October 2006
Executive Roundtable: Budgeting for 2007
Industry execs share their strategies for next year, including revenue and expense projections. Find out how they plan to grow their shows and offset rising costs.

By Nancy Mann Jackson

As the travel industry continues to gain ground, it’s a sellers’ market again and show organizers of all types are dealing with increasing hotel and airline prices. At the same time, uncertainty in the Middle East and no end in sight to rising oil prices add to increasing expenses for all types of goods and services.

But while show organizers grapple with rising costs, many predict increasing revenues for the coming year, resulting from sound strategies focused on their particular target audiences. These increased profits may come from new sponsorships, increased booth sales or online revenue generation. Here’s how a few show organizers plan to bolster their budgets and grow their shows in the midst of rising expenses.

Tamara Christian, President
National Trade Productions (NTP)
Based: Alexandria, VA
Web site: www.ntpshow.com
Largest trade shows: Coverings: 33,649 attendees, 1,170 exhibitors, 508,000 NSF; American Public Transportation Associations Expo: 16,492 attendees, 736 exhibitors, 278,500 NSF; Diving Equipment and Marketing Association Show: 10,843 attendees, 651 exhibiting companies, 140,000 NSF

EXPO: What are your revenue projections for 2007?
Christian: We run 12 shows a year in 10 industries, so each show has a different revenue projection. For five of our shows, we’re anticipating a revenue increase of 10 percent to 15 percent. For three of our shows, we’re projecting a revenue increase of 5 percent to 10 percent. For one of our shows, we’re projecting a 3 percent increase in revenue, and for one of our shows, we’re expecting revenue to remain flat. The potential for revenue increases varies dramatically based on the industry, the competition, environmental factors and location of the event.

EXPO: Which revenues do you expect to increase the most?
Christian: Our TS2 show just increased sponsorship revenue 11-fold from 2005 to 2006, which is one of the largest increases we’ve ever seen in a show. We’re seeing sponsorship revenue increase in many of our shows. Five of our shows are seeing a 20 percent plus increase in sponsorship revenue. We’re keeping attendance fees flat across the board and have some events that don’t charge any attendance fee [so we don’t rely on attendance fees for revenue growth].

EXPO: How do you plan to increase these revenues?
Christian: We have a very strong sales force and work to give them the tools they need to sell more efficiently and effectively. For example, we do internal training sessions on handling objections, where we role play various objections that potential exhibitors may have and practice overcoming those objections. We’re also working on producing more intense attendee surveys, which will provide us with in-depth data to give potential exhibitors to help them understand that we’re their ally. These surveys give our salespeople more information to share with potential exhibitors, which is very valuable. 

EXPO: Which event-related expenses are going up the most and why?
Christian: Marketing expenses are going up the most, primarily because postage rates are increasing. We’re also investing more in our Web sites so those expenses are increasing. Although e-marketing doesn’t cost as much as direct mail, we’re doing more of it, so e-marketing expenses are also going up.

EXPO: How do you plan to deal with these increasing expenses?
Christian: Again, it depends on the show and the show’s profit margin. In most cases, if expenses are going up in one line item, we look for another line item where we can cut expenses. Obviously, we’re always focused on increasing revenue. As NTP’s controller Karin Marty always says, “You can only cut expenses by 100 percent, but there are no limits to how much you can increase revenue.”
 
Ben Wold, Executive Vice President
National Marine Manufacturers Association
Based: Chicago
Web site: www.nmma.org
Trade shows: Two trade events and 23 consumer shows, including Miami Boat Show: 147,000 attendees, 2,000+ exhibitors, 831,000 NSF; Toronto Boat Show: 88,000 attendees, 1,000 exhibitors, 420,000 NSF

EXPO: What are your revenue projections for 2007?
Wold: We expect revenues for our shows to increase in a range of 3 percent to 5 percent. Most will be up about 5 percent.

EXPO: Which revenues do you expect to increase the most?
Wold: We expect increased revenues from space rates, and we anticipate larger sponsorships.

EXPO: How do you plan to increase these revenues?
Wold: We have been in the 1 percent to 3 percent range for space rate increases for the past few years, and we need to be in the 3 percent to 5 percent range, so we’re raising those rates this year. Our sponsorships are based on multi-year contracts and we’re making assumptions based on renewals: Our sponsors are pleased with the shows, our shows have grown, and we offer an attractive demographic, so we predict those sponsorships will grow. We also have an internal sponsorship team, so we’re pretty close to the process.

EXPO: Which event-related expenses are going up the most and why?
Wold: Our [convention center] leases are going up about 4 percent. Advertising costs are always high with consumer shows, and we’re seeing about a 5 percent increase there. Our installation costs are going up more like 7 percent.

EXPO: How do you plan to deal with these increasing expenses?
Wold: With increasing revenues, we’re absorbing the increase in expenses, but we’re also re-examining priorities and looking hard to find different ways to do things. Because we produce a lot of shows, we can benefit from economies of scale. As often as we can, we try to use the same services or products for a number of shows so that we can get volume discounts. Also, we have a large, year-round staff, and we put our staff on the road to work at our shows, so we virtually take the middle man out of the picture. We know the industry and they know us, so there’s continuity and efficiency that comes with that.

Angelo Gangone, Vice President, Tradeshows
Association of Woodworking and Furnishings Suppliers Based: Commerce, CA
Web site: www.awfs.org
Trade show: AWFS Fair (Las Vegas): 17,054 attendees, 898 exhibitors, 420,000 NSF

EXPO: What are your revenue projections for 2007?
Gangone: We’ve budgeted for a 10 percent increase for 2007.

EXPO: Which revenues do you expect to increase the most?
Gangone: The majority of our increased revenues will come from booth sales. We also project attendance growth and more sponsorship sales.

EXPO: How do you plan to increase these revenues?
Gangone: A lot of our increase in booth space comes from existing exhibitors who are increasing their space. We’re proud of that because it shows that exhibitors have confidence in the show, which is a great compliment. We also hope to increase booth sales to new exhibitors.

Our last show was very good; it was the first time to move the show from California to Las Vegas after 48 years. And people have really bought into the relocation, the strategy behind the show and the association’s plan to grow the show. We’ve expanded our marketing efforts a great deal. We don’t know what’s going to happen in terms of the economy. It could slow down, so we’re putting a lot of effort into recruiting attendees.

Also, we’re very, very open to new sponsorships. If an exhibitor brings a suggestion, we’ll always work with them. Buying a sponsorship with us isn’t just like purchasing items from a menu; we’ll always work with exhibitors to develop new sponsorships. We also go to a lot of different shows throughout the year to get ideas and see new types of sponsorships.

EXPO: Which event-related expenses are going up the most and why?
Gangone: Transportation costs are going up for shipping and shuttles; the price of oil right now is just crazy. Also, hotels are more expensive than they were for our last show in 2005. I think it’s because hotels are doing well and it’s more of a sellers’ market, especially in Las Vegas.

We’re also seeing an increase in our marketing expenses because we’ve expanded our marketing efforts a great deal. We advertise in the trades and do e-mail campaigns, but the backbone of our marketing efforts remains direct mail, and there’s an increase in postage coming. We’ve also increased our list by 50 percent because our best results still come from direct mail. We’ve decided to become more aggressive, going after more targets, so we’re seeing an increase in costs.
 
EXPO: How do you plan to deal with these increasing expenses?
Gangone: Our increased revenue projections should cover the increased expenses, but we’re doing our best to negotiate good rates. As for the hotels, they’re working with us, but not to the same degree they did in 2005. We’ve tried to develop a very good relationship with our representatives. We approach it as a partnership because we’re working toward the same thing: We both want to fill hotel rooms. That approach has worked well so far.

Helen S. Pollard, CMP, Director of Meetings & Conference Services
Emergency Nurses Association
Based: Des Plaines, IL
Web site: www.ena.org
Trade shows: Leadership Conference: 2,500 attendees, 200 exhibitors, 50,000 NSF; Annual Conference: 4,500 attendees, 500 exhibitors, 100,000 NSF

EXPO: What are your revenue projections for 2007?
Pollard: We expect at least a 10 percent increase on exhibit rental fees.

EXPO: Which revenues do you expect to increase the most?
Pollard: In addition to exhibit rental fees, we’re looking at other sources of revenue in the area of sponsorships. We’re working with a consultant to develop new sponsorships, and we may be exploring the packaging of sponsorship opportunities. It’s about building relationships by partnering with sponsors.

EXPO: How do you plan to increase these revenues?
Pollard: We plan to increase our exhibit rental fees by approximately 10 percent across the board. We’re in a unique position in that we have not instituted a rate hike in several years and are still beneath our industry counterparts in terms of rental rates, so we don’t anticipate repercussions as a result. We’re also expanding our sponsorship opportunities.

EXPO: Which event-related expenses are going up the most and why?
Pollard: The expenses that we see increasing the most are convention center rental rates, airline rates and hotel rates.

EXPO: How do you plan to deal with these increasing expenses?
Pollard: With convention center rental rates, the pendulum is shifting in the buyers’ direction as more and more inventory becomes available. While we have convened our conferences in first-tier cities in the past, we’re now becoming more interested in the second-tier cities. For our smaller conferences with exhibits, we’re looking at hotels with exhibition facilities, where floor rental space is significantly lower than convention centers and meeting rooms are basically free. We may also want to consider shifting our programs into lesser demand periods where our association would be more in the driver’s seat. We’re also less inclined to book years out in comparison with our past history.

One of the ways to attack escalating rental costs is to book catered events in the convention center rather than in the headquarters hotel. Many centers will offer decreased rental based on good food and beverage spending. We’re also looking at tacking rebates onto room rates to help defray convention rental costs.

Airline rates are on the upswing with the escalating fuel prices, and we’re finding that we’ll need to be budgeting at least 10 percent to 15 percent more for our funded travelers, most of which consist of board, staff and a multitude of presenters. One of the ways we may want to approach this is to focus on cities where we have a large membership concentration where attendees do not necessarily need to fly.

Hotel rates are another thing to watch. We’re becoming more aggressive with our negotiations.

Sandra Marcus, Program Director, Lotusphere
IBM Corp., Lotus Software
Based: Boston
Web site: www.ibm.com/us
Trade show: Lotusphere: 6,000 attendees, 200+ exhibitors, 60,000 NSF

EXPO: What are your revenue projections for 2007?
Marcus: My expectation is an increase. It’s hard to project a number; ask me after the conference. Offering value is how we differentiate ourselves in a crowded conference market.

EXPO: Which revenues do you expect to increase the most?
Marcus: Revenue from attendance fees is where we’re looking for growth. 

EXPO: How do you plan to increase these revenues?
Marcus: We’re increasing the amount of internal training and awareness so our sales force feels educated, in-the-know and involved in getting their customers to register. Regardless of the volume of e-mail and direct mail, there’s nothing as effective as a face-to-face, relationship-based invitation. We also invest in telemarketing to past attendees; while this isn’t as emotional as a salesperson-client relationship, the past attendee understands the value proposition immediately and can make an informed decision quickly.

EXPO: Which event-related expenses are going up the most and why?
Marcus: My biggest concerns are the rising costs of airfare and hotel room rates. For many other direct event expenses, we can make minor adjustments to help control our expenses. Just watching the economy and the market, it’s a simple function of supply and demand. It’s a sellers’ market; the airlines and hotels are in business to make money. While I’m delighted for our hotel partners that their business is strong, I have concern about the impact on the small business traveler. Attendees at our largest conference come from enterprise-size businesses, medium-size businesses and small businesses where every expense dollar is given serious consideration.  

EXPO: How do you plan to deal with these increasing expenses?
Marcus: Through increased attendance fees, both rate and volume. Across the board, our fee per head will go up slightly but again, it won’t be out of line with the value we offer, and we’re focused on tactics to increase the number of attendees. We plan to offer the highest-value content and help our attendees justify the expenses.