Gary FitzRoy looks at the price increases being foisted on expo organisers.
In a concerning development for the exhibition industry, some of the government owned venues are imposing double-digit rental increases for next year. These substantial rate hikes come at a time when many event organisers are still recovering from the economic challenges brought on by the COVID-19 pandemic, leading to fears that these increases may be the final straw for some events.
While businesses have been battling to rebuild, it is apparent that the vast majority of exhibitions are struggling to fill the same physical space and attract the same number of exhibitors as they did in 2019.
Expo organisers are not in a position to increase costs above CPI as many of their clients are also facing increasing costs for stand builds and furniture along with one of the highest increases – freight.
The government owned venues however, have enjoyed the safety net of government support. For many users, it has become a point of contention that they are now facing double-digit rental increases, which are significantly out of step with the financial reality that event organisers are dealing with. This situation raises a fundamental question, are these increases being imposed to make up for past losses or to secure future profits at the expense of the event organisers these buildings were designed to service and work with?
It’s a tough pill to swallow. Event organisers have already weathered the storm of the pandemic, and now, facing exorbitant rental increases, many are left wondering if they can continue to operate.
Along with the increasing venue costs are the steep increases on service deliverables (again double digit increases). In many cases organisers cannot bring in outside suppliers (often cheaper) and are forced to use in-house or venue approved suppliers for catering, cleaning, rubbish removal, electricity supply, rigging or rigging points, AV and security.
Now some venues are charging exhibitors, organisers and suppliers to use the loading dock to store packaging and excess display material, even if the dock is not in use while the expo is running.
In an ironic twist these venues all claim sustainability and green practices, however by forcing through these new charges suppliers are making extra truck trips to take the packaging off-site in order to avoid the extra costs.
Please note that not all venues are forcing these loading dock charges and exclusivity over services, but many of the majors have a number of services and new costs in place that are exclusive which vary also making it challenging to negotiate a national price with outside suppliers with consistency. Venue’s often claim it’s a cost recovery but dig deeper and they form income profit lines to their budgets.
Keep in mind that many trade shows are owned by industry associations who rely on income from conferences and associated expos for their primary income. These increasing costs will either cut into that income or need to be passed on to exhibitors and delegates.
As the industry faces an uncertain future, event organisers and stakeholders deserve a balanced and fair approach. They hope that government owned venues will reconsider these rate increases and work collaboratively with the industry to ensure its longevity and success, however, I won’t hold my breath. Many simply don’t care and say their government owners have instructed them to make up the losses of the past few years, and as they have no personal skin in the game it’s not a fight they would want to take on. It’s also interesting reading lately how many are posting such amazing results, if they did that based off current rates (22/23) why increase more than CPI in 2024 ?
After all, the strength of an industry should not be measured solely by revenue but by its ability to adapt, thrive, and support those it serves.