Going Up: Rates Only Slightly Higher

By Margo McCall -- Tradeshow Week, 5/30/2005

Even though 2004 marked the end of the industry downturn, tradeshow managers didn't use the occasion to impose huge rate hikes for exhibit space.

In fact, rates at the industry's largest U.S. shows didn't even keep pace with the 3.7-percent annual inflation rate. The largest association-run shows charged an average of $21.03 per square foot in 2004, up 3 percent from $20.42 per sq. ft. in 2003, according to Tradeshow Week research. The average rate at the largest for-profit shows was $23.39 per sq. ft. in 2004, up 2.8 percent from an average of $22.76 per sq. ft. charged in 2003.

The percentage gains mirrored the rate increases imposed between 2002 and 2003, when net square footage of the largest shows was still in decline.

"Slow, steady growth works well for show producers," said Michael Hughes, TSW associate publisher and director of research services. "Show producers have modest pricing power. While shows usually do not have direct head-to-head show competitors, today, show producers are more often competing with other marketing media."

Not surprisingly, the tradeshow industry's most expensive U.S. shows are usually the most popular in their sectors. Penton Media's Natural Products Expo West added 90 cents to its space rate between 2003 and 2004, when it reported nearly 20,000 more sq. ft. and 74 more exhibitors. VNU Expositions tacked on an extra $2 to its space rate last year for the July version of the JA Intl. Jewelry Show, as did the Consumer Electronics Assn. for its fast-growing Intl. CES, the largest show held in 2004. And ASIS Intl., manager of the ASIS Intl. Annual Seminar & Exhibits for security professionals, added an additional $5 to its space rate between 2003 and 2004.

Several of the industry's priciest shows, however, held the line on rate hikes. Post Newsweek Tech Media's FOSE kept its rate at $44, the Natl. Assn. of Chain Drug Stores retained a $43 rate for its NACDS Marketplace Conference and Advanstar maintained its $39 rate for AIIM ON DEMAND.

Lorenz Hassenstein, vice president of Post Newsweek's events group, said organizers have to be careful about raising rates. "Events reflect markets — they don't create them. If a market is going up, typically it's acceptable for you to drive price because you're creating additional programs. If you're caught in a situation where values are going one way and price the other, you've got a problem."

The typical model is for organizers to maintain rates for a couple of years then add a dollar or so to the space rate, said Hassenstein, who spent a decade of his career with Reed Exhibitions.

Post Newsweek, he said, tries to ensure that price increases are accompanied by additional value. "It's never just an arbitrary act. It's always related to the value of the event in the marketplace."

Many of the industry's least-expensive shows remained that way in 2004. The Florida RV SuperShow, produced by the Florida RV Trade Assn., retained the same rate of $2.05 per indoor sq. ft. as in 2003. The show, held at the Florida State Fairgrounds in Tampa, drew 20 fewer exhibitors and 26,000 fewer attendees in 2004.

The Pennsylvania RV & Camping Show, meanwhile, charged its 284 exhibitors the same starting price of $2.35 per sq. ft. last year. And even though the show is moving to the Hersheypark Entertainment Complex in Hershey this Sept. 12–18, the cost of booths will remain the same. "We're holding the rates," said Rebecca Lenington, executive vice president of the Pennsylvania Recreation Vehicle & Camping Assn., the show's owner and producer.

The Recreation Vehicle Industry Assn. added a dime in 2003 to members' per-square-foot rates for the Annual Natl. RV Trade Show. But exhibiting rates have remained the same since then.

With average rates of $37.75 per sq. ft., security-industry shows were the most expensive in 2004, up from the second-most-expensive sector in 2003. Computer and software industry shows — 2003's most costly sector at $42.74 per sq. ft. — in 2004 declined to an average of $35.67 per sq. ft., reflecting continuing concerns about information technology companies' spending.

Tradeshows serving the architecture, pharmaceutical, energy, jewelry, communications, food processing, and radio, television and cable industries were also among the 10 most expensive sectors.

Declines were recorded for hardware and electronics tradeshows. While rates for the largest hardware shows dropped by 16.4 percent, rates for electronics shows dipped by nearly 3 percent.

Space rates remained flat for shows in the food processing, manufactured housing, nursing, police, recreation vehicles and safety shows. Rates nearly doubled for the largest forest products shows, traditionally one of the least expensive sectors. Large shows in the fire protection and housewares sectors were the only others that recorded double-digit percentage gains.