Contracting Alternatives: Single Source Comes of Age

You've probably heard of The Expo Group's Single Source model for providing tradeshow services by now.

The Dallas-based general contractor began developing the model nearly 20 years ago and made headlines in 2003, when it applied for a patent on its business process and software. Equally big news came later that year, when Pack Expo owner and manager, the Packaging Machinery Manufacturers Institute, licensed TEG's system to take over its own general contracting on the show.

After all this time, with that and plenty other shows under its belt, the question is: Has Single Source provided the answer to the industry's prayers? Which begs another, more difficult question: What, exactly, is the industry praying for?

"The model for providing general services in this industry is broken. There's no question about that," said David Audrain, president of Messe Frankfurt's U.S. operations, echoing a general assessment of the situation that's been voiced frequently the last several years.

Many in the industry, like Audrain, believe the traditional way of providing and billing show services doesn't make sense. For instance, he said, contractors often don't bill exhibitors and show managers for actual services rendered; instead, they give some products and services away and shift the cost of them to other areas, like material handling.

Issues such as warehouse and equipment overhead, client expectations and contractual obligations to labor unions complicate the problem further. What many would like to see is a system in which exhibitors are billed a reasonable fee for actual products and services rendered. But how to get there?

The Expo Group's answer hones in on delivery and billing. A good way to visualize it, said Randy Pekowski, vice president and COO of the family-owned company, is at the exhibitor service center.

Metalcon Intl., taking place at the Las Vegas Convention Center Oct. 3–5, offered an opportunity for comparison. While Metalcon was in the LVCC's North Hall, the Industrial Fabrics Assn. Intl. Expo was going on next door in Central Hall. IFIA's service center featured the typical array of desks manned by different companies offering decorator, lead retrieval, computer, audiovisual, floral, photography, utility and other services. Metalcon's service center, meanwhile, had two separate areas: one for lead retrieval and another for The Expo Group.

TEG's service center was fronted by three desks, each one manned by a customer account manager responsible for a group of exhibits (for example, those numbered 100 to 499). The exhibitors in that group had already been dealing with that account manager since their booth number was assigned and they got their service kit. So, pre-show and on site, they have the same contact.

At the show, that contact fields exhibitors' requests and orders, and dispatches them to a series of offices behind the backwall of the service counter. There, a service team leader coordinates the requests and orders, sending his own floor service representatives, as well as reps from subcontracted companies, out onto the showfloor to handle fulfillment, quality control and so on.

The subcontractors — which TEG hires to do electrical, plumbing, computer, AV, floral, photography and other specialty services — have a room in the service center where they can regroup. There's a kitchen for all TEG staff and subcontractors too. It's next to the office of the general foreman, who oversees operations, including decorator services, freight, union labor and equipment, each with its own team leader who reports to the foreman. The general foreman and service leader report to the project manager, who reports to the client.

Throughout the show, the general foreman and service leader coordinate their teams, which relay information, and log everything in TEG's proprietary computer system. It tracks services and vendors, problems and solutions, orders and deliverables, amounts due and paid, for each client at every show.

At the end of the show, the team leader hits a "speedy check-out" button, and the system spits out a bill with costs grouped by service type (subcontractors aren't named). TEG team members deliver the bills to exhibitors.

Pekowski likened it to the way things work in a hotel. A visitor needs lots of things that are provided by lots of different people and companies, although the visitor rarely sees anyone besides the front desk clerk, bellman or concierge. Housekeeping or maintenance staff might come by if needed. At the end of the stay, the visitor gets an itemized bill that hotel staff has slipped under the door.

Claire Kilcoyne, vice president of tradeshows for PSMJ Resources (which manages Metalcon on behalf of the Metal Construction Assn.), said she loves TEG's system. She hired the company in 1991, when she began managing the show, and said exhibitors like it so much that they complain when it rotates to a city where in-house contractors preclude using The Expo Group.

"They do an excellent job," Kilcoyne said. "I'm fully behind their full-service concept."

Among other contractors, however, it raises some questions.

The obvious one is about costs. How does TEG pay its subcontractors and still make a profit without raising the prices it charges exhibitors?

Pekowski's answer is twofold. First, TEG negotiates wholesale, not retail, rates with its subcontractors. Second, the company charges exhibitors the highest market rate for services without discounting or surcharging, for example, early or late orders. Then, at the end of the show, each exhibitor that pays in full on time gets an across-the-board discount (usually 10 percent) on his entire bill.

This, Pekowski said, simplifies things. The exhibitor expects to pay a premium for good service, then the 10-percent discount has a calming effect at check-out time.

Jim Clark, national tradeshow manager for Natl. MicroRentals, said his company handles more than 200 shows in a calendar year, but has never worked with The Expo Group. Still, he's familiar with the model and said, "The thing that hits me right away is, you're adding layers when the order is placed and executed. Instead of exhibitors talking directly to the people who are the most knowledgeable, you're talking to someone who knows a little about everything."

That's true, according to Pekowski. Account managers are "not experts in each area, but facilitators of orders," he said. Subcontractors benefit from the system by letting TEG account managers "weed out" questions and orders, handling what they can and passing on the rest.

"Vendors don't have to send their own account reps to a show," or at least not as many, he added, because they don't have to man service desks, or do sales and marketing. "They can send their worker bees, the people who do the fulfillment."

Narsha Noer said she wouldn't be comfortable sending just "worker bees" to a show. As co-owner of Floral Exhibits, a 65-year-old company in Chicago, Noer works with The Expo Group on a handful of shows a year (including Pack Expo) and said it's always gone very smoothly. "They're very easy to work with," she said, and "it's close, profit-wise" to what she makes on shows using the standard contracting model.

Still, an Expo Group show can take as many resources as any contractor's if it has exhibits with detailed or elaborate work. While a general account manager may have no problem taking orders, Noer said she has to protect her company's reputation by having knowledgeable sales people and designers on site.

This may get to the heart of the Single Source solution from the subcontractor's point of view. Being a nameless, faceless provider under another company's brand doesn't allow a business to brand and sell itself. And these days, a business like that has trouble growing.

In addition, many other contractors, general and otherwise, now offer the one-stop shopping and personalized, one-point-of-contact service that are TEG's claim to fame. Freeman and GES, the industry's two largest contractors, have both updated their systems to group services, itemize invoices and offer single reps to deal with exhibitors soup to nuts.

Yet with all this, and The Expo Group to boot, exhibitors still complain about the high pricie of service. Maybe the answer to their prayers is still out there somewhere.