November/December 1993

Creative Negotiations

The changing structure of facility contracts

By Scott Gray

American business has a long and proud history of negotiation. From the earliest days of frontier enterprise when shopkeepers negotiated with itinerant traders, to the mega-deal leveraged buy-outs of the eighties, and even to today's more conservative -- but still impressive -- multi-billion-dollar deals, negotiation has been a key -- and dramatic -- element.

Unfortunately, all of the drama disappears when exposition producers attempt to negotiate contracts with convention facilities. There just isn't much room for negotiation, say show managers.

Space rates, perhaps the most critical bottom line element of a facility contract, are -- more often than not -- cast by governmental bodies, such as facility authorities, city councils, state legislatures or other agencies.

Many show producers -- particularly those who manage consumer or smaller and regional shows -- have little clout through the number of hotel rooms they book and, hence, little room for bargaining.

Even some show managers whose attendees do book rooms still sometimes feel they are simply "tenants" during the days their shows occupy a facility. And a short-term tenant has little leverage, they say. When costs are a major concern, one show manager says, the only option is to look for a less expensive site.

"Anymore, I don't find very much is negotiable," says Larry Newton of the Newton Group. "If you're small potatoes, you can't really negotiate. If you're the Consumer Electronics Show, you can negotiate anything you want."

Not so, says Sam Lippman, Staff Vice President of the Consumer Electronics Shows. "There's not much that is negotiable. The main point is that if you're able to move your show from city to city, you have more flexibility. If you're a mega-show that can only fit into a couple of cities, and you have a rigid schedule, you're limited. What's the quote from the hotel industry? 'You can get either dates or rates."'

So small and mid-size shows are limited in their negotiation leverage -- but large shows are equally limited. There must not be much room for negotiation, right?

Well, not exactly. The key is learning what to negotiate.

Space rates aren't really that important, say many show managers. A few cents per square foot simply doesn't have a large impact on the bottom line for most shows. Most publicly owned facilities are simply trying to break even, and negotiating for cheaper rates cuts into their bottom line.

Value-added negotiations
Show managers today are looking for those areas in which facilities can help enhance the show without arousing the ire of city accountants. Like their exhibitors, show managers are negotiating "value-added" items. Sometimes those items include additional services the facility may be able to provide, but more often it's an easing of facility-specific rules to help the show operate either more economically or more efficiently.

Sometimes the items are small or intangible -- but important.

Often, show managers just look for flexibility, says Marsha Brenner, President of Marsha Brenner Associates/The Trade Show Company. For small shows, Brenner doesn't like to have to pay for a registered nurse to be on hand full-time during the show. For her larger shows, she likes to be able to choose her nursing contractor, rather than use a firm mandated by the facility. These are both areas where Brenner has been successful in negotiations.

Gary Sherrard, President of Independent Trade Show Management, which produces the International Trucking Show, negotiates for "comfort" items, such as having the facility's air conditioning and full lights turned on during move-in, or for additional move-in and move-out days to give exhibitors and contractors more breathing room.

Newton would prefer to negotiate "guaranteed" move-in and move-out days. "I don't like it when the facility charges you for show days, but gives you free move-in and move-out days. If the facility schedule gets tight, there's always a clause that they can shorten your move-in and move-out time."

Dan Dobson, President of Dobson Associates, has found that meeting rooms provide a good avenue for negotiations. Some facilities will agree to cover and skirt the tables at no charge, or provide water service free. Others will waive the fee for turning a room more than once a day.

Some show managers negotiate for extra rooms for Board lounges, press rooms, speaker rooms or executive offices. Desks and lounge furniture are sometimes available to outfit these rooms.

If some of these items and services can't be negotiated absolutely free, a reduced rate is usually agreeable. "The percentage of reduction isn't much," says Dobson, "but our world is made up of nickels and dimes. If you save enough of them, you eventually have dollars."

Special services
Although it's impossible to negotiate a positive attitude, many show managers come close. Brenner, for instance, negotiates experience. She writes into her contract exactly which facility personnel will work with her in planning her events -- particularly the person leading the facility team. "I ask about the experience level of the person who will handle the account and how busy they are," she explains. She opts for experienced account executives with as many as 20 other events going on in the months before her show, over a less experienced individual juggling fewer projects. And she says a positive attitude is generally an additional benefit she gets when she insists on having a well-experienced facility coordinator.

Lippman agrees that devoted attention from facility personnel during the planning phase of the show is crucial. "I don't want the facility to think of us as 'that show in January.' I don't want them to think of it as one of 70 shows they do each year. When facility executives have a choice of going home and watching a game on television or doing something to help my show, hopefully they'll do the latter." Specifically, he asks that facility personnel be available on call 24 hours a day to respond quickly to problems should they occur.

Some show managers look for special services they can add to their show at no cost -- a restaurant reservations booth in the registration area, for instance. Working with the Bureau, this is a service that costs the facility little or nothing. And these "soft-dollar" versus "hard-dollar" distinctions are important.

Since the appearance of the facility adds to the atmosphere of any event, some show managers are beginning to add "clean-up" and "refurbishing" demands to their contracts. Whether it's painting a wall or shampooing lobby carpet, these jobs are typically covered in the facility budget. It's more a question of time.

Food service
Another area of flexibility and service that show managers are looking at is food and beverage. "I've worked with facilities that allow no deviations, and those that are flexible," says Brenner. "It's nice to work with a good catering firm or to be allowed to bring in an outside caterer without having to pay an exorbitant fee to the facility. That's something that should be discussed before you book the space."

Lippman will, for example, ask for extended food service locations and hours so that exhibitors working late don't have to leave the building to grab a bite to eat. Other show managers have successfully negotiated free coffee and doughnuts for exhibitors on set-up days.

Dobson has been able to negotiate food prices when the sponsoring organization is holding several food functions in the facility. "Catering companies want to work with you. Convention centers are like every other industry -- they want repeat business. So they do whatever they can within the parameters their governing bodies give them," he explains.

Show managers recognize that food service represents a "hard-dollar" cost. Rather than asking for free food or beverage items, some show managers are successful negotiating such items "at cost." A daily supply of soft drinks and snacks in the show office, for instance, is relatively inexpensive, and facility management is often amenable to negotiating such items at cost.

Miscellaneous services
Exclusive or in-house services usually leave no room for negotiation. Many show managers simply will not book a facility that requires the use of certain service providers, and some facilities are unwilling -- or unable to alter exclusive arrangements. But there is sometimes leeway.

A facility, for instance, that provides an in-house booth cleaning service can often be convinced to clean the aisles and registration areas at no cost. Perhaps more security guards can be added to the schedule, or an extra usher can be thrown in at no charge. Creativity in negotiations is crucial.

Dobson says some facilities are able to negotiate reduced parking rates, which may or may not be a real benefit to a show, depending upon the proximity of attendees to the show site.

Lippman was able to get Las Vegas to give up large amounts of parking which will allow him to erect four 200,000-gross-square-foot temporary structures. Since the show has maxed out its space the last three years, the additional space is crucial, he says.

Lippman attributes this willingness to accommodate the temporary buildings to the good working relationship CES has built with the city of Las Vegas. "It's a tenant-landlord situation and that's the way we look at it. We're not going to push our landlord to the limit. Be want a win-win situation. I can give you this analogy: A show manager works 12 months of the year and has his career on the line for four days. Where is it taking place? In a facility. Do you want the facility to be a partner or to feel like, 'CES tried to beat us on every single invoice last year'?"

What Can You Negotiate?The following are some of the items show managers may find negotiable when dealing with exposition facilities. The leeway that individual facility managers have will vary widely and is often determined by the mandates they are given by their governing bodies. Municipally-owned venues usually have much less flexibility in negotiating financial aspects of contracts or elements that might have a cost impact on the facility.

Amount of move-in/move-out days
Every show manager would like to get as much move-in and move-out time as possible, but facilities won't give you so many days that they lose other business. The object is to negotiate a period of move-in and move-out that is reasonable given the size and complexity of your show. But don't automatically jump at "free" move-in/move-out days. If the facility's schedule gets pressed, and it cuts out half a day from your move-in or move-out, you won't be compensated. If you're paying for that time and it's cut, you will generally be entitled to a prorated refund. That money can help pay for overtime charges you will incur with the tighter schedule.

Comfort items
Will the air conditioning be turned on during move-in? Will the lights be at full power? Will food and beverage service be available all hours of move-in and move-out? Although these are not necessarily low-cost items for the facility, you may decide you want these things more than you want another negotiable item.

Damage liability
We live in a litigious society, and facilities are anxious to limit their liability. Too often, however, the boilerplate contracts take liability away from the facility and give it all to show management. Try to make sure that your liability is reasonable, and that responsible parties don't get away free if there's a problem.

Flexibility
This isn't as much a negotiable item as it is an attribute to look for in the facility staff. During contract negotiations is a good time to spot it.

Food and beverage
Rates for food and beverage service are sometimes negotiable -- especially if you're holding several food functions on-site. In addition to rates, look at extending the hours food stands are open -- and what's available during move-in and move-out. And don't forget about little things like upgraded centerpieces or extra servers for large food functions.

Insurance
As with damage liability, facilities require certain levels of insurance. Often these levels are not negotiable, even when a particular hall's requirements far exceed the industry standards. Nevertheless, some facilities may be able to ease the cost by adding a rider naming your show to their master policies.

In-house/exclusive services
Although the use of exclusive in-house service providers is usually not negotiable, rates sometimes are. At the very least, some "complimentary" show management services can be found. Non-exclusive in-house services are very negotiable.

Meeting rooms
This may be the area that the facility manager has the most flexibility in negotiating. The rooms are there and may not be in use, and the amenities are provided by an in-house staff. If the facility provides ice water only for the head table, ask that it be provided for all tables. Ask for draped tables, pencils and note pads. You might even consider extra rooms for Board lounges or speaker-ready rooms.

On-duty safety and health personnel
On-duty nurses and paramedics may or may not be negotiable. You should at least be able to pick your own provider. Or perhaps the hours or rates are negotiable.

Rental payment due dates
The facility may have some flexibility in this area and be able to accommodate, for example, a peculiar fiscal year under which your organization operates.

Set-up charges
This may be an area where a facility has a good deal of leeway -- as long as they handle these services in-house. It's not unreasonable to ask that meeting room set-up charges be waived if you are using a large portion of the facility, purchasing food and beverage services and have not been unreasonable in your other demands.

Trash removal
As landfills reach capacity and close across the nation, trash removal has become a tremendous cost element for every facility. Still, you might be able to negotiate a lower rate if you have a show with demonstrated low trash output, or exhibitors willing to divide trash for recycling.