When Greyhound Exposition Services purchased United Exposition Service Co. in May 1993, it sent ripples through the exposition industry. When Greyhound purchased Andrews-Bartlett Exposition Services in October 1993, the ripples turned to whitecaps, and the purchase of regional contractor Gelco Convention Services a few weeks later helped produce a tidal wave of growing apprehension among some smaller contractors and show managers, who feared the reduction of competition among service contractors would lead to significantly higher prices and poorer service.
Within a span of a few months, GES acquired three regional contractors and merged into one national powerhouse -- the Las Vegas-based GES. Coming on the heels of the Dallas-based Freeman Companies' move into Las Vegas and Los Angeles, an industry long dominated by four mostly regional companies was suddenly, with little warning, dominated by two national powerhouses -- GES with 24 offices across the country and Freeman with 16.
It has been six months since GES' last acquisition and, for now, it appears the flurry of activity has passed. Was there any truth to the gloomy projections? Regional contractors and show managers appear divided in their assessments of the post-acquisition landscape. Nearly half of those interviewed say the storm has passed and the industry -- as well as their individual businesses -- look healthier than ever.
But an equal number of show managers and contractors say they fear the current calm is merely the eye of the storm. They remain convinced that the exposition industry is in for a rocky, costly road.
"The smoke will be clearing for years to come," says Doug Fairweather, Manager of Exhibits and Meetings for the Instrument Society of America. "Anyone who says the dust has settled on the issue probably isn't looking at it long-term. They're probably taking a short-term view."
No matter what the predictions for the future, most agree that the transition this past year has been smoother than expected.
Butch Bartlett, President and CEO of the former Andrews-Bartlett and current Senior Executive Vice President for Sales and Marketing at GES, says: "We're pleased with the direction of the new GES. It looks like things are settling down."
Bartlett's new boss at GES, Nort Rittmaster, the Chairman and Chief Executive Officer of GES, concurs. "Everything has gone well. We've had our ups and downs with morale, but we've tried to make this as painless as possible."
The clout and financial backing of GES's parent company, the Dial Corp., makes some competitors fear a juggernaut that would squash all competition. But not Don Freeman, Chairman and CEO of The Freeman Companies, the other half of the "Big Two" equation.
Freeman has few complaints about the transition period. "People are always nervous about change, but there is always going to be change," he says. "This was a natural progression."
Rick Dobson, Senior Vice President of Conventions & Exhibitions at the National Association of Broadcasters and a GES customer, says he sees nothing negative about the acquisitions. "Originally, some people were concerned about there being less competition, but I questioned that," Dobson says. "I think the GES purchases were a really positive thing. It has made for more financial stability. I've worked with GES about five years, and this expansion hasn't had a noticeable effect on our events."
But the glowing reviews aren't unanimous. Several show managers say little has happened to alleviate the fears they expressed six months ago, and most agree it is still too early to tell how the acquisitions will affect the industry.
Cheryl Nordstedt, Director of Meetings and Conventions for the American Academy of Dermatology, says maintaining the same account service representative can ease the changes. "For the past few years we have been an Andrews-Bartlett client. We have gone through the transition from Andrews-Bartlett to GES and felt some slight ripples as the combining of the two played out. It hasn't been an easy task. Fortunately, we've had an account rep. who has stayed with us the whole time."
Fairweather, a Freeman client, also has benefited from continuity. "There have been no problems yet. In fact, it's been excellent so far. Fortunately, I haven't lost my contacts with Freeman."
The "Big Two"
Critics of the consolidation, who six months ago were predicting a less competitive market, higher prices and poorer service, say little has happened to change their minds. They warn that the next two to three years will prove them right.
"Long-term, I have real concerns about the compression of competition in the industry," Nordstedt says. "We're down to two major players in the industry. While that opens up opportunities to smaller companies to grow, remember this is a very expensive industry to be in. With just two driving the market, that's not a whole lot of competition in the field."
If the consolidation of competition is to yield all that the doomsayers predict, why hasn't it happened, and when will it happen?
"Most people have two- or three-year agreements, and most of those probably are still in place," Fairweather says. "What kind of agreements we can reach when those contracts are up remains to be seen. I think the jury is still out about whether prices will rise in the future, but it's something we should be thinking about."
Nordstedt says multi-year contracts are a key to keeping the industry honest. "Multi-year contracts benefit us in many ways. We spend less time on bidding. And when you keep the same account executive for several years, they know what we want and we don't have to spend the time grooming a new account executive."
But Nordstedt also worries what will happen when current multi-year contracts run out. "When you have more than two players in the game, no one is going to establish a price on a contract that is out of line with the rest. But with only two, now one of them can decide they want to try it and stick their foot in the water to see what the other one does."
Dobson at NAB disagrees.
"Have the prices gone up? No. The whole price issue is a non-issue. And I'm not fearful about the future," Dobson says. "It will remain market-driven. And there are still plenty of players in the market. There are two very good and capable national contractors now and a host of regional contractors."
But managers of larger shows argue that the regional contractors don't figure into the mix because most are unable to service their huge logistical demands.
"I wish there were four people I could go to requesting bids," Fairweather says. "Unfortunately, because of the size of our event, I'm really limited to two national contractors now."
The proponents
The "Big Two" maintain that competition is still fierce and managers of large shows have nothing to worry about.
"The competition has actually increased," says Bartlett. "Prior to Freeman's expansion to the West, there really were no national companies. The expansion gives the industry the choice of two national companies. And our customers appreciate the consistency of a nationwide network. Customers have more options now. Customers certainly haven't lost any options.
"If Freeman had expanded and everyone else stayed the same, then there would only have been one super company and a lot of little companies.
"That would have been a legitimate cause for concern. But because GES responded with its own expansion, then it gives customers a choice of two national companies."
Rittmaster also dismisses the anti-competition fears. "We're still in head-to-head competition," he says. "The pricing hasn't changed at all. We have now two healthy national companies that will continue to build for the future development of our industry."
Rittmaster adds that the new national network and the support of the Dial Corp. will allow GES to make unprecedented investments in new technologies and in upgrading all the furniture lines, carpet lines and other services.
A group that could be at a disadvantage is managers of smaller or less-profitable shows. "I see a chance for the regional contractors to grow as they pick up shows that GES or Freeman choose not to pick up," says Fairweather. "But I see GES and Freeman becoming more selective in the shows they take."
The benefactors
Many regional and smaller contractors are glad to see the consolidation of the "Big Four" to the "Big Two," citing unlimited growth potential for their own companies.
One regional contractor, who regularly sub-contracts shows with one of the "Big Two" and who asked not to be identified, says he has gained considerable new business since the acquisitions, but says he has also had an alarming experience that makes him fearful of the future.
"This is the scary part. When we sub out a show to them, we're scared to death to say something that will anger them, because we're afraid they'll squash us like a bug. I still have to sub-contract with them."
He says that at a recent show, his account executive had a dispute with the on-site representative of the company they had sub-contracted out to. The representative, feeling no pressure to fix the problem, told him to take it or leave it. The company's competition doesn't have an office in that city.
"I feel like we're walking on eggshells all the time," he says.
But other regional contractors are ecstatic about the consolidation of big-time competition. "For us, it has been very positive," says Daniel Hoffend Jr., Executive Vice President of Hoffend Xposition, a regional contractor based in Rochester, NY, with offices in Meadowlands, NJ, and Charlotte, NC. "Our sales are up 28 percent over the same time last year, and we expect it to be the same for next year.
"When there are fewer contractors out there in the field, it provides us with more opportunities. We have more opportunities to bid shows now, we are getting increased exposure and we are being more recognized as a national company than a regional one.
"The consolidation is giving those smaller, regional companies the chance to grow nationally. Most shows solicit at least three bids, sometimes more. Where four companies used to get those, now show managers have to look beyond the 'Big Two' to get competitive bids."
Hoffend says familiarity with competition is important, and now there are fewer competitors to keep track of "The two majors have been doing it the same way every year. We're able to compete because we know who our competition is and what our competition is doing. Now, by knowing what two companies are doing -- with pricing, marketing, etc. -- we know what most of the industry is doing."
Carl Hubbell, President of Hubbell/Tyner, a Kansas City-based contractor, is among those who caution that it is too early to judge the long-term effects of the consolidation. "It's an interesting time in the industry, but I don't think the results have been felt. Because of long-term contracts, it's going to be three to five years before we know how this will play out."
But for now, he says, his company is benefiting from the mergers. "We've submitted more bids in the past six months than in the previous period. Whether that has to do with GES, I don't know. But we are opening up our bidding in more areas. Show managers who are used to getting bids from the 'Big Four' are having to go out farther and that helps us."
Paul Cunniffe, Director of Sales for Champion Expositions in Boston, said his company has added new shows in the wake of the GES acquisitions, in part because of his company's track record and in part because "there are national clients out there looking for alternatives. It has created more opportunity now that the national companies have consolidated. It's not that they don't do a good job -- they do. But everyone wants to have choices."
Too big to care?
Throughout the acquisitions, Freeman says, competition with his chief rival has been fierce but fair. "The companies they bought were all excellent companies. They have good people. I can't be critical of GES.
"The only thing that has disturbed me has come from smaller contractors, and I don't blame them for marketing that way. But lumping us together as the "Big Two" and saying the "Big Two" can't pay attention to you anymore and won't provide personal service anymore is unfair. I have seen some ads that imply we have gotten too big to look after the smaller accounts. I take great exception to that.
"We emphasize to all our people that all accounts are important. After all, even an account that is small now has the potential to grow into a big show, and we want to be there."
Rittmaster says GES and Freeman are still family-oriented companies. "They're just larger family-oriented companies. We see a lot of positive things in this. We are better able to service our clients because now we don't have to subcontract. I think we are better able to weather the peaks and valleys of the business now."
Regional contractors say marketing is consumer-driven. "We are reacting to what the customer is asking for," says Hoffend, "which is a more personal, attentive service, which the big guys aren't doing in some cases. The client is requesting that situation be solved. The customers are telling us, 'It's not the relationship I used to have with my contractor.' "
Bartlett takes exception. "I can't quite figure out what made us change in their eyes. We are still the same people putting together one show at a time. Now, there may be show managers who simply don't want to work with a larger company.When I had Andrews-Bartlett, I had clients who didn't want to work with us because they thought we were too big then -- and we were relatively small."
Bartlett and Rittmaster also say they are annoyed by competitors who charge that a big faceless corporation with no experience in the industry is charging in and taking no prisoners.
"Another shot we took back in the days of consolidation," says Rittmaster, "is about the Dial Corp. coming in. Dial has been in the industry more than a quarter of a century. The Dial Corp. brings professional management into the companies."
Bartlett takes another approach. "It should say something about the potential for this industry that someone like the Dial Corp., with all its resources, sees something here they think is worth the investment."
People first
Freeman, GES and their smaller competitors are in full agreement about the importance of customer service.
"This is still a very personal business," says Hubbell. "Show managers aren't concerned so much about companies as they are about the people they work with and the service they get."
Dobson says it's still a people business. "I would rather have a top-notch account executive with a small contractor than an inexperienced rep with a bigger company."
But Dobson, too, has been lucky through the acquisitions. The account representative at Andrews-Bartlett who handled one of his NAB shows is still with GES and still works on that show. "The service we get is the same as before. Just because it says GES on his business card now doesn't mean a difference in service level."
For all the talk and rumors of mass defections of personnel from GES to Freeman, Freeman to GES and from the "Big Two" to regional contractors, most of the changes have been in upper management. Both Rittmaster and Freeman confirm there have been a lot of transfers, but wouldn't elaborate.
"Most of the movement has been at the top," Fairweather says. "While it's important to have capable salespeople, you also need to have strength at the operational end of the organization -- the ability to service theseshows when they're grabbed from one company to the other. You need the drayage people, the sign shop people and everybody else who is going to be needed to make it happen."
Squeezed out
With the consolidation of offices in cities where GES acquisitions left duplicate offices -- in some cases at least three offices -- there was no doubt that there wouldn't be enough jobs to go around. Rittmaster wouldn't identify the number of former Andrews-Bartlett, United and Gelco offices closed, nor would he say how many people lost their jobs.
"When you put two or three companies together in cities such as Atlanta, Chicago, New Orleans, Orlando and D.C.," Rittmaster says, "it's unfortunate, but you're not going to have positions for everyone. Some have moved to other companies, some went into other fields. Morale has been a little up and down, sure. But we tried to make the changes as easy as possible. We offered job training programs to help people find new jobs.
Even with the elimination of some GES jobs, both GES and Freeman have been hiring, sometimes away from each other. "We have hired some folks who were employed with a GES company," Freeman said. "We lost some to GES, too. Yes, some of them were aggressively pursued."
Rittmaster, too, has been the target of a job-related rumor. He says that people who came in from the parent Dial Corp. are there to help him, not replace him, and are there at his request. "When we went from six to 24 offices, logistically, I needed help in areas such as accounting, real estate, legal and information services. I'm Chairman and CEO, I have been since 1981, and that hasn't changed."
Who's next
Will the consolidations ever end? When considering the reasons for consolidating, probably not.
"If you have a company and you want to grow in this industry," says Bartlett, "you almost have to grow through acquisitions. We've always grown through acquisitions, as far back as this industry has been around. The only difference now is the size and scope of the acquisitions."
Bartlett points out that although GES has gained most of the press for its three big acquisitions, it was rival Freeman that fired the first shot. The mostly eastern Freeman purchased Design Industries in Las Vegas in 1992, moving into the West Coast for the first time.
"GES was already exploring expansion before we moved into Las Vegas," Freeman says. "We've been doing work in Vegas for years and had sub-contracted to Greyhound. When you get to where you have enough business, it makes sense to open an office and do it directly. That's what we did."
And Rittmaster points out that he didn't pursue the companies GES purchased. "There were too many contracting services in some of the cities and some were having trouble making it. When Freeman decided to move out of their regional status, that's what prompted the phone calls to us. We didn't pick up the phone.
"And we're still getting calls. We want to build for the future. The Dial Corp. is in this for the long-term."
