IT APPEARS TO BE A RETRO TREND: Hearkening back to the days, 30 years ago, when show organizers contracted directly with specialty suppliers, several associations are becoming their own general contractors. The most notable: The Packaging Machinery Manufacturers Institute, which announced in July the creation of PACK EXPO Services LLC (PES) to service the PACK EXPO trade shows. “We wanted to offer superior customer service, stabilize the costs of exhibiting, and take the hassle out of exhibiting at trade shows,” says Charles D. Yuska, president of PMMI, Arlington, Va. “For years our loyal exhibitors have expressed frustrations about all of these issues and, we are committed to doing something about it.”
To support the effort, PES is licensing The Expo Group's patented Single Source® business process and software technology, which provides exhibitors with one-stop shopping from a menu of services and equipment, a single point of contact for ordering, and one invoice at the end of the show.
“This is different from customers who hire us as their general service contractor, where we give them bids and they leave it to us to set the prices,” says Ray Pekowski, president and CEO of The Expo Group, Irving, Texas. “Here, PACK EXPO will have control of everything. They'll set the prices, collect all the dollars, and pay the suppliers.”
How will this stabilize exhibitor costs? PES will negotiate directly with suppliers to get the best value for exhibitors. Because PMMI isn't in the business of general contracting, PES can operate on a narrower margin and offer lower-priced services than a general contractor.
Whether a show the size of PACK EXPO, at 1.2 million net square feet, can deliver on its promise remains to be seen. The first trial will be PACK EXPO International, next November at McCormick Place, Chicago, with an expected 1,600 exhibiting companies.
“I think you can predict with absolute certainty that it will result in convenience for corporate exhibit managers, but on the issue of true cost savings, the jury is out until after the show,” says Doug Ducate, CMP, CEM, president and CEO of the Center for Exhibition Industry Research, Chicago. “They're getting into a business that's not their core business, and for an association, that's usually a slippery slope.”
A Different Tack
Though PMMI may be the first association to form its own limited liability corporation for service contracting, it is not the first to seize control of the role of service contractor. Atlanta-based TradeshowLogistics, run by the mother-daughter team of Bonnie Aaron, CEO, and B.J. Enright, president, has gotten at least two associations to fire their general contractors and “produce their own shows.” AFCOM, Orange, Calif.-based producer of the IS Expo for data center professionals, left The Expo Group to try the TradeshowLogistics Management System, which includes management consulting services, customer relations management, and an online service manual powered by the London-based Exhibitor Manual Co. Ltd.'s “emsystem.”
“From the exhibitor's standpoint, it makes life a lot easier,” says Jill Eckhaus, AFCOM president. “They can go to one place, order everything on this one site, pay one person, and have one customer service representative they deal with from pre-show to post-show.”
To date, Eckhaus has produced two editions of IS Expo with TradeshowLogistics, most recently the 20,000-net-square-foot spring 2003 show, at the Las Vegas Convention Center with 85 exhibiting companies. According to the post-show survey, 83 percent of exhibitors saved money over their 2001 experience. “We saved our exhibitors 35 percent on material handling and shipping and 34 percent for overall show services,” Eckhaus says.
To help achieve these results, two customer care representatives called exhibitors and walked them through the online ordering and payment process. The care reps mailed letters pushing the preferred shipper, TradeshowLogistics Transport. All but one exhibitor placed orders in advance, nearly 90 percent ordered online, and 47 percent selected the preferred shipper.
For the fall 2003 show, Eckhaus plans to capture some of those savings for AFCOM. “That's the beauty of this system. You could charge exhibitors what you always charged them, and you could make all of the money, or you can give the savings back to exhibitors.”
Another Takes a Leap
The American Academy of Pediatrics, Elk Grove Village, Ill., will use Trade-showLogistics for its annual meeting this November at the New Orleans Convention Center, with about 300 exhibiting companies.
Customer satisfaction was one factor that led AAP to leave GES Exposition Services for TradeshowLogistics. “On all of our post-meeting evaluations, no matter what we did, we still couldn't bring customer satisfaction up from a ‘fair’ to a ‘good’ or ‘excellent’ level,” says Marisa Goldberg, CEM, CMP, manager, Exhibits and Meeting Services. “It was no fault of GES. There were just too many players involved.”
As consultant, Enright is managing exhibitor services on AAP's behalf. In addition to improving customer service, her goals include decreasing new exhibitor turnover. She assigned three customer care representatives to handle pre-show orders, on-site troubleshooting, and post-show billing inquiries.
Says Donna Karl, CMP, director, meetings and convention services. “We have been able to reduce costs by $400,000 for just this one show. That's what we're predicting based on past orders,” says Karl. “We're looking at a 10 percent savings for exhibitors.”
A large part of the projected savings is based on convincing 46 percent of exhibitors to use the preferred shipper. “We picked shipping and handling as a major service to cut costs,” Enright says. “We offer discounted materials handling services and competitively priced shipping, so exhibitors [have an incentive] to use TradeshowLogistics Transport.” Other savings will come from competitive prices negotiated on at least 30 different service. If savings are higher than estimated, TradeshowLogistics will share in the profit.
Whether driving down costs or revving up customer service is the primary goal, giving exhibitors a single point of contact is a win-win scenario. “The bottom line is, they pay a lot and don't get good service,” says Pekowski of The Expo Group. “This is a service business.”
The Expo Group has been refining its service for more than 15 years. With a standard ratio of one customer service representative for every 100 exhibitors, it goes into every show with close to 90 percent of exhibitors pre-ordered. “That's where the cost-savings are,” Pekowski says. “People say the way we do things has to cost more money. The reality is, it's more work on the back end, but there are efficiencies gained on show site by having so many pre-orders.”
Those efficiencies could be phenomenal at an event the size of The Super Show, which is trying The Expo Group's Single Source Solution® for the first time January 12 to 14, 2004, at the Orange County Convention Center in Orlando. The Expo Group will handle most services, but not drayage, for the 2,600 exhibitors at the Sporting Goods Manufacturers Association show. Since 2001, The Super Show has hired Show Biz USA, Arlington Heights, Ill., to provide flat-rate drayage, which has saved some exhibitors nearly $30,000 per show.
Unlike the situation with PMMI, The Expo Group will still be the general contractor, not SGMA. “We don't want to get into the service contracting business,” says Show Director Hardy C. Katz, North Miami, Fla.
For some shows, though, the potential to earn general contracting revenue may be seductive. “We can create savings through the system, and they can decide whether they want to pass those on to the exhibitor, or fund activities within their own organization,” says Enright. “The smartest thing for a show to do may be to take profits generated by the show production and pour that into activities that generate attendance. That ultimately benefits the exhibitor.”
The bottom line for exhibitors may not be saving money but getting better service and knowing what they're paying for up front. The one-stop shopping model — whether operated by show management or a general contractor — delivers on that promise.
One might argue that what AFCOM and AAP are doing is not being their own general contractors so much as contracting with a general contractor, Trade-showLogistics, in a different way. Call it management consulting, if you will, but Aaron and Enright, both formerly employed by GES, come from long careers in service contracting. They procure services on behalf of the association and get paid a fee for doing it.
“Most general service contractors have been aggregating vendor services either in-house or in partnership with other vendors already,” says Steven Hacker, CAE, president of the International Association for Exhibition Management, Dallas. “This kind of direct, vendor-to-vendor model ought to result in lower costs than if a third, independent party were to become involved in brokering these arrangements.”
Other kinks in the cost-reduction scheme include negotiating for facility-exclusive services to be included in the online service kit, convincing a majority of exhibitors not to use their own exhibitor appointed contractors, and overcoming resistance to online ordering, which typically is just under 30 percent.
Finally, the vendor selection process is more complex than comparing competitive bids. Quality service comes, in part, by building relationships with reputable vendors. Sometimes it may be worth the added cost to hire a team that's worked together on hundreds of shows and know that the contractor is ultimately responsible for timely delivery and quality service.
The PMMI approach, on the other hand, puts responsibility squarely in the hands of an association-owned service contracting company, which will manage delivery of services such as drayage, electrical, plumbing, carpet rental, booth labor, cleaning, and rigging. The Expo Group will provide the order and bill processing technology, as well as customer service. More than 20 customer service reps will service the account, for an exhibitor-to-ratio of 75-to-1. Still, with its “all drayage included” program, PMMI is assuming considerable risk and expense, dealing with union labor, workmen's compensation, insurance and liability issues, just like any other general contractor.
Future of Contracting
If the trend continues and more associations become their own general contractors, who will provide services that have typically been part of the general service package — labor, carpeting and signage, for instance? Specialty contractors may bid on the work, but it's questionable whether they can do it more cheaply than a general contractor with econ-omies of scale in its favor.
“It is not our policy to have orders, invoices, and billing filtered through a third party,” say Ellen Beckert, corporate director,and communications, The Freeman Companies, Dallas. GES Executive Vice President, Industry Development, John Patronski says, “We're full-service. Our goal is to deal directly with the association or organizer.” Both Freeman and GES offer robust online systems and customer service organizations to process exhibitor orders.
“General service contractors are very willing to say, ‘This is how our system works. Tell us how you want it to work, and let's see if we can work together,’”says Susan Schwartz, executive director of the Exposition Service Contractors Association. “We're all looking for better ways to serve exhibitors.”
Contributing editor Cathy Chatfield-Taylor is a freelance writer and editor based in Lenexa, Kan. She's a former editor of Expo.
Who's Idea Was It?
In what may become an ugly legal dispute, The Expo Group claims exclusive rights to the Single Source Solution®, which allows exhibitors to interact with a single company to order all the services needed for exhibiting. In fact, the U.S. Trademark and Patent Office issued U.S. patent 6,557,007 in April 2003 for Ray Pekowski's invention of the “Automated Convention Processing System and Method.” The first use of the system was in 1987, when Pekowski serviced a Tradeshow 200 event in Washington, D.C., with five customer service representatives entering orders on a network of rented PCs. Since then he's refined the system and in 1999 moved the software component from a DOS-based network program to the Web-based e-commerce system, cyberservices®, which is now patented and licensable.
In September 2002, TradeshowLogistics announced its flagship product, the TradeshowLogistics Management System, which combines service processes and technology to deliver “a new level of control to show management.” TradeshowLogistics licenses technology provided by Exhibitor Manual Company Ltd., London, for the online service manual component, known in Europe as “emsystem.”
“Both TradeshowLogistics and emsystem are infringing on our patent, and we have reached out to them to resolve the issue. We will pursue all alternatives as appropriate to protect our intellectual property,” Pekowski says.
As we went to press, three general services contractors, Freeman, GES, and Champion, issued a press release saying that Pekowski's patent is invalid since it “simply patents a way of doing business” that all three companies have been using “in one way or another for years.” Stay tuned.