3rd party restrictions on hotel meeting contracts

From Tom Stimson's AVMatters Blog 2/21/12 www.trstimson.com This is a timeless discussion topic. After all the philosophical discussions about who is better equipped to perform the work or who is gouging whom, it all comes down to the same conclusion now as it was in 1980: The venue owns the space, the venue assumes the risk, the venue gets to decide what profit it wants to make and how it makes it. Clients have the power to change contracts before signing them and have a great deal of influence afterwards too. MPI has been teaching Meeting Planners about the ins and outs of convention services contracts and third-party provider clauses for years. We can complain about stupidly expensive and occasionally inept rigging services, but at $300 per gallon of coffee – that rigging charge is chump change to the overall meeting costs.

And before we blame the in-house AV company for the pricing, the hotel owners have a great deal to do with this. Since the hotel gets between 50-70% of the revenue (40-60% of the service cost plus a hotel service charge on top of that), the net revenue to the supplier often looks like what you would have charged. The hotels can be very greedy and downright illogical about these fees. (What do you think the hotel service charge would be if the client wanted to bring in its own caterer?)

So, you have my sympathies, but the in-house AV provider has to pay a huge fee to get the contract, is constantly ordered by the hotel to comp charges that were fair, has to provide tons of free support to the hotel itself (from editing the GM’s kid’s birthday party video to handling AV for weekly staff meetings) – all for the privilege of watching you come in and do the show.

Stagers complain all the time about individuals selling shows from their apartment and renting the gear from [insert your competitor's name here]. These independents have no overhead, insurance, or responsibilities that legitimate companies like you have. Now imagine that you are the one that built a huge convention center and hopes to pay it off by providing services to the guests and then some stager that only has a couple of employees and much lower overhead wants to take that away. I think it is a wonder they let outsiders in at all!

Educate your clients, explain their options – you are supposed to be the expert. Bottom line is that this situation is one of the unchangeable conditions of our industry. It will sometimes cheat you out of business, therefore it is your job to be aware, be resourceful, and educate your clients. In my opinion, the venues are not going to change any time soon.

– Tom Stimson

For more information about successfully negotiating AV contracts visit our site: www.stageamerica.com  - click on "project management" or email rfranklin at stageamerica.com.

Ray Franklin

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