I’ve gotten interested lately in a phenomenon that I’ll call “nonresponsive markets.”  I’m no economist, so I’m sure I’m not coming up with anything new here, and it probably already has a (different) name.  But what concerns me is this: I wonder whether we’re seeing an example of a nonresponsive market in the healthcare convention industry.  I hope not.

My wife is a speech pathologist.  It continues to amaze me that, even in the midst of the worst economic downturn in our lifetimes, she still gets one to two completely unsolicited job offers every week.  The demand for speech therapists is sky high, and has been high for decades.  You’d think with that kind of demand, she could command the salary of a baseball pitcher.  Alas – no.

The same seems true in nursing.  America suffers from a chronic shortage of nurses, yet nurse wages remain relatively low.

Why is it that some markets don’t seem to respond to the ordinary supply and demand pressures that are supposed to dictate a free market?  I don’t have the answer to that (though I have some theories about both of the examples above).  But here’s the question it causes me to ask about our industry:  why is it that certain sectors of the trade show and convention industry don’t seem to respond to the ordinary supply and demand pressures of a free market, either?

Specifically: we (HCEA) have been telling the healthcare association community for years that a contraction was bound to happen in exhibit halls.  Ever increasing show costs in the face of a shrinking R&D pipeline, increased scrutiny of the measurable return of convention participation, and now the recession, made that about as sure a prediction as one can make.  Yet neither associations nor, in many cases, their suppliers, seem to have responded in ordinary ways.  Space rates haven’t gone down.  Costs of exhibiting haven’t gone down.  Or even leveled off.  Why is that?

The worst thing for a market is inflexibility.  Sometimes inflexibility is introduced from outside, such as government price controls.  Maybe in other cases it comes from other sources.  But where is it coming from in the trade show and convention industry?

The era of unscrutinized company participation in trade shows and conventions is over.  As it should be.  Don’t get me wrong: I remain convinced that we have a great story to tell, and once it’s out there fully, trade shows and conventions will stand up to scrutiny better most other sales or marketing channels.

But some associations, trade show organizers and their service contractors still don’t seem to grasp the full scope of this.  They try to shore up sagging revenue streams by raising rates or adding on new fees.  This is only going to exacerbate the problem.  An inflexible market, like an inflexible bridge, can withstand pressure to a point, then it catastrophically collapses.  When it happens to a bridge, people have to drive around.  When it happens to a market, companies find other ways to reach their customers.

Let’s all work together to make sure this doesn’t happen in the trade show and convention industry.  Flexibility is the key.  If we remain flexible, there is absolutely no doubt in my mind, the best days of the trade show and convention marketing industry are ahead of it.

Members of the Trade Show Exhibitors Association (TSEA), comprising the world’s exhibit marketing leaders, along with exhibit builders, agencies, show producers and other vested suppliers are openly collaborating at levels never before seen. Results of such collaboration are expected to create new efficiencies that will ultimately serve and benefit the exhibit and event marketing ecosystem as a whole. With that goal in mind, TSEA convened its inaugural Red Diamond Congress event, a three-day leadership summit held in Orlando, FL, April 25-27, 2010. The event brought together many industry leaders to directly address such key issues as third-party audits and housing and labor practices. Results included significant understanding and collaborative insight into the issues, potential solutions and a roadmap forward. The full white paper, produced in conjunction with George P. Johnson, is available at www.tsea.org

The following are examples of the key findings and recommendations:

• 95% of attendees believe that certified, independent, third-party attendance and demographic data would help validate continued investment in a show.
• Housing bureaus should adopt a customer service orientation when dealing with corporate marketers, in recognition of their status as true value generators. The needs of exhibitors and their companies should be considered at all times.
• More efficient and effective labor management can free up allocated budget and resources. These, in turn, can be invested into additional activities and promotions that can (1) improve the performance and increase the overall value of corporate exhibit programs and (2) enhance profit for show producers.

TSEA expressly wishes to thank all Red Diamond Congress attendees as well as the following supporters for helping to make the event possible:  Orlando Convention & Visitors Bureau, Orange County Convention Center, Czarnowski, George P. Johnson, Universal Studios, Walt Disney World Resort; BPA Worldwide, Skyline Exhibits, Centerplate, Fantail Consulting & Technologies, Exhibit Surveys, LMG; SmartCity; Pictura Graphics, Momentum Communications, FedEx Graphics, Contact Keeper, and MMI.

The following communique was distributed by David R. Causton, General Manager, McCormick Place to all industry stakeholders regarding the new legislation which impacts trade shows at McCormick Place which was enacted in Illinois on May 27, 2010.

Dear Stakeholders:

On behalf the Metropolitan Pier and Exposition Authority, I am proud to announce that a new day has dawned in the Chicago convention industry.  On May 27, 2010, the Illinois General Assembly enacted historic legislation in response to your demands for a sweeping transformation in the way business is conducted on MPEA premises.  As a result of this legislation, show management, contractors and exhibitors will realize immediate and long-term benefits, and Chicago will become an even more competitive and attractive destination for conventions, trade shows, expositions and meetings.

While this legislation is effective upon enactment, the implementation process has only just begun.  Preliminary preparations have long been underway, and the Authority will soon finalize a full-scale implementation plan in cooperation with its key partners.  Certain changes will be implemented promptly.  Other changes are wholesale modifications to the way business is conducted on our premises and thus will require a lengthier implementation period.  The following examples illustrate the myriad complex tasks now required:

√               While the legislation expands the type of work that exhibitors may perform in their booths, it directs the Authority to develop rules and regulations to ensure that these new exhibitor rights are exercised consistent with the training and safety requirements for such work.

√               Exhibitors may now unload and load privately owned vehicles using non-motorized hand trucks and dollies in areas designated by MPEA for such purposes.  The Authority must evaluate the logistics of this new policy and identify the areas where such unloading and loading may occur safely.

√              The legislation establishes new rules governing when show managers and contractors may charge exhibitors for labor services on a straight-time, time-and-one-half or double-time basis and how such services must be billed.  The implementation of this provision will require an audit of current wage structures and a new communications piece regarding labor costs and billing practices.

√             While the legislation eliminates “stand-by labor” and requires all union stewards to be “working stewards,” it authorizes the Authority to exercise its discretion to determine whether more than one working steward may be necessary depending on the building or show at issue.  The Authority will develop protocols for evaluating when more than one working steward may be required.

√              The legislation establishes a new Advisory Council to represent the interests of all stakeholders and regularly advise the Authority on critical operations issues.  To illustrate, the Authority now has the legal right to determine the work jurisdictions of “show labor” and crew sizes when appropriate on MPEA premises.  The Authority may only, however, exercise these rights after consultation with the Advisory Council.  For this reason, the Advisory Council will be established as promptly as possible to facilitate a resolution of these important policy considerations.

√               At present, MPEA’s FOCUS One is the exclusive provider of electrical services to show managers and exhibitors.  By virtue of the legislation, MPEA may no longer serve as the exclusive provider, and customers may now choose either an in-house electrical contractor or an outside electrical contractor approved by the Authority.  The Authority will begin to develop a list of approved electrical contractors and modify the FOCUS One model to accommodate this change.

√             The legislation requires itemized billing statements for utility services provided by MPEA and establishes pricing guidelines for food and beverage contracts.  An audit of current practices and new communications pieces are necessary to implement this change.

√             The Authority is solely responsible for administering and enforcing these new legislative requirements and must now establish the necessary governing regulations and enforcement mechanisms, including procedures for audits and contract reviews.

As the above issues and others are resolved, the Authority and its partners will then be required to amend current agreements and substantially revise existing MPEA policies and procedures, including, but not limited to, the following:

√              License Agreements

√              Registration Agreements

√               Right of Entry Agreements

√              MPEA Meeting Planners Guides

√              Exhibitor Manuals

√              MPEA Facility Protection Guidelines

√              McCormick Place Exhibitor and Utility Ordering Guides

√              Informational Publications on the MPEA Website

Undoubtedly, a great deal of work remains to be accomplished.  MPEA and its partners embrace this challenge and reaffirm their commitment to implement this historic legislation in the most expeditious, efficient and communicative manner possible.  Until further notice, you should continue to rely on existing agreements, arrangements, practices and policies. In the meantime, the Authority will continue to finalize the full-scale implementation plan and will communicate with you promptly upon its completion.

As has been said before, we are truly grateful for your support and diligence in this important endeavor and appreciate your insight and patience as we continue this collaborative venture.  The future of Chicago’s convention industry is bright, and the best is yet to come thanks to your dedication and commitment.