Suppliers Speak: Downturn? What Downturn?

No sector of the tradeshow industry was hit earlier or harder by the last economic downturn in 2002 than exhibit service providers. Those still thriving today recall seeing their colleagues – from I&D firms and technology companies, to graphics printers and modeling agencies – close their doors, one after another.

So, what's their attitude today, faced with another period of possible economic hardship? “Never again,” their attitude seems to say. Those who spoke with Tradeshow Week are not only ready for a downturn, but, most added, are expecting some growth this year.

“Yes, we have seen some softness in demand,” admitted Shelly Justice, president and CEO of CMT Agency, which provides exhibit staff. “In fact, in the middle of December, we had several clients that did not rebook for shows such as (Intl.) CES, or they booked with a decreased number of people.”

Justice's observation is in line with larger economic trends in the United States, such as slowing growth in gross domestic product and flat retail sales during the normally busy holiday season.

Jeff Rudner, president and CEO of Exhibit Lighting Group, said he was seeing some customers start to be more cautious with their marketing dollars, in preparation for budget cuts. “They may have less money to spend on the same package,” said the 15-year veteran of the tradeshow lighting business.

But, like Justice and other sources, Rudner said he wasn't feeling too much of a pinch.

“Business is fine,” corporate magician Charles Greene said. “I've seen no difference because of the current economic situation.”

With several large tradeshows in the first quarter already reporting declines in net square footage and number of exhibiting firms, how could this be?

In Greene's case, the small size of his business and the way he books clients keep him prepared for possible slow-downs.

“I'm the smallest guy at Exhibitor Show,” Greene said, referring to the March 9-13 tradeshow at Las Vegas' Mandalay Bay Resort & Casino, where exhibit service providers of all sizes are gathering for their annual meeting. “But being smaller allows me to adjust more quickly.”

Greene added that his main clients book him several months in advance, so he's already got plenty of work for the bulk of this year.

“I just spoke with about 100 people on my mailing list,” he said. “During times like these, some people will say their budget is down and they're not spending as much as last year, but some will want services like mine more than (other services). I just have to find them.”

As soon as Justice noticed shortfalls in fourth-quarter 2007 bookings compared with 2006, she started talking to her customers about it, asking why they were booking fewer presenters and models.

“They said their budgets were cut,” Justice said.

After thinking about the logic of trimming booth staff in response to budget cuts, she offered her clients some advice: “When they have fewer temporary booth staff, they have to bring in more of their own staff, because they need a person in the booth, getting a lead walking by, and they pay for that. They don't need 15 sales reps in the booth, but maybe eight. With us, they can still have a presence in the booth with people doing demonstrations, scanning badges, while those other seven sales reps are in the office or out on the road.”

Her argument worked. In mid-February, Justice saw a spike in sales that brought business back up to its normal level.

Rudner agreed that honing in on clients' budget concerns was key to facing financial challenges.

“Profit margins get a little tighter compared to our normal pricing,” he said. “You need to stretch those dollars a little farther. But we do project we'll meet or exceed our (revenue) goals for '08, because we always have a conservative growth strategy. A booming economy is not an excuse to be frivolous.”

Rudner's prudence is characteristic of others who survived the last downturn.

Bruce Green, president of I&D firm Coastal Intl., said the near devastation that followed the 2002 downturn caused him to completely revamp his business strategy, with a focus on diversification and globalization. Coastal branched into other markets, such as construction and retail, and began marketing to overseas clients considering exhibiting in the U.S.

As a result, Green said, he's expecting sales to be up as much as 40 percent this year at the company that has grown from 35 employees in 2002 to 65 today.

“If the U.S. isn't doing too well, India is doing phenomenal,” he said. “Dubai is doing phenomenal.” The company still gets 50 to 60 percent of its revenue from tradeshows, but no longer relies on standard models for marketing and service.

Unfortunately, Green added, if companies didn't start developing new revenue streams at least three years ago, it's too late for them to diversify now as a means of weathering the downturn.

“You have to start looking at new growth opportunities five years in advance,” said the 24-year industry veteran. “When things are down, you have to have a strategy to grow. For every person you have to cut, you have to plan to replace them, and add someone new, within two years.”