Creative Leisure News - Busniess-Wise

Mike's often irreverent, thought-provoking analysis of the industry-- with an occasional guest columnist.

Debate: CHA Summer Show Expenses

An angry exhibitor vents -- and CHA's response.

by Ken Petersen, Product Performers and CHA's Steve Berger (March 22, 2011)

(Note: the following is an email sent to Steve Berger at CHA. Ken cc'd exhibitors from the Los Angeles show. CLN invited Steve to respond, which he did � and Ken responded to that.)

We received the contract for the CHA Summer show last week and I am appalled at the huge price increase for Exhibit Space. From my perspective, CHA has concocted the smoke and mirrors gimmick of selling "Bonus" 10'x10' Booths for $10 each under the guise of fooling us into accepting what in reality is the largest one year cost increase for Exhibit space the craft industry has ever seen. I think this entire idea of raising Exhibit Space prices from $17 per square foot of booth space in 2010 to $21 per square foot (numbers rounded) in 2011, and then telling us we're getting extra space for just $10 more is an insult to our intelligence.

This charade is paramount to a landlord telling a tenant, I've got some good news and some bad news for you. The bad news is that I'm raising your rent by 23% this year. The good news is .... you know that extra space in the complex that I can't get anybody to rent any more because of the poor decisions (think Orlando & Los Angeles) I've made in recent years? Well, instead of the space sitting empty again for another year, you can have it for just $10 (on top of the 23% rent increase for your current space). To that I would say, thanks for nothing!

If any landlord in the country tried doing this with their tenants in this economy, they would all move out in a heartbeat. Or in our industry's specific case, find a new, more affordable way to market themselves. As they say, necessity is the mother of invention, so why or how does CHA think it is a good move to create this necessity for its members? Is the illusion of a larger show this year more important to CHA than actually trying to ensure the long term success of it by keeping it affordable to exhibitors? What happens in 2012 when exhibitors are asked to pay $21 psf for their artificially enlarged booth space from 2011? Of course hardly anyone would be able to afford their booths without downsizing, so then the whole "show is growing" illusion will come crashing down like a house of cards.

Obviously for some exhibitors, the Bonus Booth scheme may work in their favor. But for your long term "tenants" that have Exhibits that fit a certain footprint and do not need or want any extra space, this is a bad deal! A larger booth does not necessarily translate into extra sales, but it certainly translates into extra costs beyond the floor space. i.e. extra shipping costs, union labor set up costs, internal labor costs, hotel rooms for the extra employees to cover the "bonus" space, etc.

As for my company, we have spent the days since receiving the 2011 Exhibit Space Contract designing our downsized booth. We are going to fit very nicely into a 20'x20' booth, which is 1/2 the size of our CHAW 2011 booth. Yes, necessity truly is the mother of invention. Our downsizing for the summer show is not necessary because business is bad (it is actually very good for us), it is necessary because your 23% increase blew our show budget. I wonder how many other show budgets this ridiculous price increase is going to have an effect on?

I truly hope this price gouging does not speed the downward trend of the CHA shows and cause things to spiral out of control, but as it stands, it may quite possibly be the straw that breaks the show's back. The Craft Industry needs the CHA shows to not only survive, but to thrive. If we are going to survive and thrive though, we cannot be priced out of the show market. Like any business, CHA needs to keep their costs under control and price their goods and services at an affordable rate for the masses. To do otherwise, marks certain failure.

Please feel free to Reply All to this email so that all CHA Members cc'd (from CHAW Show Directory) can hear what you have to say on this subject.

CHA's Response

Dear CHA Members,

First, thank you for your patience this week while being copied on multiple e-mails surrounding confusion in regard to CHA's 2011 Summer Show pricing. I'm also appreciative of your understanding that my response comes several days after the initial e-mail, as I have been careful to take this time to diligently review the questions submitted and have had multiple phone calls directly with Ken Petersen and several others, all of whom I appreciate and respect as valued CHA members. While we still disagree on some issues, after discussion and explanation, Ken Petersen agrees that with the new booth package his booth costs for 2011 will be almost the same as they were in 2010 since he is local to Rosemont and brings his own carpeting and furniture.

In most cases we estimate that exhibiting companies will save approximately $400 per booth if they take the full package.

I'd now like to take this opportunity to provide further clarification on pricing for the 2011 Summer Show. To review the pricing in appropriate context, last year's price per square foot with added a la carte services would equal a higher total cost to members this year than the new inclusive package pricing. Should members choose not to use or do not need items in the package, then the cost to exhibit at this year's Summer Show per square foot alone is higher. Although we cannot meet everyone�s needs and requests 100% of the time, I am pleased that our CHA team was able to develop a new pricing structure this year that was created from CHA member feedback, since a large majority of members utilize items in the inclusive package.

Alyson Dias, of iLoveToCreate, sent me the following e-mail this week and has agreed to allow me to share it with all of you.

"I want to send my support on this issue. After review of the new contract versus last year's cost, we should actually increase our booth space over last year to a 30x40, so we gain additional material handling costs in our favor, reducing the total show investment. Therefore, I believe we can increase our booth space without increasing our costs. Nice job."

Again, I understand there is a group of CHA members for whom the new pricing structure is not as beneficial. However, CHA strives to seek member insight and act on it by developing programs and pricing models that address the valuable feedback we receive. From what members have told us you want from your Association, CHA's objectives have not wavered as we focus on:

- containing/decreasing total Show cost to members;

- increasing product diversity of exhibitors;

- increasing size of the Show with more exhibitors; and

- increasing size of the Show with more buyers through programs encouraging new buyers to attend.

In summary, I hope this information has been helpful to answer questions you may have regarding Show pricing, value, background, and CHA's commitment to fairly representing you as members, advocating on your behalf, and striving to meet your needs. Please do not hesitate to call me directly with any additional questions, as I welcome the opportunity to speak with you one-on-one, as Ken and I have done.

In the meantime, we�ve already had a great initial response to the 2011 Summer Show and hope to see each of you there!

And Ken Pattersen's Response

Dear Mr. Berger,

Thank you for the courteous responses this week from both yourself and Mr. Lee. While there remains many things that we still disagree on, I am pleased that my email has at least opened up a dialogue on not only the pricing structure of CHA, but other subjects as well.

After getting over the sticker shock of seeing booth space rise from $17 psf last year to $21 psf this year, I do now see that the partial free drayage offer this year just about offsets the increase for the actual Exhibit Floor Space. The point that I have been expressing though to you in our phone conversations the past week is that before the decision of moving the summer show to Orlando, the drayage was always basically free in Chicago. But upon our return last year that perk was taken away. Now that CHA gave us back 70% of the drayage perk, the booth prices were raised 20% to offset it. I just don't believe CHA should be playing those kind of games with the prices. Why bother partially giving the free drayage perk back if you raise the prices in another category to offset it?!

Now that I have a better understanding of the situation, breaking the math down in short: Factoring in the current CHA price structure, on average it costs just about the same to exhibit this year as last year, but it does cost many exhibitors 20% more for floor space plus higher drayage charges to exhibit in Chicago now than it did before Orlando. Personally, I regret not sending out an email to the member base a year ago about that large price increase.

Another one of my concerns is that the $21 psf Exhibit Floor Space for the summer show will set the precedent for the 2012 winter show where full drayage is charged. Some transparency at this stage from CHA on that issue would be greatly appreciated so that show budgets can be figured out.

I know you realize that I do not want to promote negativity towards the shows. They are a very important part of our industry and have certainly been an integral part in my own company's growth over the years. We all need to work together to ensure the show's long term success. Communication with all the members of CHA and acting on their concerns is the key to that success. While it is important for members to communicate with you one on one, members can now see the easy forum we have to get our thoughts and ideas out there to everyone. Speaking of forums - How about creating a message board on the CHA website where all members can communicate and discuss ideas?

Mr. Berger, another important issue that should be addressed is the CHAW conflict in dates with the Paper World show. Can you please explain to the members why the winter show continues to be held at the same time as Paper World? This scheduling conflict was a very big concern to many of the members that responded to my previous email.

(Note: Everyone is welcome to join the conversation. Email your thoughts to Ken, Steve, and CLN: mike@clnonline.com.)

xxx