In today’s economic climate, it might seem like everything is more expensive than it used to be. In some cases, the costs remain the same, but companies have less to spend. In some other cases, the costs really are going up, and companies cannot always afford the increase. Either way, expense factors have driven many companies to re-examine their marketing efforts, and exhibiting at trade shows has fallen in the crosshairs. For some, long-lamented exhibiting expenses have recently proven to be the last straw, and many industry professionals continue to wonder…

Why Is Everything So Expensive?

“This is, perhaps, one of the most frequently asked questions by our clients,” says Peter Crouch, a partner at exhibit solutions provider Nimlok Chicago, “[with] the next being, ‘What in the world can we do about it?’ In all, the expense isn’t forcing all companies off of the show floor, but it’s challenging them—and us—to be smarter about how they exhibit.”

First, it helps to understand where “extra” exhibiting costs come from and how they are justified. Some industry professionals feel premium pricing at trade shows is justified by the very setting itself.

“Simplistically, these services are similar to popcorn at a movie or a hotdog at the ballpark,” says Gary Stewart, president of marketing, design and management firm StewartMDM, LLC. “Compared to other venues, these prices are a lot higher, but you are paying for a product or service provided in a defined space and time.”

Logically enough, many of the “extra” expenses that come along with exhibiting are dependent upon the quantity of “extra” services that are needed, according to Justin Markle, national sales manager for Global Spectrum Facility Management Company, which manages the Duke Energy Convention Center in Cincinnati, OH, among other facilities. For instance, many displays require power or Internet. The costs of booth utilities depend on “how much of each will be required by a particular exhibit,” Markle says, plus the labor costs of delivery and installation—never cheap, many agree.

“Think about it like this,” Markle says. “When a package is shipped through FedEx, it is sorted, shipped, and delivered to the doorstep of its final destination. It takes several different FedEx employees to make this process work, and the cost of this is factored into the cost of shipping a package. The same situation applies for, as an example, the electrical service going to a trade show booth.”

When it comes to equipment rental, for instance, multiple factors can influence pricing. Perry Perez, production supervisor for trade show contractor Metropolitan Exposition Services, Inc., has an insider’s view of the multi-step process involved in, say, getting a piece of furniture into a booth. First of all, in order to budget accordingly prior to an event, his company provides advance pricing for any equipment that is “above and beyond” the normal booth package equipment—the typical table, drape, two chairs, etc.—but it can be difficult to predict day-of demand for some items.

“Often times, we have extra equipment ready for rental at show site, but there are times that we run tight,” Perez explains. “This is because we, as the contractor, operate on a very small profit margin. To send too much extra equipment incurs extra trailers. Extra trailers require labor to get loaded out of the warehouse. That causes extra labor to unload at show site. So, if this extra equipment never gets used, we go over budget.”

When an exhibitor orders equipment upon arrival at a show, Perez explains, pricing depends, in part, on one big factor: whether or not the equipment is actually onsite.

“If it is, there is labor required to deliver it to the booth,” Perez says. “This labor is not budgeted for and might pull manpower away from a pressing job. We put our exhibitor’s needs first, so this might make us run into overtime in other areas on the show floor—again, not budgeted. And that’s only if the equipment is at show site.”

What if it’s not?

“Then you have to factor in the labor to load a truck at our warehouse, as well as labor to unload it at show site, then the labor to deliver it to the booth,” Perez continues. “Each job mentioned above is handled by a different laborer, whether it be a teamster to unload it or a carpenter to deliver or build at the booth. You have to factor in 1) loading a truck, 2) gas and tolls for that truck, 3) a driver for that truck, 4) unloading that truck, and, finally, 5) delivery to the booth.”

When one considers the costs incurred by a contractor from Point A to Point B (and all points in between) in such a scenario, a $500+ charge for a pedestal might just begin to fall into perspective. However, understanding how some extra expenses work might not necessarily mean a company can predict or afford some of them. Shipping and material handling charges are another point of contention for many exhibitors.

“While I can project my costs for fixed items—e.g. the booth space, furniture—I can’t project from conference to conference what the extra shipping or labor cost will be,” says Denise Wolk, director of publications and senior program associate for a non-profit organization called Educators for Social Responsibility. “For example, a while back, when the gas prices went way up, several conferences started charging a fuel surcharge of $30 to $50 per show—sometimes in and out of the conference—adding hundreds to my already stretched budget.”

“Material handling or drayage [fees] are very, very high,” says Harris Schanhaut, CME, who has been exhibiting for 25 years. “Exhibitors have to be aware there's something in place called cwt, or hundredweight, meaning from zero to 100 pounds, they'll charge you this one rate. If I send a 100-pound box, it might be $35 to bring it in, but if someone else sends a letter in a separate mailing, it'll now be double that. The initial fee for that hundredweight I don't see as unreasonable, but it's something exhibitors have to pay very close attention to and ship smartly.”

Taking the time to learn some of the ins and outs of show fees can aid exhibitors in accurately predicting their costs and, in some cases, saving money. However, on top of all the known charges, according to some industry professionals, another issue can affect pricing for show services: sometimes, numbers seem to get padded along the way.

“Several complaints from exhibitors I know come as a result of extra hours packed in by some—not all—show services,” says Tim Patterson, vice president of sales and marketing for Interpretive Exhibits, Inc. “They may have two workers scheduled for four hours each to set up a certain size booth, but it only takes half the time or less. Yet, [exhibitors] still get charged because it was, after all, agreed to and booked. We try to steer our clients to show service groups that are more flexible and fair.”

Us Vs. Them: The Blame Game

Ask why exhibiting is so expensive, and a lot of finger pointing takes place all of a sudden. Along with the hard costs of equipment rentals, services, and installations, industry professionals see many additional factors playing into what Debra Yergen, of media, marketing and design specialists Debra Yergen &Co., calls the “trade show transaction.”

“Many businesses have cut travel expenses, and, as a result, fewer people are attending certain shows,” she explains. “This affects the amount of money raised by the hosting associations. While the venues can usually acquire less-expensive labor, their hard costs from an operational and taxation standpoint remain steady. This means that, if there are fewer shows booked annually, the costs have to be spread out among fewer hosting associations, virtually wiping out any savings from cheaper labor. And, finally, there are fewer shows because many businesses have been forced to cut their trade show presence, along with staffing cuts and other budgetary decreases.”

 “You combine all these individual organizations, throw in exclusive vendor agreements, then add insane markups to simple services, and the answer to your question becomes clear,” Crouch adds.

A hosting organization is often the entity that loses out the most during difficult times, Yergen notes, due to its dependence on trade show income for salaries and other operating costs. However, she believes the fee structure an organization puts in place can also sometimes serve to drive up related costs for exhibitors. For instance, imagine a typical exhibitor registration fee. Now imagine what that fee would look like if the typical exhibitor services were added on. While inclusive, that larger number might not look very attractive to exhibitors if it were listed in trade show promotions. Hence, as Yergen sees it, exhibitors pay separately for each individual service. Similar to the meetings industry’s never-ending debate over resort fees and surcharges, frustrations over exhibiting expenses often center on perceived “nickel-and-diming” within the industry.

“The reason there are so many extra costs for exhibiting is because associations or hosting groups prefer to offer businesses a lower base cost, with the understanding that most will require standard upgrades such as Internet access and electrical outlets,” Yergen explains. “The scaled-down offerings enable the trade show hosting associations to advertise a price point that sounds affordable, while giving the exhibitors the option of upgrading at an additional cost.”

“They are following the airline industry model of charging for everything beyond the basic fare, such as luggage, leg room, food and beverages, etc.,” says John Taylor, co-owner of Lucky Bucky Clothing, which typically participates in five trade shows a year. “[At] the last few [shows] we’ve attended, exhibitor participation was way down. I think facility management and service providers are trying to offset the downturn in revenues by raising rates for furniture rental, power, Internet access, etc.”

Some industry professionals think service providers, in general, go overboard with their charges anyway. Others feel some service providers can be unscrupulous in their practices. Tallying the figures between Point A and Point B, does it really add up so much to get that piece of furniture into a booth—or is that just what “they” say? The us-vs.-them sentiments between exhibitors and show service providers lend a particular brand of vitriol to some anecdotal reports.

“We still feel services companies put unfair pressure on an exhibitor’s budget,” says Susan Ratliff, owner of Exhibit Experts in Phoenix. She notes that issues exist even in right-to-work states like Arizona, with little union control. “In secret circles, exhibitors refer to the high prices and unusual controls from the decorators as ‘organized extortion.’ That may seem like an unfair label, but when your labor crew ‘loses’ your carpet for a few hours because you ticked off the foreman, or your electrician delays running your lines because your employee inadvertently plugged in a light, you sometimes get the feeling that you’ve lost control of your booth and your budget. The reason the decorators charge what they do is because they can.”

Others disagree with this line of thinking, pointing out that many show service providers are no wealthier than anyone else.

“If you look at the P&L's of these companies—some are publicly traded—you will see their net profits are in line with other companies,” Stewart says. “A campaign to get them to greatly cut their cost is not a good use of energy.”

Still others believe exhibitors, in their efforts to cut their own expenses, share responsibility for service providers’ rising costs. There is the issue of some companies pulling out from some shows altogether, leaving the burden of expense to rest on fewer shoulders. In other cases, some exhibitors might inadvertently influence service providers’ bottom lines in less visible ways, by scaling back on the size of their booth spaces or by using lighter, more portable displays, says Jeff Meisner, president of Skyline DFW Exhibits & Graphics.

“This is a ‘double-whammy’ for show contractors because the result of this dynamic is much lower material handling charges, since they charge based on weight—e.g. $100 per cwt, which is $100 for every 100 pounds the exhibit weighs,” Meisner says. “In my opinion, they are raising the material handling charges and/or introducing other charges in an attempt to boost their falling revenues.”

In addition, some exhibitors have found areas in which they can entirely bypass show contractors—and the extra expenses they might represent—by purchasing their own equipment and bringing it along to multiple shows, instead of renting equipment at each individual show.

“How many times can that same piece of carpet, table, chair, garbage can, and bad plastic plant be rented before it’s paid for?” Crouch says. “It should come as no surprise that most exhibitors have decided it’s financially irresponsible to rent monitors from the show. The math is simple. Rent a 42” plasma monitor from XYZ AV contractor for $864 ($1,080 after discount deadline date), or purchase one from the local big box for less than the cost of renting it once. These types of purchasing decisions become critical in maximizing a budget.”

“People are cutting corners,” Patterson adds. “They bring carpet sweepers instead of paying over a hundred dollars a show to have someone come and vacuum their booth. In a nutshell, the show services groups appear to be squeezed because exhibitors are cutting back—so they keep raising their prices, so their profit margins don’t disappear as well.”

Regardless of whom one holds responsible, the vicious cycle of exhibiting expenses continues. However, there are a few things exhibitors and show organizers can do about it.

Up Next: Ways in which show organizers and exhibitors can work to minimize exhibiting costs.

Previously on PlannerWire: You Want Me to Pay What?! Part I

Serenity J. Knutson is the Editor in Chief of PlannerWire.com, the News, Information and Community website for meeting and event planners. Contact her at Serenity@PlannerWire.com.

back to top

Name:
Subject:
Comment:
Enter Text Below:

back to top