The event centre business has seen strong growth in the past five years and is having an impact on traditional hotel operations as newer and more specialized facilities have entered the market.
Over the last few years, we have seen a noticeable increase of interest in free-standing, purpose-built event facilities located in suburban areas and in key destination resort areas. More recently, we have seen hotel developments paired with a dedicated event centre, creating a symbiotic relationship. The three most crucial factors to differentiate an event centre are:
- location (proximity to intended target market),
- property characteristics (exterior architecture, interior décor, function space), and
- quality of service (good management team assists in training motivated staff and optimizing demand based on their knowledge of the local market).
Urban Event Centres
In the last decade, the event centre sector has evolved from one dominated by “banquet halls” which often catered to specific cultural groups, to state-of-the-art facilities catering not only to traditional users but to a wider range of corporate and industry groups as well.
The increased diversity of the population, the growth in social catering, and the need for state-of-the-art facilities has created opportunities for an updated version of the banquet hall – event centres. In many cases, these facilities provide enhanced food and beverage offerings, high quality surroundings, and advanced audio-visual capability. When event centres are developed in conjunction with a hotel, it allows these facilities to expand their offering beyond weekend social business, helping capture mid-week corporate clientele. When combined with a hotel, these contemporary event centres have the advantage of not just an expanded range of user groups, but also the ability to provide convenient accommodations to many of those attending events.
Destination Resort and Event Facilities
Interest in the development of destination resort and boutique resort facilities continues to increase. Venues offering suitable facilities sell out years in advance, and investor interest in the development of event venues and accommodation options to satisfy this growing source of demand is increasing.
Meeting, conference, and wedding requests are a key demand driver to these types of properties. Locales such as Prince Edward County, the Muskoka region, Thousand Islands, and Bay of Quinte have seen increased levels of tourism. Travelers are looking for unique experiences and the demand for distinctive and stylish resort properties has grown. However, given the seasonality of demand within Canada, and particularly Ontario, meeting and event facilities have shown to be an important source of income in the shoulder and off-season periods. In addition, “destination” weddings within the couples’ home province have shown considerable growth over the last few years, with many couples opting for a rural destination.
Understanding the Market
The analysis and valuation of assets in this industry can be challenging since most facilities are independent and owner managed. As a growth industry, the sector has not yet developed standardized accounting practices as seen in the other segments of the hospitality industry. Often times there is limited data available on market supply and demand, attendance data, detailed financial data, staffing, payroll, operating costs, etc. In our practice, considerable time is spent reviewing and validating operating data and benchmarking results to ensure the stated results are reasonable.
Through our Hospitality practice, Cushman & Wakefield has developed a series of data bases on market inventory, financial performance, operating benchmarks, and actual results. Data related to transactions of these properties is often difficult to obtain; however, Cushman & Wakefield has been involved in a number of transactions, providing us with insights on the investment aspect of the industry as well.
Banquet and event facilities bring their own unique opportunities and challenges from both valuation, operational, and investment perspectives. Increased activity in this sector will be an interesting trend to observe, and access to reliable data will be key in creating successful developments and investment opportunities.
Charles Suddaby has provided advisory and valuation services to the hospitality industry for 30 years and currently leads the Hospitality & Gaming Group at Cushman & Wakefield in Canada. His consulting practice includes market and feasibility studies, valuations and appraisals, development strategies, operational reviews, asset management, litigation support and other services associated with the tourism and hospitality industries.
Brian Flood has provided advisory and valuation services to the hospitality industry for 30 years and leads the Hospitality & Gaming Group at Cushman & Wakefield Ltd. in Canada. His consulting practice includes market and feasibility studies, appraisals, development strategies, litigation support, and other services associated with the tourism and hospitality industries.