As tourism and business travel to San Francisco continues on the long road to normalcy, a new speed bump has arisen as VMware canceled its contract with the Moscone Center for its 2023 conference.
The Palo Alto-based cloud computing company has made the decision to pull the VMware Explore conference and relocate the event.
The 2022 iteration of the conference was held in person for the first time in San Francisco since the pandemic and drew around 10,000 attendees.
While VMware has not officially announced the new location, industry sources say the company is likely planning for a Las Vegas conference relaunch. The desert city hosted the company’s conference between 2016 and 2018. The San Francisco Business Times first reported the news.
In a statement, a VMware spokesman confirmed the cancellation and said it was a “decision that makes financial sense both for the company and our customers in today’s economic environment.”
Prior to VMware’s departure, SF Travel, the city’s tourism board, said it had confirmed over 30 events for the Moscone Center next year, including the Asia-Pacific Economic Cooperation (APEC) Leaders Meeting, which will draw an estimated $36.5 million in total local economic impact.
That number of events is close to the 33 events that were held in 2022 at the convention center, which accounted for an estimated 317,359 hotel room nights, a little more than a third of the 850,000 room nights in 2019.
“We are disappointed they moved the conference, which they’ve also done in years past,” an SF Travel spokesperson said. “We would welcome VMware back to San Francisco in the future. In the meantime, we are focused on bringing new convention and event business to San Francisco.”
Las Vegas was one of just three major markets in the country that saw projected hotel business travel revenue rise in 2022 when compared with pre-pandemic levels, according to data from the American Hotel & Lodging Association (AHLA).
Projected 2022 business travel revenue for Vegas was expected to increase by $474.4 million—or 17.7%—when compared with 2019 numbers.
San Francisco, on the other hand, saw the steepest drop of any major metro with a loss of $1.68 billion—or 68.8%—when compared with 2019.
That mismatch is not lost on tourism officials in San Francisco, who have taken steps to boost business travel, including making the Moscone Center more competitive with rival destinations. The business travel category makes up around a third of all tourism and travel in the city.
In September, the Board of Supervisors approved an increase in the city’s hotel room assessment, which will increase the amount charged to guests in hotels and short-term rentals and raise an additional $10 million annually for a fund that would cover event organizer’s costs to book the Moscone Center.
Alex Bastian, the president and CEO of the Hotel Council of San Francisco, hailed the September return of Dreamforce to the Moscone Center as a major milestone for the recovery of the city’s business travel sector. An estimated 40,000 in-person guests attended the conference, the largest since the pandemic started in 2020.
“Everything is open for the first time with this convention,” Salesforce CEO Marc Benioff said in an interview at the time. “Let's see if this can be a great convention city and everybody has a good time.”
Even prior to the pandemic, the city had started to see an exodus of high-profile conventions—including Oracle’s CloudWorld—which left San Francisco for Las Vegas, citing dirty street conditions and high hotel prices.
A major test for the city’s ability to handle a huge influx of business travelers is the upcoming J.P. Morgan Healthcare Conference scheduled for Jan. 9-12 in Union Square. The event, which is being held in person for the first time since 2020, represents a way to get the travel and tourism industry started off on the right foot, according to Bastian.
Bastian pointed to the advantages that San Francisco has as a business travel destination, including its proximity to Asia, its restaurants and its walkability, while noting that “there’s much more work to do collectively.”
“If J.P. Morgan is a success—particularly as it’s the first convention of the year—it can really show San Francisco off as an incredible destination for conventions and ensure our convention business grows in 2023,” Bastian said.