|
|
|||
|
|
|
|
|
|
 |
FEATURE | |
Back to Facility Manager
Contents |
“Imagine the typical large market—a dedicated convention center, a dedicated arena (or two), and a few major league sports stadiums. Each building has its event niche, and each event niche knows its building.
Tomorrow you’ve got an exam for 250 wannabe accountants. Then, it’s on to the “world’s greatest rib cook-off” over the weekend, with two wedding receptions going on at the same time. You know one of the mothers of the bride, and no doubt it’s going to be a long painful night. And now, that city council member (who’s running for reelection) just publicly blasted the venue for “losing money’” while the director of a local charitable organization shows up at the council meeting blasting the high rental rates and demanding a discount. The life of a small facility/small market venue manager is not easy. The way the venue interacts with the community can be complicated. The local benefits of the venue may not be obvious, but are generally substantial. Here are just a few thoughts to consider as the small facility/small market venue manager navigates the constantly changing political and operational landscape of the small market/venue.
The Play’s the Thing, The rib fest, bridal fair and boat show are a pain to produce and host, but you’ve added to the quality of life in the community. The basketball tournament draws families from throughout the state to celebrate the spirit of high school sports. Your building is in effect the community gathering place. The regional chapter of fire chief’s association is in the building, generating room nights and economic impact. The Eagles concert is playing tonight and half the attendees are from out of town, generating significant economic impact, while the other half are locals enjoying first-class entertainment, solely due to the existence of the center. Unique to small market/venue facilities, this multi-purpose focus requires that a building manager pays attention to certain operational and political aspects that a large market venue manager may not have to address. Marketing the benefits of the center – If you generate an annual report, highlight what your building truly does for the community– hosting first-class entertainment and community sports and festivals, generating economic impact, enhancing the community image. Quantify and describe what you do and how the building interacts with the community. If you don’t prepare an annual report, you should – brief, concise, highlighting the past year’s goals and progress towards achieving them. Providing staff that can accommodate very diverse event types – In some venues, the same staff that worked the youth rap concert the night before is now servicing the governor’s conference on tourism– staff with blue jeans and a work shirt with a name over the pocket. Every level of added multiple use requires an added level of concentration on providing tailored service. This may simply mean upgrading uniforms or allocating particular staff to certain event types, or, if feasible, increasing staff to address the varying client demands.
The point is that a small market/ venue building manager needs to be able to respond, without the resources of a large market venue, on short notice. Saying no to a customer is an option, but how about anticipating these challenges, and developing a support network within the community that can help you? Multiple event types means constant attention to the building amenities – The industry is changing – this is certainly a common sense notion that requires the manager of a single purpose facility to stay on his or her toes. Now, if you’re delving into multiple event segments, with very different needs and trends, “on your toes” may not be good enough. A simple exhibit hall can be converted into a playhouse suitable for a concert or Broadway type event, and a building may have to change to accommodate this. The venue manager must stay current as to the equipment available to serve multiple needs, the demands of the community for particular event types, and how similar buildings are addressing these same issues. For some arenas, the addition of a limited multi-use flat floor space could dramatically increase overall facility use. Is this true for your market, and what is involved in adding such space? It makes sense, every year, to take stock of the events you’ve served, events you’ve turned away, innovations in the industry, and to use this data to continually refine a set of short and long-term building improvement plans. Benchmarking your facility? – Don’t even try! There are no significant resources, nor will there likely ever be, that you can easily access to generate very specific benchmarking data as to the various operational characteristics of your venue. The IAAM tried, and it really doesn’t work, because every building, every market, every city council, every authority, every contractor, everything is unique. Having said that, the sharing of ideas, solutions, operational data and related characteristics among buildings can be a fantastic resource. Rather than broad benchmarking efforts, you’d be better off selecting a set, maybe five or six centers, from around the country that best reflect the situation you’re in. Hold regular conference calls, share data, understand each other’s problems and how problems are addressed. Maybe it’s more of a support group. Whatever method works best for your communication with peer facilities should be pursued as an important means of bringing industry innovation to your venue.
Are You Leaving Money on the Table?
Based on our research, less than half of small market/venue facilities use a contractor for these types of services, and only 38 percent receive any type of revenue split from a vendor. Building managers, particularly those in facilities that host convention and trade events, may want to consider upgrading the level of service provided, and if a contractor is used, insist on a relatively high percentage of gross revenue. In some markets, an outside vendor may be difficult to secure due to the low volume of work. Consider a local telecommunications company (maybe even as a sponsor of the venue) to work with you in providing the necessary equipment and service. Audiovisual services are delivered to the event planner in numerous ways. These typically involve the center’s providing a limited array of basic services and a preferred or open vendor policy to address more technical needs. Based on our research, 27 percent of small market/venue facilities receive no revenue share from vendors operating in the facility. Again, there is a principle here: the building is the economic engine allowing a vendor to be successful. The engine should get a fair share of the revenue. Food and beverage services are generally provided by a contractor, although in some cases, the service is provided in-house with the facility receiving a very substantial amount of net revenue. Several small-market centers have generated in the range of $900,000 in net food and beverage revenue in past years. In many small markets, an open or preferred vendor policy is used, and often times this is appropriate. As previously noted, a venue will cater to an incredibly wide variety of events, from the highly price-sensitive “brown bag lunch” set, to high-end catered functions. In some cases, concession services are provided in-house while catering is contracted. In smaller markets, there oftentimes isn’t a single vendor that can accommodate such varying needs. In other cases, a single vendor is used. No matter the method, it is important to generate a fair share of gross revenue for the venue. Even with an open or preferred vendor policy, a center should be able to expect at least eight to ten percent of gross revenue. If the service is brought in-house, the profit margin can be as high as 35 to 45 percent. It is critical in in-house situations that building management has a solid background in the food and beverage business.
“Event Promotion is a Sleazy Business” Minimize the risk – Co-promotion can simply mean you’ll contribute rent and/or other venue costs to the production, and split the profits with the promoter based on an agreed-to formula. If a show tanks, you lose the rent, but can still collect F&B, parking and potentially other ancillary revenue. The more you’re willing to offer, the greater the potential reward, all the way up to the point of purchasing the act yourself and retaining all revenue. As a cautionary note, and there are many such notes, one convention center manager took a risk on Dionne Warwick (with the event set in a ballroom with portable seating). You can applaud taking the risk, but Dionne certainly wasn’t at her prime, the event lost a ton and the manager is no longer employed at the center. Another promoter took a chance on a little known event called “Spirit of the Dance.” By the time it reached his building, the event was a top seller and he made tens of thousands of dollars on the event. Manage expectations - You certainly won’t make money on every event. The trick is to develop an annual budget for promotion that forecasts a break-even at the end of the year. If you make some money, great, but the point is you have added significantly to the entertainment inventory your building has delivered to the community. Relationship business – There are good promoters/ agents and bad promoters/agents. Build a relationship with the agencies that know your market, know your building and respect your level of risk tolerance. If an event you’re co-promoting does poorly, don’t leave the impression with the promoter that you’re nickel-and-diming to minimize your loss. Maybe there are a few charges that can be waived. The personal relationships you build will help you in securing in-demand profitable acts, and avoiding the Dionne's.
To CVB or Not to CVB First, avoid any public battles over who gets credit. The event has been held in the center for 10 years and your staff knows the event planner on a first name basis. The CVB staff may have shown up at a meeting or two, yet on the year-end CVB report they list the room nights from the event as one of their “success stories.” This happens in nearly every market and you’re better off just leaving it alone. The CVB staff has a very difficult job, particularly in these tough times, and you’re going to need them on your side. And if you’re preparing an annual report, as you should be, you can list the event as one of your achievements as well. Build your own qualified marketing staff – Even if it’s just one or two people, the large majority of the events at your building will be booked by you and your staff. Based on what you’ve heard from some other “support group” facility managers, you may want to get into some new event markets and you won’t be able to rely on the CVB. It’s your building, you know it better than anyone, and you should have a feel for the types of events you could be going after. Be aggressive and take some chances – Maybe you can pursue some events that require a bit of risk on the front end, risk that can take many forms. Some buildings could pursue more multiple simultaneous bookings, and this entails an operational/ customer service risk that may be worth taking. Maybe you could invest in marketing to local banquets and receptions. You’re risking dollars, and potentially the ire of the hotel community, but there could be significant financial rewards. As noted earlier, maybe there are opportunities to co-promote. In fact, if you’re not doing it, there certainly are such opportunities, but the risks are obvious. We’ve only scratched the surface in discussing issues that face the small market/venue building manager. Sandra O’Toole, through her leadership in the IAAM, has raised and discussed many of these issues, and topic-specific seminars have been developed at both the annual meeting and the various building specific events. Hopefully, these efforts continue because the demands on the small market/venue manager are significant. John Kaatz is vice president of CSL International and is based in Minneapolis, MN. He can be contacted at jkaatz@cslintl.com. |
|
|
© 2002-2004 International Association of Assembly Managers 635 Fritz Dr. Coppell, TX 75019 USA Phone: 972/906-7441 Fax: 972/906-7418 |
And now, step into the world of a small market venue, or just a small venue. Today you’re hosting a youth rock concert, and by the way, there’s a corporate party going on at the same time upstairs. Oops, the mayor just called, and he needs dates and discounted rent for a meeting he’s hosting next week.
How high can you jump? – At any moment, an event planner may throw you a curve. You haven’t had to use high-speed Internet access routinely, but now the planner wants capacity for a large classroom setting. In this case, a relationship with the local telecommunications provider can be critical. Perhaps a last minute change-order requires you to turn the arena floor from high school basketball to banquet and back in short order. In this case, you may need access to quick labor, perhaps volunteers from the local high school.