitive with our Western market. We are the only city that we compete with for these association shows and conventions that doesn’t have a convention center hotel. And by nature of the size of our market and by several other factors that are way too long for a podcast, or for other future podcasts, every city in the West has had a publicly led or publicly financed development of a convention center hotel.

So we feel, and have been communicating over the last two weeks that the hotel is now even more important. The thing that I always remind people is, last year we lost over 35 conventions because we didn’t have an adequate hotel room block of convention quality hotel rooms. Just landing three of those would replace the business for Outdoor Retailer that we have lost or will lose in 2019. So this is a strategy that’s really important for the long-term viability and the maximization of the Salt Palace Convention Center. So we believe it’s more relevant than ever.

Lisa Christensen: Yeah, so speaking about those other conventions that had shown interest, does the hole that OR will leave kind of raise a flag like, hey guys, there’s an opening here? Or is it like, oh hey, OR left. Maybe we should reevaluate Salt Lake. What is kind of the reputational impact that this will probably have?

Scott Beck: I think it’s real. But I also think it’s again contextual. The outdoor market, the Outdoor Markets and the Outdoor Industry represent two of 52 shows that we had last year. And so much like our economy, our state economy which is one of the best in the country, it’s very diverse. So is our business at the convention center.

Having an issue like public lands policy affect our biggest client doesn’t mean that it affects all of our clients. It’s a very different perspective than North Carolina’s bathroom bill. The bathroom bill crosses all segments. So they’ve estimated over $100 million of lost revenue, I mean the NBA All-Star game, you go down a list of the things that pulled out of North Carolina. So because of the diversity of our trade show clients and our convention clients, more so our convention clients, this political stance is fairly siloed.

Now the reputation of the state as welcoming to the outdoor traveler or the outdoor enthusiast, because of this position we haven’t lost Arches National Monument or Arches National Park. We haven’t lost any of the assets that are iconic to who we are as a state and still have more public land, other than Nevada, more public land than any other state out there. We still believe that the product is there and the experience is there, but there’s going to have to be some recognition that this does affect our reputation. But in terms of the convention industry it’s pretty narrow.

I don’t mean to diminish the impact of this. But in terms of our other 50 conventions, they’re not all saying we agree and we’re not coming. Because their own ethos and their own philosophy maybe doesn’t align with public lands policy. And so within the outdoor segment and if you look at Outside magazine or you go down the list of sort of endemic communication possibilities in that market, there’s some reputation management that we’re absolutely going to have to do.

Lisa Christensen: Yeah, what kinds of adjustments are we going to have to make on a reputation level, and also for those businesses that aren’t going to have that, I guess guaranteed business that they’ve been counting on for the last 20 years?

Scott Beck: Well a lot of that is the responsibility of my organization. That’s why the people who hire us, hire us. The beauty of our industry is that these visitors come to our destination, they spend lots of money, they pay taxes and then they go home. And so we don’t have to educate them. We very rarely incarcerate them. All of these public services that our tax dollars provide, what our visitor economy does is decrease the locals’ tax burden. And so that’s why we’re in the business that we’re in. And so we have been planning, we plan for contingencies all the time.

We lost Adobe two years ago. People don’t really remember it because while it wasn’t as big as Outdoor Retailer, it was 7,000 people. And that’s a big convention for a city like Salt Lake. So Adobe leaves in 2015, and we still beat our total revenue in 2016. Even though we didn’t have Adobe we had other smaller groups.

And so what we want to do now is really work with these stakeholders. It’s going to be really important for a lot of these stakeholders that we find another trade show type of a business that has a very exhibitor-centric format to it so that these services that live and breathe off of the exhibitor community have the opportunity to continue to flourish. And those are primarily exhibitor service companies. Those are caterers. Those are event venues like The Depot. Those are the people that really need another trade show in this community, so that’s our goal. That’s what we’re doing every single day now is ramping those up in terms of that specific market.

Lisa Christensen: So when you talk about the backfill you’re saying you’re the one who’s going to have to find the rest of the fill to fill that hole?

Scott Beck: That’s what we do. That’s our job.

Lisa Christensen: Has there been another loss of this magnitude that Utah has overcome?

Scott Beck: Yes, but not for the same reasons. So I think in terms of, if you look at other segments, we lost the Dew Tour which for several years was one of our iconic events. 70,000 attendees, I think even more than that, and it was very iconic to who we were. They chose to consolidate and go to another destination. And while it wasn’t because of political or policy or rhetoric. It was a pretty big hole and one that again we had to retool and work with a lot of the organizers of that event, with the Utah Sports Commission, and retool and refocus and talk about what we can do and what we can control. And so yeah, we have experience doing this. And again I use the Adobe example.

The one that I think most people don’t recognize is that we had a repeating convention called the Hearth, Patio & Barbecue Association. So this is everything that’s on an outdoor deck, so hot tubs, barbecues, hearths and mantles that are in homes. We had an ongoing every other year relationship with them that was a rotation between Orlando and Salt Lake. And we lost that show. And it took us two years to sort of backfill that show. So this happens in our industry. The one that makes this different is that this was so close to sort of an ethos that we felt we shared. That’s what makes this a little more impactful.

Lisa Christensen: The ethos of Utah is a great place for outdoor recreation.

Scott Beck: Yeah, and even more specific than that, that Salt Lake is the embodiment of that ethos. You can’t take Salt Lake out of Utah, and none of us would want to because it’s part of what we are. And there’s an urban element that creates the possibility to have a trade show like this. Because you can’t have a trade show like this in a rural environment. There’s not the support network, right?

Lisa Christensen: Right.

Scott Beck: So an urban environment that is conscious of its stewardship of the natural environment is really endemic to Salt Lake and that’s what makes this so hard. Is that ethos was very much aligned with this group, more so than anybody else. You know, we’ll do the Emergency Nurses Association. We’ll do, you know, Solar Energy Association. We’ll do a lot of shows that are great people, fun to work with, have an impact on our community, love our community, but maybe aren’t as connected. They don’t go backpacking on the weekends, they don’t wear flannel like we all wear. That’s what makes this one so significant.

Lisa Christensen: So is there an overarching lesson or perspective of this situation that we can kind of look at broadly, you know, about the real nature of the business, the real nature of ourselves or just the reality of doing business?

Scott Beck: I think it’s that last one. I think hopefully what we can learn is that business is business and sometimes business and passion are aligned. And the best thing we can do is recognize that it doesn’t necessarily change who we are. We have to go on those strengths and those benefits that we offer.

The other part is you’ve got to be prepared. You’ve got to have a contingency plan, and luckily I can say we are and we have. We in our industry, we always thought we’d be at this table because Outdoor Retailer was growing so fast and as you alluded to in your intro, we have 35 pounds of gold in a 10 pound bag. And at some point if it grows to be 50 pounds, that’s a lot. The success of the show and all of that, we thought it was going to be a departure because of phenomenal success. So while I do not think that that’s the reason that the show is looking for another venue, because we have been able to stay relevant, that the lessons we take is that business is important to have a contingency plan and to have a strategy to ensure that you don’t take things for granted.

We didn’t lose this because we took these folks for granted. There is a very big political divide that is at the base of this as there are in so many other destinations in the country right now.

Lisa Christensen: For sure. Well thank you and good luck with your mission in finding backfill.

Scott Beck: Thank you and I appreciate it very much. Thanks for the opportunity.

Lisa Christensen: Thanks also to Mike Sasich for production help. Let us know what you think at news@utahbusiness.com or through Facebook, Instagram or Twitter where you can find us at @utahbusiness. Thanks for listening.