Where have all the french fries gone? Muriel Hogan, senior conference manager for Xplor International, the electronic document systems association, is having a hard time getting fries served on the tradeshow floor along with the hamburgers and hot dogs her group likes to gulp at lunch time. The reason? The profit margin must be greater on a bag of chips than on fries, she figures.
"Somebody has really put a lot of analysis into these kinds of things," Hogan believes. Another example: She's noticed that water fountains in some convention centers, especially the newer ones, have disappeared. "But you can easily rent a cooler for $55 or have jugs of tap water put in for a charge," she says.
Alas, the days of wine and roses--french fries and water--are long past as the era of convention centers as "loss leaders" gives way to facilities that increasingly must operate in the black as local governments cut back on subsidies. And many convention centers, predominantly those in high-demand areas, are squeezing profits out of shows in new and novel ways.
John Katz, expositions manager for the American Chemical Society, Washington, DC, finds the trend understandable but a bit disingenuous. "Convention centers are always patting themselves on the back for keeping their space-rental rates low," he points out. "But what is the point of the self-congratulations when they're increasing fees in areas other than space rentals?" He adds, "It's much harder to budget costs years out when you run into exclusives you didn't even know about at the time of negotiation."
The traditional criteria by which convention centers evaluate a piece of association business (dates, square footage of function space, and number of hotel rooms) remains key.. But in today's seller's market, high-demand facilities analyze the potential for a range of revenue streams from association business. Indeed, first-time users of convention centers are very often surprised and overwhelmed by everything they can and are charged for.
Unlike hotels, which make their money on sleeping rooms and food and beverage--so they can afford to give planners some freebies--convention centers have only their halls as revenue producers, notes John Swinburn, vice president of operations for the International Association for Exposition Management (IAEM). Because centers were originally built and conceived as money losers, "for years event organizers have not been paying full freight at convention centers," he says.
More Exclusives? Exclusives at convention centers have long been a sore point for many event organizers. But Hogan is finding centers that are taking them beyond the catering, electrical, and security exclusives of the past. For instance, the host facility for her 1997 annual global conference, which will draw more than 14,000 people, has contracted an outside telephone company to handle telephone service. The cost of a phone line installation and handset for the show this year is $400--$250 more than the cost at last year's annual conference (in a different first-tier city.)
Moreover, today's show organizer and exhibitor seem to value Internet access as much as telephone connections and electrical power, and this need has fueled one of the fastest-growing revenue areas for convention centers. Newer facilities, such as the Atlantic City Convention Center, have spent millions of dollars on a telecommunications-friendly infrastructure, while existing ones like the Dallas Convention Center, have done expensive retooling to include a permanent fiber-optic backbone built into the ceiling above the exhibit halls, lobbies, and arena.
Here are some other "hidden" or unexpected convention center charges and requirements that Hogan has encountered recently:
A requirement that the association hire a center's contracted paramedic team. "We've always had someone on site, but now instead of hiring one paramedic on our own, we have to hire four paramedics from an exclusive contractor, so our costs have tripled for this service in one year."
In the past, the group paid about $25 per lock to have locks rekeyed on the doors of association offices at various convention centers. This year the cost quoted was $175 per lock--a fee which she was able to negotiate down to $50.
As a service to attendees, Hogan's association typically makes handouts for the sessions, which amount to about a million pages of document reproduction. One convention center stipulated that all photocopying had to be done through its business center, which charged five cents a page. Hogan was able to get that condition removed when she pointed out that the center's photocopier could not adequately handle the volume she needed. The documents were reproduced on site for free by one of the exhibitors at the show.
One convention center wanted an exclusive on any attendee shipping done from the convention center. "We just said no way were they going to make $5 per package from our attendees," says Hogan. Other centers have stipulated exclusives on cell phone and computer rentals.
Hogan reports that her association's costs for security, always an exclusive at the convention centers she has used, have gone up 35 percent in the last three years. One pleasant exception: For an event at the Rhode Island Convention Center in Providence, the group was allowed to hire its own security for the evening hours.
Catering Cutbacks In a long letter to the editor in a May 1997 edition of Tradeshow Week, American Chemical's John Katz questioned convention centers' pricing policies for catering--specifically why there are no volume discounts, how service levels canbe maintained when service charges are automatic, and why a dozen bagels can cost $30 inside a convention center.
Katz says he understands that halls need to generate more revenue from shows. His wish list: A sheet that summarizes exclusives and unusual charges or conditions so that they don't come as a surprise. "Not all five pages of a contract are of equal importance, and a list that highlights exclusives and unusual situations would be much appreciated and go a long way in avoiding confusion and misunderstanding."
One time, for example, he found out the hard way that a hall at a major exposition facility had no PA system, and that in order to make announcements on the tradeshow floor, it would cost a couple thousand dollars to have electricians put up some speakers. "We never used to ask if a hall came equipped with PA system," he says. "We do now."
Katz is also cutting back on food and beverage functions at convention centers. His group surveyed exhibitors and found that the exhibitor lounge and its food and beverage service ranked behind free lead- retrieval devices and free hot-links on the association's Web page in value to exhibitors. The association plans to cut back on the exhibitor lounge and continue to offer free lead-retrieval devices.
"Centers know we're not going to drop them because of the cost of bagels," he says. "They sense they have some leverage since in many cases we're booking facilities so far out." He adds that exhibitors have put a lot of heat on general contractors over the spiraling cost of drayage, yet no one has really turned up the heat on catering costs. "Anytime you have an exclusive, chances are those services are going to be more expensive because there is no competitive pressure."
Hogan's tips for saving on food and beverage include ordering soda by the liter or serving it from a pre-mix (as in soda fountains) instead of using cans, which can run in excess of $2 per can plus tax and service charge. She has had concession stands open during move-in and move-out days, available on a cash basis to exhibitors. This year, when the hall asked that she guarantee x-dollars of sales per hour, she negotiated instead that the stands open for three hours instead of five.
"And you better have a good history to support the concession being opened for whatever amount of time," she advises.
Nickel and Diming Space rental rates, which account for the lion's share of revenue for most convention centers, are probably the easiest area of negotiation--often the rate is locked, or, if you're buying out the entire facility or close to it, you may be able to negotiate a percentage discount. It is the myriad of other fees and charges that can wreak havoc on your budget, Hogan cautions. Here are some other areas she says to look out for:
Ventilation and lighting charges: Usually organizers must pay for heat or air-conditioning during move-in and move-out days. Hogan is finding that some facilities now provide only 25 percent illumination during those days, and will charge an hourly fee for full-power lighting.
Trash: Some facilities charge for removal of trash from the exhibit aisles. (Exhibitor trash is handled through the decorator.)
Water: There may be a charge for putting water on tables in meeting rooms.
Linens: Hogan says she is seeing a $2 to $5 charge to put tablecloths on session-room tables. And some facilities won't do it, saying decorators must do that, she says.
Reset: Halls normally charge to reset a session room, but Hogan says one facility tried to charge the group to set a room for a catering function. Such a setup is usually covered by the service charge levied on catered events.
Rigging: Exhibitors are used to rigging charges in the exhibit hall, but the association is generally responsible for rigging fees in session hallways and general session areas. "And I have never seen a rigging charge by the quarter of an hour or half hour. It's always an hourly charge."
Stagehands: Planners are used to hiring stagehands for large general session events. But recently Hogan was told she needed a stagehand at any breakout session that used more than three microphones.
Inventory: With all the expansions going on at convention centers, Hogan has found that some of them do not have adequate inventory of things like tables and chairs. One such facility allowed her to use her decorator's inventory, but the decorator did not want to have its inventory mixed with the center's for fear of theft. So Hogan had to rethink meeting room setups to take care of this problem.
Scheduling: Some centers do not allow you to set up registration areas until after the previous event has closed for the day, which may mean time-and-a-half charges for your group, Hogan cautions.
Excessive Charges? Are some centers going overboard with charges? "To be perfectly frank, yes," says IAEM's Swinburn, who previously directed the International Association of Assembly Managers. He suggests that facilities look at operations to identify services that the majority of hall users need--like room changeovers, tablecloths, and water service--and then package those fees into the basic rental rate.
But the chances of such a change are slim, he admits, because no center wants to be the first to raise space rental rates. "Convention centers are between a rock and a hard place," Swinburne concedes. "Disclosure is the key issue. There is no reason not to tell organizers quickly and completely what additional charges might be. Except fear of losing business."