PRICE PER GROSS SQUARE FOOT, indemnification clauses, force majeure cancellation policies, T1 lines, high-speed connectivity … what is negotiable and what isn't, when it comes to convention centers? Convention centers negotiations are a completely different ball of wax than working with hotels, say experts, and contractual agreements are in many ways much more complex. Here are some important tips to help build your clout with — and operational understanding of — convention facilities.
One of the first things to ascertain is whether the convention facility is public or private. Most meeting planners agree that price is rarely negotiable with publicly owned convention centers.
“Many of them have legislative and regulatory boards that get involved with their decisions and interfere with how the client would otherwise negotiate,” says Cheryl Nordstedt, deputy executive director of the American Academy of Dermatology in Schaumburg, Ill. “Orlando, for example, has no room for negotiating rates because their rates are decided at the beginning of the year.”
Private centers, however, have the ability to dicker over everything. “Las Vegas has two huge convention facilities and a third is being built,” says Peter Nathan, president of PWN Exhibicon International in Westport, Conn. “It has a city-owned center. It has The Sands, which is private. And now Mandalay Bay is building a center. A private center could shave a bit off the [cost of] square footage or off the meeting room cost. Or it could change a whole array of options.”
Managers of government-controlled convention centers have some wiggle room — if you ask for the right concessions. Prices may be set in stone for exhibit floor space, but many centers will throw in extra meeting rooms at no charge to be competitive. And while each facility has its own idea about how many move-in/move-out days should be free with the convention center rental, getting an extra comp day or two on either end of the event is not impossible.
“Ours is a six-day conference,” says Randy Bauler, exhibits and sponsorships director for the American Association of Critical-Care Nurses, Aliso Viejo, Calif. “but only a three-day trade show, so we get three days of move-in/move-out. We need five. I'll say, ‘Can you give us two extra days? We're using your catering, telecommunications, and maintenance.”
The bigger your event is, or the more events and dates you book, the better the chances of non-negotiable items suddenly becoming negotiable.
“We're in Chicago every year,” says Janet Cooper, managing director of convention operations for the Radiological Society of North America in Oak Brook, Ill. RSNA is the biggest medical trade show in the U.S. Because of that clout, “We have negotiated some things with the city of Chicago that encourage us to stay, including a freeze in our rate rental for five years. We've been able to negotiate the minimum space for rental because of repeat business. We've also worked with the city to rebate some hotel nights back to the society.”
In Albuquerque, N.M., Cooper negotiated another solution to a space problem. Because there was no single hotel large enough for the meeting it planned there, the Radiological Society had to rent the convention center. In order to pay for it, the hotels in town charged attendees an extra $5 per night, money which was then rebated to pay for the convention center.
But size can also work against you, points out Nathan. “If you have a huge show that can only go into four places in the whole country, that restricts your ability to negotiate. The cities know what's going on. If you're on a cycle because your board of directors wants you on the East Coast one year, the West Coast the next year, your ability to negotiate is reduced.”
Ask the venue, “When do you need my business?” That's when the real negotiations begin. For example, every year since 1985, RSNA has brought as many as 60,000 people to Chicago immediately after Thanksgiving.
“Our exhibitors start moving in the Monday before Thanksgiving. We worked out an adjustment in labor rates so the show floor is open on Thanksgiving Day and it's all straight time,” Janet Cooper says of her association's annual meeting at McCormick Place. “This is because we hold our meeting right after Thanksgiving Day. Nobody wants to be in Chicago then so we get concessions because of that.”
The planner always has the advantage, according to Steven Hacker, president of the International Association for Exhibition Management in Dallas. “The information you need to negotiate is almost always public. I don't need to ask the convention center director who's in town during a week I'm interested in. I can look online, check a newspaper. There are all kinds of ways I can do research. I can say, ‘I know the building is empty from July 15 to 18 and I can fill it. Are you interested in talking?’”
If you have date flexibility, you can also use the competition to give you an edge, Nathan adds. “If there is a competitive event to your show, the convention center may want to go out of its way to attract you and give you additional help of one kind. The event manager can say, ‘Their show never comes to New York. I want to come to New York, but I'll need some help.’ If you can move around dates and locations, if you can work with different halls in different cities, and if they're anxious to get your show, that gives you flexibility.”
Can you negotiate a better price by booking a facility five to 10 years out? Not necessarily. Convention center rates are usually set for three to five years out. More than that, however, they won't guarantee. Beyond that time, meeting planners usually negotiate an annual rate increase for each subsequent year. “We will put in the contract that it will only increase by 3 percent a year or by the cost of living,” Bauler says.
Investigate whether deposit due dates are negotiable. “We try to negotiate those because of the way our dues fall,” says Kelly Fox, director of meetings and exhibits for the American Health Information Management Association in Chicago. “Some cities want a deposit five years ahead. Some want a portion three or two years ahead. If we are in a position to pay it ahead, we want it in an interest-bearing account.”
Pat Philips is the director of corporate trade show operations and best corporate practices for VNU Expositions in Chantilly, Va. She books a lot of different events, but many that wind up in the same centers over and over again. The National Kitchen and Bath Show and Medtrade, for example recently wound up in the same center in successive years. That created leverage.
“Those two shows use the same amount of meetings and exhibition space,” Philips says. “Sometimes convention center managers think they can price one of our shows at $1.55 net per square foot and another one $1.35. So one of our shows could be paying up to twenty cents more net per square foot than one of our other shows if we're not paying attention.”
Philips personally reviews all facility contracts for two reasons. The first is to leverage buying power with repeat convention center supplies. She also insists on standardized language.
“There's a lot of research to be done in reviewing a facility's contract,” she says. “Much of it is in standard language that a facility manager doesn't realize won't apply unless you point it out. If the event manager doesn't realize that to be the case, it can be costly. We try to establish a template for each facility so we don't have to reinvent the wheel every time we go back to the same facility with a different show.”
There must be liability insurance, of course, but Philips says you can negotiate to cover both the licensor and the licensee. “If there is an act of God — a tornado or earthquake — not only is facility covered, so is the show,” she says. “Cancellation, indemnification, liability, and force majeure should protect both parties. It should be mutual.”
With a publicly owned convention center, it will be difficult if not impossible to negotiate an indemnification provision. But the degree to which the trade show must indemnify the convention center is highly negotiable.
“Indemnifying someone against their own negligence is something you can do, but it's something I recommend you not do,” says Jed Mandel, Association Meetings columnist, and head of the association practice group at the Chicago law firm of Neal, Gerber & Eisenberg. “Provide indemnification, but limit it to something that makes sense. Indemnify your own negligence, but not theirs.”
Indemnification clauses tend to be one-sided to the building's favor. But most building managers have reciprocal language available that they can substitute to cover both parties.
“Don't assume a form contract is intended to do anything but protect the person who prepared it,” Mandel warns. “The big convention centers all have model agreements that they developed over the years.”
Be sure to obtain a copy of the center's operating policies. Often these documents contain much more information than the contract because you will find special requirements and fees described in them.
Another potential hidden fee: Many shows are expected to provide guarantees for concession stand sales. Investigate external food and beverage outlets that could affect these guarantees. The Pennsylvania Convention Center in Philadelphia, for example, is directly across the street from the Reading Terminal Market, one of the finest food outlets anywhere. Once attendees discover it, they scoot over there for breaks or lunch. Other cities have similar attractions that could take away from your attendees' concession expenditures.
Overall, try and be as flexible as you can, advises Kelly Fox, with the American Health Information Management Association. “You'll get a better package deal if you're upfront and reasonable. Being sly doesn't pay.”
Many of the largest convention centers have exclusive telecommunications providers. In those situations, negotiating to bring in your own provider is a dead-end. But that's just the big picture, says Terry Funk, president and CEO of Priority Networks in Boise, Idaho. Priority's main function is providing in-house service for event networking. It is the exclusive provider of such services at San Francisco's Moscone Center in San Francisco.
In this Q & A, Funk explains that when it comes to details such as bringing in your own computers, that issue is far more negotiable than bringing in T1 lines, because convention centers don't want outsiders crawling all over the innards of their facility putting in new lines.
It depends on the building. Some centers have an exclusive producer; others have no such provider.
If they have an exclusive, it's non-negotiable. If not, it is negotiable and planners can get competitive bids between different providers. More and more, if connectivity is not negotiable, show producers go somewhere else. The network, with B2B and e-commerce, has become a very important part of many events.
Most facilities that have in-house services have a price list and order form to give to anybody off the street. Large show producers can say, “We're going to bring in 400 booths. Here is the number of Internet connections we brought in last year. Can we get a discount on our connections for show production?” Certainly, there is a discount structure for event managers. If they bring in enough off-the-street business, we can give them a good discount, perhaps 10 to 20 percent.
There are some cases where, if a corporate event wants a T1 directly from their offices into the facility, that is negotiable. In the broad picture, from an event manager's standpoint, as long as it's not a very small show, anything is negotiable in a nonexclusive building.
There are elements that simply are not negotiable: union regulations, most fire regulations, structural integrity issues. Then there are facility-specific rules and regulations that are ironclad.
One hall requires that anything larger than 400 square feet needs the building engineer's stamp of approval. Or that anything over 12 feet tall must be positioned near a sprinkler system. Insurance regulations are not negotiable.
Exclusives are not negotiable. But their rates can be. If there's a caterer in the building, you're not going to bring in another caterer, but the rate they quote is negotiable. Even better, there are some circumstances in which even a catering exclusive might be negotiable. For example, you might want a kosher dinner, however most convention centers do not have kosher kitchens. So you can probably negotiate.