Sep 2, 2019
Trade show exhibitors, associations and industry suppliers all need to know the data about material handling and other costs to effectively influence change in our industry. Listen to this interview with Sue Huff, Director, Global Conventions at Medtronic, who shares insights from her panel at HCEAConnect titled "Challenge the Status Quo: 19 Years of Data". In this interview you will discover: The Impact of rising material handling costs on marketing budgets. Who is affected when exhibitors reduce their exhibit space size. What matters to the millennial attendee experience. How one show organizer, NAB, changed what they charge for material handling and so much more.
The Attendee Shift
Demographics are changing for who attends trade shows. The largest group of attendees today are millennials and their expectations are to have interaction, networking, hands on demos and immersive experiences in the trade show hall. The positive experience for attendees is diminishing due to some of the costs of bringing the equipment and exhibit to the show. As these costs are rising, exhibitors are decreasing the booth size or decide to bring less product to the show.
The Impact of Downsizing
Sue shared how at one show, an exhibitor went from an exhibit space of approx. 100’ x 50’ down to a 20x20. In the past they had a full OR suite in the exhibit and at this particular show, the OR set up was a miniature model displayed under glass. The question posed Sue asked the show organizer was “how is that experience different for the attendee, when they no longer can touch the product -what is it doing to the overall value of the attendee”. Attendees want the experience of touching and feeling the instruments and products.
A Look at the Consumer Price Index
In a 10-year analysis of the consumer price index on costs for conventions, the CPI increased by 20% and union labor wages went up 36% -37% compared to material handling which went up by 150%. Material handling is increasing at a much higher rate than other costs in face-to-face marketing.
Material Handling at Trade Shows
Here is a snapshot of how material handling is determined for ta show. Often an association needs signage, aisle carpet etc. and they may ask if they can receive those items at a lower rate. The general services contractor needs to cover those costs and it can be applied to material handling which is paid for by an exhibitor. Exhibitors often are unaware of surcharges on material handling until they receive an invoice after the show is over. The challenge with this model is that exhibitors don’t have predictable pricing for budgets.
Case study: What is the true cost of moving one crate
Sue described an analysis of how many days it would take a fork lift driver to move one single crate based on the drayage rate. If the material handling rate is $135 per hundred weight, the cost for a single crate was $1,500. Applying the union workers’ wage of $47 per hour against the crate cost, it worked out to be 32 hours to move one crate or 4 days. While it is understood that the crate may be handled multiple times and placed into storage, it is unlikely the time it takes to handle the crate would equal 4 days.
Impact on Show Organizers
Some associations are not aware they can negotiate rates charged to the exhibitor. Organizers have the opportunity to negotiate the rates in the service kit. In the discussion, Sue shared how
at one show material handling went up, and to compensate for the increased cost, the booth size decreased to offset that increase. The costs to the exhibitor stayed the same, however the show organizer lost $36,000 with the decrease in exhibit size.
NAB Implements a New Material Handling Model
This year, NAB tried something new and changed how they charged for drayage. Instead of charging per hundred weight they charged by the square foot at a rate $3.85 per square foot. Another show that did this model is Pack Expo several years ago. For insights into how this works, check out the NAB Cares and watch the video about why they took this initiative for their exhibitors. The result was that exhibitors saved about 40% over the previous year in material handling. Other organizations are looking at to help companies bring in product. Especially for larger equipment shows.
Non-Exclusive and Exclusive Rates
When looking at costs there are two types of rates. The labor rate is an example of a non-exclusive rate-you can choose what company you use for Installation and Dismantle. Exclusive rates apply to things like material handling, electrical, rigging, etc.
How Associations Can Help
Gregg Lapin, CMP Director of Meeting Services at American Association of Diabetes Educators (AADE) shared on the panel with Sue Huff how he learned about the attendee’s decisions and how things like what day to hold the show impacted exhibitors. AADE changed the timing of move in and move out to be on straight time which also coincided with when attendees wanted to attend the show - over the weekend.
How to Impact Change
Exhibitors need to have a dialog with the associations and shareinsights about budgets and the impact on booth size relative to fixed costs on the show floor. Take the opportunity to request the association negotiate material handling rates on your behalf. In turn, associations should talk with convention centers and the general services providers about all exclusive rates including internet to help exhibitors offer attendees the best experience.
A big thanks to Sue Huff for sharing this information on the show!
Check out HCEA for more educational information.
As always thanks to Christy Haussler from Team Podcastfor creating editing magic on this and every episode of the show!