EMBRACING THE NEW NORMAL AND THE ASSOCIATED COSTS DELIVERING A SHOW POST PANDEMIC

Hello, this is Les Goldberg, and welcome to The Road Ahead. The Road Ahead podcast is dedicated to the future of the live events business, bringing together industry experts. Hello, production world. This is Les Goldberg and The Road Ahead. Today, I have three amazing guests. I have Michael Lachance. He's the director of technical production for Wilson Dow. I have Rick Barranco. He's the vice president executive producer for Red Rocket Studios. And I also have Katie Riggs. She's the chief event strategist for Riggs & Co. Everyone, thank you and welcome to the show. Thanks for having us. Well, today's show is dedicated to the infamous word, the budget. The budget is something that is near and dear to all of us, and so much we can talk about it. You know, we had shows we did pre-pandemic in 2019, and there were lots of budgets. And then the show business industry, the live event gathering business, kind of changed, and it kind of went into a stalemate, or it halted for a little while. We did a lot of virtual. And as we came back to do virtual events, have kind of come down, and they're really more like hybrid. And these live gatherings started in 22, but really started to come back in a meaningful way. And now we're three quarters of the way through 2023. And when clients call all of you, I'm really interested in hearing what your thoughts are on the budget, the infamous word, the budget. And are people trying to do shows, and they take their last time they did a big show, may have been 2019, and they're going, it's time to do that big show again. And it's like, okay, let's refer to our 2019 budget. And a lot has changed since then. So my first question is going to go to Katie. And Katie, have clients embraced the new normal, and have the associated costs with delivering a show now, then versus when they last did their big show? And how do they approach it? And what's your thoughts on this? So I think it really depends on who your clients are, and what their abilities are. So we serve as clients, both in the corporate and in the association space. And I can tell you that those that are in the corporate space have been a little bit more flexible, right? Like they're not expecting to be at 2019 prices. They understand they're not charging 2019 prices. But those in my nonprofit association space are struggling a little bit more because they cannot, I mean, we're seeing almost 25% increases across the board on food and beverage, audio, visual, rental, whatever it may be. And you can't typically raise association dues or member registration prices 25% in one year, and that be a tolerable increase for them. And so they're really struggling, I'm going to be honest. And so on the corporate side, it's been, okay, let's rework the budget. Let's be creative. Let's do things differently. Let's cut back here. Let's add here. What is the most important, the most strategic impact that we can make? And if it's not strategically valuable, then those are the things that get cut. And if the content, for example, is the most important thing that they're going to put forward, then we invest in the audio visual first, right? And maybe the food and beverage takes a little bit of a hit so that we can keep that fluid and not completely break their budget. And on the association nonprofit side, what we're seeing is they're trying to raise dues. They're trying to raise registration prices, but they're cutting back on everything else in order to keep things level set as much as they can, because they just can't increase those charges to their members who have also seen a hit depending on their industry or layoffs or whatever that much in one year. And so it really, I think, depends on who you're primarily serving. So my takeaways so far are, we're not going to do filet mignon, we're going to chicken, and audio visual is very important, which is exactly the kind of thing a guy like me would want to hear, the message and the delivery of the content. Same question, Michael Lachance, your thoughts on budgets from 2019 to 2023? I think we face the problem of clients believing a sentence, the budget is the same as last year is still valid. It's not valid with eggs, it's not valid with milk, and it's not valid with production. And that's really a big, one big challenge. Second challenge that I've been seeing is the meeting planning community for these corporations is becoming much, much younger and much less experienced, and they're not booking ballrooms big enough, they're not booking ballrooms tall enough, high enough, rigging points, they're not negotiating in their contract, any sort of concessions from Encore, and other things like that. And we're running into situations where, well, just using internet as an example, internet's the new rigging as far as how much Encore can charge. I saw an invoice for $100,000 for a 500 megabyte per second line in Las Vegas. And it was they considered that the discounted rate, and then they put a 25% service charge on top of that. So the clients are looking at those numbers, and then that comes right out of the AV budget right out of your pocket. It just it's hurting every single show we have to cut back because of in-house charges. Wow. Well, that's, I guess, having a good LTE connection might save a little bit of money. Maybe there's a new business there of providing internet from a third party and not having to be slaves to the hotel. That's an interesting concept. If they don't firewall you. If they don't firewall you, that's right. Rick, what are your 2019 budgets, 2023 budgets? What's happening out there? I agree with the other two, man. Right spot on. I mean, I feel that's exactly the same way. In fact, you guys may have experienced this too, but I feel like a lot of our clients are coming back saying, gosh, I know the event industry has really been hit. So I'm sure you'll take anything. I think the perception is that you guys would do it. You're desperate for work. That's just not the case. We lost a lot. And I think a lot of people think that we're going to do this stuff for nothing. And conversely, this has gone, the prices have gone up to Katie's point. Prices have doubled. I mean, it's crazy. So that's the first part of it. And I think, like Katie said, I think we kind of work at the same way where we really look at the whole event, right? And if it means that we got to cut back on some of the food or bring up the AV or, God forbid, get rid of the A, a little bit less AV to be able to be able to do more entertainment, it depends on what we always look at holistically. And I think at least our clients really appreciate kind of us doing that. Internet, it drives me nuts. And you're exactly right. I think the whole rigging thing, we have really young people in the industry right now that we're forced to work with. And it's a training program too, as well, it seems like. I will tell you on the rigging side, from what I've seen and experienced, because a lot of times we go into venues that have exclusive rigging contracts, I have personally seen whoever the provider is, that sometimes they're charging you the cost to purchase the equipment to rent it for one show. So that's 100% markup per show. And I think if I was in a business like I could do that only, that would be really super amazing. And so those kind of margins would be, you know, that would compete with the flip chart as the most profitable item in the industry. Oh my gosh. Oh yes, the flip chart. So let me move on. Let me move on to my next question. So this question goes to Michael. Are you finding the clients and these cost changes that are happening with all these elements, are they accepting them? Are they pushing back? And also, is it location dependent? So if I'm in Chicago versus Las Vegas versus New York versus Orlando, are you seeing different cost disparities based on the location you're working in, maybe union, non-union, or is it just across the board? What's the experience you can share? Well, certainly everything's gone up across the board. I think we all agree on that. I am getting more clients that call and say, hey, I'm thinking of three cities, Phoenix, San Diego, Las Vegas, which is the most cost effective? Well, obviously Phoenix. I mean, that's a right off the top of your head, easy answer. Everything would be less expensive in Phoenix. If you go to Las Vegas, even between properties, a property that is an SES property, SANS Exposition Service property, and while they say they're non-union, everything you do there is non-union. And it just gets hugely more expensive. Even in two venues in Las Vegas, there's a big difference. So clients getting us involved earlier in the process and letting us guide them picking a venue lets us have more budget to work with on the production side. It's the ones that don't and that is, oh, we're going to Vegas and we're going to the Venetian, and you're like, okay, you're going to have a 300% increase in your production budget. Is that where you just tell them to bring a bigger wallet or a bigger bag of money because of those selection process? Yeah, it's getting ridiculous. It really is getting ridiculous how much it varies between cities to do exactly the same show. So Katie, your thoughts on the same question? Yes. So we're fortunate that we're strategy first and sourcing, and then we're a hands-on agency. So with a lot of our clients, we are doing their for them. And so we're partnering with them to guide them based on their budget, their needs. We map their members. We map their attendees if they have addresses across the country to say, you're going to get the most draw in this region. And from that, you're going to get the best costs in this city. And so that city will elevate to the number one city that we're sourcing. But I would say it is exactly true. You've got to be careful depending. I mean, San Diego is a city that not a lot of people have known as a heavy union city. But when you're talking about in the downtown district of San Diego, they're all unionized. And I'm not here to bash unions. They have a purpose. I think that they are good for a reason. But when it comes to things like audiovisual, they're blocking you in breakout rooms. They refuse to negotiate. I mean, I just had a meeting a month ago in San Diego at a hotel that has the monopoly in the audiovisual industry right now in their in-house and the things that they would not negotiate on the contract and how it raised our costs because this client of mine partners with the same audiovisual company for four events a year. And then we pay a huge bill on top of that because of the barriers that they're creating for us that they're just refusing to negotiate on contracts. It's been really difficult. So we're trying to be the best guide we can to be like, these are the cities to go to choose a tier two city. Maybe it'll be a little bit harder to get to, but your flexibility might be better. Go here, don't go there. We've mapped your members, things like that. But I think people are willing, organizations are more willing to take that guidance now than they were in 2019. Before it was just like, nope, we want New York City. Nope, we want Atlanta, whatever it was. And now they're like, whoa, we actually don't know and we need your help. And I think that that is great because it has opened a line of communication if you're really willing to partner with your clients on being that support system for them. I love everything you told me about that. The advice for a client to be a winner is to bring the group, the production team early and help guide the process. And then you get good outcomes. Rick, your thoughts? I totally agree. I have a couple of clients that I've worked with them since my Disney days. And it's all about this, as anybody will agree, it's all about relationships this business. And we've built up quite a big rapport with my clients. And to the point where they don't bother sourcing with these big hotel chains anymore, the conference directs to the world and that kind of thing. So a lot of times, because what we were finding was, depending on, they weren't even looking at the city, they were just looking about availability, somewhere in Spain. Okay, great. That's wonderful. But what's been happening lately, or at least the last couple of times, we go over two years before. And although my client's looking heads in beds, I'm looking at production because a lot of times we'll get over there. We all know this. It's a beautiful hotel, but I can't do any rigging in there. I can't do any of that. And I had this conversation with some of my counterparts and they were like, you know, we never thought about asking the question about production. I'm like, that's why you're there. You're not there to sleep in a ballroom. I mean, I think that's a big piece that kind of what we offer at Red Rocket is we're a full resource to our client because they really do. And it saves money. If you don't have to pay a hotel company 10, 15%, whatever that is, there's more money on production. So we try to help in that as well to be a guide for them. So it's interesting. A lot of these hotels have providers, and I'm speaking toward AV side, but there could be internet or power providers, et cetera, that have stringent rules. And it's all driven by a certain commission structure at the hotels getting a revenue stream. And that drives some inflexibility. And the only time I've actually seen an alternative to that is when there's some big dollars involved. And when the venue feels like they don't want to lose the business to another city or another property. And if people don't feel like they have competition and everybody and their brother want space, then I feel like it's really hard to negotiate. Which brings me to my next question. This is to Katie. What's the one thing that the hardest pill for a client to swallow? And Michael mentioned the internet at $100,000 at some crazy thing. We should provide internet for a small city for $100,000. Maybe we should get Elon Musk to be the Katie, what do you think is the hardest thing for your clients to really accept? It's just incredibly over the top crazy. And there's a red line and they're not willing to cross that line and it might be a reason not to go to a venue. Correct. So for a long time, I think it's actually been power rigging and internet because those have always been exclusive to properties, at least in my 20 plus years of experience. Those are the things they've always been able to capitalize and really get you right, like $75 for a power strip. So those have always been a hard pill to swallow. But I think on top of that, being a hard pill to swallow. Now, we do have these in-house audio visual companies that are partnering, giving a 20, 25%, 30% kickback to the hotel. And they're doing things like siloing off breakout rooms. And so we're seeing this more. And I hate to mention a competitor, but Encore is doing this. So they're working with the hotels to silo off breakout room service, for example. So like, sure, you can have your general session. But if you've got eight breakouts, those are completely off limits to your audio visual company. And so you have to work with us on every one of them. And so it really is making it difficult. To create a seamless production on the AV side, because you work with the vendor you're working with, because you've got four or five shows, you're trying to create a brand, a consistency, they record your content the same way, you know, and you've got a fluid production going. And then when that happens, and you're doing those types of things in the breakout rooms, it's really hard to say, okay, this content is not produced in the same way. The turnaround time is not the same. And you're the, you know, as me, the meeting planning company they're working with, I'm navigating those waters for them. So that's a really, I mean, like I said, the power, the rigging, the AV has always been difficult. And we're cutting back on some of those things. We're ground supporting things, right, when we can, as opposed to rigging, if it's possible to provide the same production value, cutting back on power needs, like using complimentary, I'm negotiating complimentary internet year over year for all of my clients. But it's that the weird things that are happening now, that are like, you can service your general session, but you can't service your eight breakouts, and weird stuff, and they just will not flex. They just won't flex. You know, my last podcast I had done last month was dedicated to using an in-house provider and bring someone in. Now, our company is unusual, because we have a number of venues. But I will tell you, when you reference that 20 to 30%, I think that might be a low average for the majority of venues out there. That number might probably be slightly higher. And what's hard about that is then you don't get a partner in the venue either, because they want the kickback, right? So you're not getting a partner from either of them. So here's the reality is, when you're trying to deliver the best event, and you have a certain crew or a team that have worked on it over and over, and especially with digital recording, and having to interface if we're going to stream, and there's a lot of level of sophistication that we're doing now, that maybe we weren't doing five years ago or 10 years ago. And if you work with a typical in-house team, sometimes you'll find people that lack that level of sophistication, and they don't have the same loyalty to you and your client, because their loyalty is to the venue to produce that income stream, and it becomes this dichotomy of where I want a great show, they're forcing me down a certain path, but it's really sacrificing the integrity or the ability for me to deliver that show. So for all the people that put out great productions, it's this conundrum, and we're living in the conundrum. But anyway, I want to ask the same question to Michael. What do you think is the red line or the most difficult thing for your clients to deal with that they're having in any venue? I think Katie's spot on. I mean, that really is the biggest thing we're running into. And I'll admit, I make it very hard for them. At the site survey, once they say to the client, well, we do it for safety, they've opened the door for us. And I'll make, I want a card carrying certified rigger on the call. Anyone who's going up in a lift has to be lift certified. I need to see dates on your motors of the last time they were inspected. And I make it very hard for them because they can't do most of that. And then they slowly, I've had some luck, not always luck, but I've had some luck having them back down just a little bit. Interesting. You know, the devil's in the details, right? And so you're saying, dot my I's and cross my T's, which is very smart because, you know, not everybody is up with certifying their motors and doing the annual testing and testing all their trusts and all of the things you have to do to maintain a safe environment. And so you're asking for something, what would be standard, especially at the rates that people are charging in the different places in the venues, you would think that the safety would be number one, but somehow you probably don't always experience that. No, it's, it's actually frightening. It's actually frightening sometimes when you see someone going up and trying to rig something or trying to wrap a trust before, before, and, and you watch them and then you walk, you take that and you show them how to do it. And you think, now I'm training them. There's not, there's only a right way to do it wrong ways, but, but you only get one shot of doing it right. Because failure has consequences, especially in rigging. So, so Rick, what are your thoughts on this? Where's the red line for your clients? And, and what are you finding? Again, spot on. I can't, you know, those are always kind of the big rugs. You know, I've been lucky enough down here in Florida to kind of work at Disney for many years. I worked with these guys, you know, Encore, obviously before that, a lot of other companies that were involved. But, you know, I think what happens is what we try to do. And I think everybody tries to do is build a relationship with these folks. And I, like the program I have in November, it's a perfect example. You know, we, as a production house, we want to produce it all right. But we know that, you know, if we're going to partner with Encore in the hotel there, we're going to, we're going to understand that, you know, for some concessions on rigging and power, obviously you have to do in the power, but for some concessions, I will give you the trade show. You know, because to be perfectly honest, I don't want to do the trade show. You know, it's just a lot of junk in a room. And so, so I think, and again, that's easier said than done. A lot of times, you know, in union places, you got to have it all. And I get that. But there are some times when there could be some partnerships that they're going to make a little bit of buck because right now they weren't making any. So if you use that as a little bit of a, of a little bit of a ploy to say, listen, I'll give you all the breakouts. I'll give you the trade show. I want 20% off. You know, we've been really successful at that. And I think that really helps. It doesn't help in the union houses. I get that. But a lot of times that, that, you know, you throw that kind of bone out there first. And I think people, you know, So you're looking for a partner that can be a little flexible if you're willing to give them some of the action or some of the business. Absolutely. And, you know, to be perfectly honest, it's not, it's not the action that we really gravitate towards, you know, and to them, it's all about stuff on the shelf that they charge full boat for, you know, for us, it's, you know, it's, it's just, so we try to do that. I, you know, Katie's point, you know, you're in a union house, you're kind of stuck, but we still try to work that angle whenever we can. Got it. When we're locked into only two weeks and we're in fall, which is one of the busier meeting seasons, and we've got two hotels, it starts to get real complicated to like throw down the gauntlet, unless you're like a citywide or, you know, bringing them $4 million worth of business. Like, it's gotten so hard to source strategically like that to where it's in your pocket. Yeah. So, so let me move on to my next question. This is to you, Katie. So what advice would you give a client if, you know, and they're being prepared for their new budget, they're chosen 24. And I could pick some crazy cities like Las Vegas or Chicago or New York, but what advice could you just give a client? Because ultimately, all of you have, you know, countless years of experience. And if there's someone who's out there from an end client, who's part of a meeting team, and they're saying, what can I do to follow a process or program that will help my get the best value? That's such a open ended. So what are your thoughts, Katie? Value is a great word, but I think it's ROI. So you have to know what your purpose is. Like, why are you meeting? Why are you gathering people? What is the purpose of why you're getting people together in the first place? And keep that center of mind. And if costs mean they're going to go up between 15 and 30%, you have to be prepared for that so that you can execute on driving ROI for the organization and for the attendees. And if you cannot do that, then there's no purpose in holding the meeting. Meeting for the sake of meeting is pointless, and people don't have the time or patience for that anymore. So keeping that top of mind, and then just increasing your budgets in general, you're going into fourth quarter, you're in budgeting season, you need to be budgeting for increases, labor has gone up, food has gone up, audio visual has gone up, transportation has gone up, shipping is out of control, it's triple what it used to be. So just really being prepared and budgeting in advance, but keeping the core of what you're doing in mind. So if you can cut back in one area to keep what drives, if it's a networking strategy event, then maybe the production and audio visual is not where you spend your money, right? And you do some other things. Maybe it's core heavy, like some of my clients where it's all about the data they're presenting, then you need a rock star audio visual production team, and you need great recording, and that is where you spend your bread and butter. So really, I think it's raising your budgets and being prepared for that, having a contingency budget, and keeping your strategy and your ROI top of mind. I heard all of your, but one thing really caught my mind, it was the word rock star audio visual provider. My ears just perked up and I was like, damn, I think she might be talking about me, but I'm not sure. I mean, one of my clients does use the client that rolls up in here occasionally. So very thoughtful answer. Michael, your thoughts, you're telling your client, what can they do to best be well prepared for creating a budget and a successful formula for their show next year? Yeah, I think we touched on it already in that get the production companies involved sooner. Even something as simple as picking a ballroom big enough saves them money. If I don't have to put the empties on a truck, then I don't have to labor as long. I'm saving them money. The ceiling is high enough. We can do more ground support LED instead of flown LED. There are things we can do if you work with us at the beginning. So few meeting planners know that the numbers the hotel gives you as far as square footage and how many people fit in the room are not accurate. And you have to take at least 30% off that number for production. If they just knew that one thing, it just makes it, we can be more cost effective if you're giving us the room that we need to produce the event you want. And it's a small thing, but getting us involved earlier that we can be looking at these rooms that we can be looking at the numbers, even do a draft drawing, so that you say, okay, this is why you don't fit. And this is what you're going to pay. Always put a CSM on your site visit, because they'll tell you the real numbers of a room unlike a salesperson. Oh, sure. I was going to tell you that if we were walking a ballroom in 21 and trying to book space for 24, I bet you we would have got a great deal. I bet you the contracts at that time would have been incredible compared to if you ask for it now. So, Rick, what are your thoughts on best advice you could give someone on trying to plan an event and in the approach? Yeah. So, I agree with Michael, obviously. Get us involved early. I don't know how many times we've kind of diverted our client into thinking that Vegas is the best when, heck, maybe Atlanta was just exactly what they needed to have for their event. But it really does help. If we're involved with it during the walkthroughs, all that kind of stuff, we can kind of brainstorm what that production is. I'm sure you guys have, too. I've had multiple planners tell me or multiple people at hotels saying, well, we have you loading in in one day. Well, you don't even know what the production is. So, how do you know that I need one day? I might need three days. You don't even know. He goes, well, you need to talk them into a smaller production. It's exactly what they tell me. And I'm like thinking to myself. That's no good. That's less audiovisual. That's no good. Less audiovisual. That's no good. And the idea is they are not coming to your hotel to eat the chicken and sleep in your ballroom. They need that, but that's not the priority. The priority is the content and what they're going to experience. That's why they're there. So, anyway, get us included earlier. So, this is my last question, and I'm going to start with Katie. Can a savvy production team deliver an amazing show at a fair price in today's world? That's the $64,000 question. I think it depends on what you call fair, and I think that every organization has a different mind. Like I said, I have corporations that spend on a one-day event $100,000 on their audiovisual production. I have associations that don't spend $50,000 in a three-day production. So, I think it really depends on what you consider fair, but also I do agree that when you have a savvy team and if you've got multiple events a year or you've got a show that repeats year over year contracting the same company, you're going to get a better deal. They're going to find a way. They're going to offer you discounts. They're going to put the same lead on your team show after show so they get you. They know the process. There's less meetings. There's less work. You can repeat some orders with a few adjustments, and that can really help you save, in my opinion. And when you make a vendor a partner, then it changes the game. I mean, it really does. Just going out to bid for everything all the time. We use very few vendors here at Riggs & Co., and that's because I trust them. I know their quality of work. I know who they're going to put on the team is going to be great. And even if we're managing local labor, which we usually are because we travel with them, that they're going to handle that, and they're going to put out the fires, and the client's never going to see it. So, it's making your vendor a partner, and you will be able to get that savvy production in or around your budget unless you've got just $2. You can't do anything with nothing, but you have to have realistic expectations. Katie, I love your answer. I absolutely adore it. I'm not a fan of the word vendor. I'm a fan of the word partner. A partner will work at any hour of the night and do whatever is necessary to deliver. A vendor is someone who you get the lowest price on your pencils, and they have to compete with Amazon. Michael, a chance, your thought on, can we deliver an amazing show at a fair price? Is that possible? Yeah, I would say absolutely. The budgets I'm working on and working at Wilson Dow now, senior leadership, they're really, and I agree with this, is we're going through a phase, and they're actually saying, okay, let's take X off the margin to give us a little bit more production, give us a little bit more creative, and willing to make maybe a little bit less money to get through this phase, and also to be fair to their clients. The majority of Wilson Dow's no-bid clients, they're just repeat clients year after year after year, and a lot of those are big pharma. Big pharma is not coming to dimes quite as much as some of the other companies in the industry, but I absolutely think it's there. You need to be creative. Again, we've all been in the business for a really, really long time. We need to change how we're thinking. If I was on stage, I would be using break the paradigm. We need to break our own paradigm and start to learn how to as well as what the next phase is going to be. Cool. All right, Rick, take us home. Can you do an amazing production at a fair price? Yeah. No, I totally agree. I think that both of you guys said it right. I very much look at our relationship with our clients as partners. We know what the business is. We love to get in their brains, understand what they want to accomplish, all that kind of stuff. I think it's all about, in my opinion, it's all about the grand. I'm going to help them. How I'm going to help them is, listen, we need to have a little bit of AV. What's the experience? Is it about maybe a little entertainment moment? It could be a little video moment that we're creating. To them, it is a big production. We all have to remember that because a big production to me is what's happening in Vegas right now in that sphere. That's a big production. You know what I'm saying? To my client, that has never done anything like this before, $30,000, wow. We've got to remember that too. I think that to put on an amazing show, it's all about the experience and it's all about the perception of what that is. That client will never pay for a big, huge production like we're all used to, but neither will a big production that we do every year that's billions of dollars. They're not going to settle for a $30,000 thing. It's all about that, managing our client's expectations, and we can do some amazing things. We do every day. Well, I want to thank all of you. I have three amazing guests, Michael, Katie, and Rick. You all have been very insightful. Anyone who listens to this podcast will be smarter as a result of taking their 30 minutes. Hopefully, they'll use the tools and the ideas that you shared. This is Les Goldberg and The Road Ahead. Thank you all, everybody. Great job. Thank you, guys. Thank you.