SMG, Conferon Make a Deal to Ease Red Tape

Facility manager says such master agreements save time, negotiations

By Heidi Genoist -- Tradeshow Week, 7/19/2004

Facility manager SMG and event planner Conferon late last month unveiled an agreement meant to minimize the legal red tape involved in convention center contract negotiations. While industry observers feel the agreement is a no-brainer for the two companies, they add a word of caution for clients. Meanwhile, SMG said more such arrangements are in its future.

To save themselves time, SMG and Conferon came up with what they dubbed a "master license agreement addendum" — a template of commonly used definitions and clauses that can be tacked onto Conferon's contracts for space at SMG-managed facilities.

Gregg Caren, SMG vice president of operations and business development, said the addendum covers business terms, cancellations, group sizes, Americans with Disabilities Act language — "some of the things that have been sticking points with Conferon." After agreeing that the two were spending far too much time hashing out the same issues in contract after contract, Caren explained, "We've pared it down and gotten it to the shortest form possible."

Charlie Johnson, president of a real estate consultancy that specializes in convention center projects, described the agreement as a plus for SMG and Conferon — and not necessarily a minus for their competitors.

"Hotels have always had relationships with planner organizations," Johnson said, "but it's been hard for facilities to do this because they're owned by individual cities. Increasingly, though, private management firms like SMG are being used."

SMG is the largest convention center management company in the United States, with 49 exhibition facilities under contract. As Johnson pointed out, before this, no facility management company had enough leverage to negotiate nationwide deals.

Companies like Conferon, meanwhile, manage everything from small special events to large exhibitions for an impressive portfolio of clients. The company, which started as a site-selection and registration firm, now handles 575 association and corporate clients.

And, although the SMG-Conferon addendum is meant to expedite contract negotiations, Johnson does not believe it will give either group an edge over others when it comes to choosing dates at SMG venues, because cities and buildings have their own criteria for booking, and events have their own specialized needs.

Caren said part of SMG's strategic plan is to develop formalized agreements with organizations with which it has relationships. Last year, the company signed a national licensing agreement with Microsoft, giving the software giant a standardized process for booking SMG-run facilities. SMG also has what Caren described as a "bridge contract" with VNU Expositions, allowing the facility operator to bypass some issues the show owner has with individual, city-run convention centers. And it has an affinity program that gives benefits to members of the Society of Independent Show Organizers.

Caren hastens to add that these agreements are far from cookie-cutter master contracts. Each booking is still based on the specific event, he said, and simply offers a way to help the planner and facility negotiate their best deal based on the event's requirements and the value of that piece of business.

"Our goal is best described by looking at the parallel of what Marriott or Hilton does with the Fortune 500 clients they deal with," Caren said, adding that more such agreements are in the works.

Attorney Mark Roysner, who specializes in assisting meeting planners with venue contract negotiations, said boilerplate documents have advantages. But he pointed out that the agreement with Conferon is different than the others SMG has in one important way: Whereas Microsoft, VNU and SISO members own the events for which they're signing space contracts, Conferon, a third-party organizer, is doing the booking on someone else's behalf.

"I think the clients that hire Conferon will want to look at why they're doing this," Roysner said. "Are they doing it to provide better service, or to make it easier for them to pick a venue and get paid for it quickly?" Anyone who hires an outside party to negotiate a contract on his behalf should still read the contract himself — or have his attorney do so, Roysner believes.

Conferon agreed. "We are not a signator on any contract," said Bruce Harris, president of Conferon Global Services. "We're just saying, 'Let's agree on some things in advance and discuss any additional items to tailor it to the individual customer.'"

Harris added that Conferon already has similar agreements with hotel chains. Their goal is "to take our collective buying power and provide benefits to organizations that are much smaller than Microsoft or VNU — to give them some benefits they may not get in dealing with the locations themselves."

According to Johnson and Roysner, it would be difficult for anyone to follow SMG's lead in the convention center realm. Global Spectrum, SMG's closest competitor, doesn't have the exhibition hall inventory to leverage a national agreement. The largest independently and city-owned facilities in Chicago, Las Vegas and elsewhere have deals in place with companies like VNU and Reed Exhibitions to facilitate booking multiple shows, but they apply only to those specific facilities.

The Convention Industry Council's Accepted Practices Exchange project includes a panel charged with standardizing certain portions and language of space rental contracts, and other industry associations offer their members boilerplate documents and clauses that can be tailored to fit their specific needs. But as sources pointed out, there will always be factors — the laws of the city or county that owns the facility, house rules and regulations, the wishes of the show owners — that transcend attempts at sweeping generalization.

"If somebody is doing their job right, they already have relationships with their partners and suppliers," said Johnson. "This is just the codification of the larger responsibility of relationship-building."