By Danica Tormohlen, Content Producer, UFI
There’s no doubt that inflationary pressures and supply chain issues are real in the U.S. and around the globe. How are North American exhibition organizers dealing these economic headwinds? We spoke with three UFI members who are leading exhibition organizers in North America to find out how they are creating a game plan to address these rapidly evolving challenges.
Back story: Companies are paying higher wages, spending more for materials and absorbing record freight costs. Shipping, freight and insurance rates have skyrocketed to multiple times their pre-pandemic levels.
The opportunity: Widespread inflation makes it easier to broach the topic of raising prices with customers. Some executives are seizing a once in a generation opportunity to raise prices to match and in some cases outpace their own higher expenses.
Not impacting budgets yet. “Costs are going up. It’s a concern, but they haven’t been impacted much at this point. It’s too early to tell. In 2008-2009 during the last recession, our organization invested in marketing, and we predict that will be the case again.”
Price elasticity. “We are finding there’s price elasticity now. We can charge more, but we are offering more, such as smart event packages, digital solutions, matchmaking, etc. We have been testing these for some time now.If we have a good product with good value, there’s opportunity in pricing.”
Pick the low-hanging fruit. “We have scrutinized our on-site and travel costs and found low-hanging fruit to cut – like food during set-up, rental cars, etc. It’s a simple example but those are the types of things we are looking at.”
Beefing up regional marketing efforts. “We are seeing more regional and more drive-in attendance at our shows — probably because of higher travel costs — so we are beefing up regional marketing efforts.”
Understand your customer’s pain points. “Our goal right now: Be fluid and keep in touch with our customers. Know their pain points and respond when necessary.”
Biggest hits to the budget: Labor and materials. “Costs for any hourly wage positions are going up.Those workers can do other jobs for more money, so we had some issues with no-shows this summer. Therefore, we have had to budget more for those positions. Security costs have spiked 20% to 30%, and materials costs are up 5% to 10%. For some things, suppliers aren’t able to get materials (like materials for registration counters). We have not passed on those cost increases to exhibitors yet, but if things don’t level off soon, we will.”
Work with vendors to keep costs in check. “Contractor costs are going up, mostly because of labor. We were able to negotiate a 3% to 5.5% increases. We typically have a 3% increase on exhibitor costs. Our goal was to stay under 6%, and part of how we were able to do that is stipulations in current contracts on caps. Overall, exhibitors are not downsizing their booths due to increased costs, but they may spend less when ordering. It’s too early to tell.”
Tracking hotel and airline costs. “We sell hospitality suites for exhibitors, and pricing for those has gone up because hotel rates are up. For customers, hotel rates are more than they were in 2022 but less than 2020. We are internally discussing booking airfare now for a 2023 show because we are concerned airline pricing will continue to go up. We are undecided as of yet, but we have never bought airline this early before.”