Rent: plus, plus, (plus) or inclusive?
Hello again!
I have received numerous notes, emails, tweets, skywriting, posts, carrier pigeons, and phone calls regarding my first use of this blog. OK, there really was no skywriting or carrier pigeons. What I did receive was a steady stream of communication, both public and private, with suggestions, concerns, topics, rants, and some people that just wanted to make a personal connection. One thing I heard a lot was that I did not really define myself, as I prefaced that I would in the start of the last post. Since my goal here is not to talk about myself, I’ll include this link for anyone that cares to read my interview with Michelle Russell from the Convening Leaders Show Daily. ‘Nuff said.
At PMA, we run one of the larger trade shows in the U.S. each year, so I received a fair amount of communication from that sector of the community. Yet, when I look at the all the conversations that initial blog post spawned, nearly all of it focused on one aspect: net revenue a.k.a. money, duckets, dough, shekels, scratch, moolah, cheddar, etc. Given our current state of the world this is no surprise to any of you, however, the number one thing that continues to be un-discussed publicly is one of the largest factors that make up net revenue: rent.
This seems to hold true whether you are talking about hotel room rental for 20 people or a one million gross square foot buyout. One of the callers wanted to know what their organization should be paying for convention center hall rental. This is a great question, but it unconsciously caused me to cringe a bit before giving my non-committal answer. This got me to thinking about why I was uncomfortable answering this question. After all, I tend to not have a problem speaking my mind or sharing my opinion when asked – and sometimes even when not!
This remains one of those questions that we skirt when the topic arises, or directly avoid discussing during the conversation at the bar with colleagues. Because if everyone honestly answered the question, the answers would all be different, ranging from free to full price. Variations in hotel room rate have about a hundred different factors that can be pointed to: brand, location, time of year, competing events, supply and demand, room type, etc. Rent is a whole different animal, with far fewer limiting factors, so why is the real pricing structure nebulous?
In the U.S., convention centers focus on the NSF (net square feet) rate, which seems to make it more palatable, breaking down that big ‘ole building into 12-inch squares. In the micro view that price can seem relatively inexpensive, but in the macro it adds up quickly: $1.60/NSF X 300,000 = $480,000, and that typically just gets the lights on in the halls you just bought. Yes, in turn, show organizers re-sell that 12-inch section of concrete for upwards of $25, but (like the exhibitors that buy space) there are a host of other expenses that have to be paid. For PMA, these unique expenses also include daily air conditioning (produce goes bad quickly in a hot hall), excessive trash pulls, and special food and beverage needs to name just a few.
Each event is unique in its needs, but most organizers are having the same conversations around the world right now: Wi-Fi is an expected “must have” for the majority of attendees, who use it for everything from exhibitor freight tracking to keeping up with the office to social media. Attendees are angry when they are charged for services like this, especially on top of the expenses they are already spending to be there. Here’s an example: I recently was at an event in a recognizable property and when I inquired about Wi-Fi in the meeting room I was told that the pricing structure was $100 for the first user and $50 for each additional user. Really? If major convention centers are figuring out how to include complimentary Wi-Fi for thousands of attendees, albeit at a low speed, why are smaller venues unable to get in tune with the needs of the customer? The tech folks are already telling us that Wi-Fi will go the way of the instamatic camera, only to be replaced by another chargeable technology that new devices will need to have.
But what about the other side of the coin? No one works for free, and government and privately run convention centers, along with all those hotels, are under ever increasing pressure to show a profit. How does an entity with free or significantly reduced rent continue to exist? My opinion is that other less-savvy organizers are paying rent not only for their event, but for someone else’s as well.
How many of us have had the “Nickel & Diming” conversation with exhibitors and attendees? In turn, how many of us have had that same conversation with a building or property? This is a circular thread running through our community, which I find similar to the zero-dollar contractor invoicing discussion that continues to this day. Personally, I would not have a problem paying a reasonable rental fee, providing that it basically flipped the switch from ‘OFF’ to ‘ON’ and included all the things that my association needed and met my exhibitors and attendees reasonable expectations.
Since this is intended to be a dialogue vs. a monologue, my question to you is this: Should rental rates be day lighted as a standard operating expense and what would that rate include? Have you seen examples in use that make more sense than others?
Kent E. Allaway, CEM, CMP, Chairman of the Board
Vice President, Meetings and Trade Shows
Produce Marketing Association
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Terrific opening salvo on this, Kent. Refreshing to open up the discussion to the things that need discussing.
This comment is related to my role as chair for the PCMA Exhibit and Trade Show Task Force, as this topic ironically came up in our discussions recently.
The inconsistency of pricing is definitely a factor, however, for the members of the task force (suppliers and organizers), the inconsistency of the technology/wifi service within the building considering the price you pay is really a limiting factor. There is also a lack of supplier options across facilities.
There are technologies out there that would enhance the attendee and exhibitor experience that really can’t be considered due to the unpredictable nature of the service provided.
From the task force’s standpoint, like your example of $100/$50, facilities have languished around really committing to have as good of experience in their facilities as you can get nowdays in a ballpark or your local Starbucks.
So, I do hope the facilities members will chime in because we need an even handed discussion around this. Most public facilities are getting squeezed, and yet all our events want more and more for free. But when is free not free?
Kent, great to see you blogging! This post made me think of an article that I penned for Convene magazine a couple years ago. The supply/demand equation is way out of whack for Convention Centers in North America. Many centers have occupancy levels in the low double digits. With that in-balance in the market, there’s plenty of room for negotiation. Here’s the link http://bit.ly/wXU3rA
Dave – great article, then and now! So, with all of what has been written, said, and not said, what does the community need and want from a building and what should that pricing structure look like? I also want to add that this conversation is alive and well on the PCMA Group on LinkedIn: http://linkd.in/wWCelJ
Kent – OK, so I’m a LITTLE late in reading your blog, but I did catch up today with your first effort, and then this one…great job on both! I can hear you talking when you write.
I look forward to reading more from you as the months go by…and especially to the comments and discussions that I am sure this month’s edition will generate.
Oh, and thanks for accepting the FB friend request…
All the best!!
Great to see discussion around this. However it is important to remember that every show/conference has different requirements when it comes to wifi and it is practically impossible for a center (at this time) to provide free AND RELIABLE wifi for every show. The centers that tout free wifi is not only slow but also limited in how many devices can connect at one time. Free wifi will get you nowhere if it only allows for 5000 devices connected at one time and you have 30,000 attendees.
Believe me, I’d love to see a convention center paying for my attendees’ wifi access but is it reasonable to expect them to foot the bill for 50,000 devices connected at one time? That’s some serious network they’d have to install. It’s easy for your local coffee shot to give customers free access when they only need to provide for 20-30 devices connected at one time…if even that.
Would love to hear from datacomms person on this issue.
All good points, Traci, thank you for bringing up the obvious points that are not thought of when you think of “Free Wi-Fi”. I am on the Provider side of the world and it is my Job to try to meet the Demands of Shows while trying to run a Business of which my stakeholders like to see actually make money. To provide service in a starbucks i need only order a DSL line from my local carrier and take a trip down to my local best buy and buy a wireless router for about 80.00 and with the monthly fee for my DSL of 40.00 so my initial investment of 120.00 i have just made my place of business more attractive to visit and i will sureley make that money up as i will sell more Coffee. In a convention Center enviroment as the “provider of Internet” i am reselling the service that i Buy and must pay a higher price then say Starbucks or any other small business that is using it.i then have to build an infistructure that will meet the demands of All shows with respect to wired and wireless services this is a huge investment typically measured in 7 digits depending on the size of the venue. i cannot just throw out a wireless router. I need to Engineer the entire facility as it relates to industry code and spec. i then have to have an internet pipe that is large enough to meet the demand for all shows, this is a monthly cost that could be as high as 10K. i then need to have a staff of folks from customer service to installation techs in addition to that i am required to have a network engineer on staff which could be as much as 120K annually, rent to the building for my offices and all the other fixed costs that go along with running a business. at the end of the day i do not have another source to make lost revenue up such as a Hotel room night, Cup of coffee etc…so at the end of the day to give something away for free that costs money is a struggle thoough we see the value in doing so. the demand for free Wi-Fi is growing everyday and we are trying to come up with more creative ways to make up these costs. i think we can all agree that giving something away for free that costs you money is not a good business practice yet we do it because we see the need to add value to the visitor or show to our facility but there is a lot to think about when doing so. I hope my point of view is well recieved and remember i am only the Messanger!
Good sharing by @CyberGeek. There is much to consider, and as the Exhibit/Tradeshow task force shared, free is not necessarily realistic at this time, and the “free” example you shared is absolutely what everyone is experiencing.
From the customers that I’ve spoken with, there are opportunities to provide additional education around this topic because the bigger issue wasn’t price, it was consistent accessibility throughout a venue. And, as Kent originally pointed out, perhaps the bundling of services and pricing is an area that can be considered differently and fairly across all types of events.
The days of “free” and “go make it off the exhibitor” are clearly over. Association members and event attendees want/expect the internet experience for free, yet don’t even have it free in their homes and in their offices. I travel all the time. Outside of the Starbucks example, it is not free in airports, hotels, or airplanes.
Electricity to power our devices is free in most places. The future of connectivity, according to futurist and event speaker Michio Kaku, will be like electricity. You don’t ask if a facility has electricity, nor expect to pay for it when you are there.
That future just isn’t here yet. So, whether it be internet or something else, should it be hosted by the association, built into the pricing of the exhibit hall, or absorbed by the attendee as a user fee, such as is the case in all other venues/tollways, etc?
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