Price per gross square foot, indemnification clauses, force majeure cancellation policies, the cost of bringing in live animals for medical testing, T1 lines … is there anything in a convention center meetings deal that is not negotiable? Not much, say the medical meeting planners we talked to.
While you may think you have no leverage in negotiating convention center contracts, try on this bit of attitude adjustment: What's negotiable is what's important to you as an organizer. Know your group and what's important to it.
“It never hurts to ask,” says Cheryl Nord-stedt, deputy executive director of the American Academy of Dermatology in Schaumburg, Ill. “If an issue is important for your organization, be willing to go to the mat.”
The first question to ask is whether the 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,” according to Nordstedt. “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 privately owned center. Negotiating strength depends on the show. A private center could shave a bit off the square footage or off the meeting room cost. Or it could change a whole array of options.”
And even 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 a an extra comp day or two on either end of the event is rarely beyond negotiation.
“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 you are, 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 United States. Because that equals 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 nifty solution to a space problem. Because there was no single hotel large enough for a meeting it planned there (not its annual conference), the Radiological Society was forced 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. (Attendees were informed of the arrangement; the extra fee was listed in the hotel reservation brochures.)
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, you can't hold the event in Greensboro, N.C. Your options and your ability to negotiate are greatly reduced.”
If your event's date is movable, a range of issues becomes more flexible in pricing and negotiating.
“The February through May, and September through November time slots are the ones most in demand,” Nathan says. “Negotiations for those times are more difficult. But if you wanted to host a show in New York City between Christmas and New Year's Eve, they would probably kiss your rear end in Times Square.”
In other words, you can take the same number of attendees and expand or contract the economic value of the event in the eyes of a convention center and CVB depending on timing. 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 that any work done on Thanksgiving Day was billed at straight time rates, rather than overtime,” Janet Cooper says of her association's annual meeting at McCormick Place. “This is because of the time we hold our meeting, right after Thanksgiving Day. Nobody wants to be in Chicago then, so we get concessions. It's a really down time in the city. They love our being here at that time.”
Ask the venue, “When do you need my business?” That's when the real negotiations begin.
“The planner always has the advantage,” says Steven Hacker, president of the International Association for Exhibition Management in Dallas, Texas. “The information you need to negotiate is always available; it's 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?’ The same events come into play with the hotel. If the convention center is empty, likely the hotel is too. And it will be inclined to negotiate concessions.”
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. 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.’ Remember to be flexible. 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. In addition to that, 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 increase by only 3 percent a year or by the cost of living,” Bauler says.
You might 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 years 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 convention centers over and over again. The National Kitchen and Bath Show and Medtrade, a home healthcare industry show, for example, recently wound up in the same center in successive years. That created leverage.
However, she notes that you have to read the fine print carefully. Sometimes due to dates and other show-related factors, convention centers can charge the same client different exhibit hall rental rates for the same space, she cautions. In the case of the National Kitchen and Bath Show and Medtrade, for example, shows which use the same amount of meetings and exhibition space, “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 at VNU for two reasons. First is to leverage buying power with repeat convention center suppliers. She also insists on standardized language to protect VNU's interests. “There's a lot of research to be done in reviewing a facility's contract. 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,” Philips says.
There must be liability insurance, of course, but Pat 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 the 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. “You can indemnify someone against their own negligence, but it's something I recommend you not do,” says Jed Mandel, MM 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 in 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.”
You may have something special for which the generalized facility contract might prove the exception. Think about a medical show.Without negotiation, a “no vehicles in the convention center” provision would prevent a bloodmobile from being on exhibit.
Issues that could present a security risk and therefore might incur additional costs also need to be negotiated upfront. “Hazardous waste must be negotiated,” Fox says. “Or if you're going to bring in live animals for testing purposes, that could become controversial in cities that are strong on animal rights. You have to find out about picketers. That could cause a big commotion.”
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.
Entering negotiations in a confrontational or adversarial way will not get you what you need: support of the venue.
“Try and be as flexible as you can,” advises Fox, “and you'll come out with a better package deal than if you demand everything. Keep it open and friendly. Think of it more as a partnership. You're going to work with these people a lot. Be on the up 'n' up. Don't try to be sly. That doesn't help anybody in the end.”
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 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 the event. It used to be that networks were important just at shows such as Comdex and Macworld. Now, connectivity is very important for medical shows.
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 non-exclusive building.
There are elements that simply are not negotiable. Union regulations. Most fire regulations. Structural integrity issues are not negotiable. 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. If you want a kosher dinner, most convention centers do not have kosher kitchens. So you can probably negotiate.