When your venue tells you to use their in-house supplier for your conference audio visual

Have you ever been in a situation where you’re managing conference audio visual services and your venue pushes you to use their in-house audio visual supplier?

This can be a deal-breaker for planners…especially when they already have a trusted partner.

In this interview, Christopher Gerhart covers:

  • Why in-house AV may not be the best option for your conference audio visual
  • How to get in your preferred AV partner without having to pay the venue a dime
  • Tips to re-negotiate your contract so you don’t encounter penalties, even if you already have a contract in place

 

Conference Audio Visual Video transcription

 

Lara McCulloch: Hey, Crescent Event followers. Lara McCulloch here. I am here with Christopher Gerhart, who is the president of Crescent Event. So, I’m an event planner, holding an event. I’ve got the venue selected. The venue is coming back to me and saying, “Awesome. That’s great you have an AV supplier that you like working with, but we have an in-house AV company that we work with, so you must use our in-house conference audio visual company.”

Chris Gerhart: Yes, we hear that. Honestly, it comes up in just about every opportunity we have with new customers. Once we get an opportunity to work with a customer, we’ll help them through that process. I think that our goal here today, is to just put some information out on that topic. It’s a very, very common frustration and pain point.

Lara McCulloch: Awesome. Listen, if you guys have ever been through this situation, give us a thumbs up or a heart. If you’ve got a question that you want to ask, please feel free to write it in the comment section, and I’ll be keeping an eye open on what your questions are. I’ll interject and ask those questions to Chris. We also have a great giveaway at the end of this call. If you stick around, keep your eye open for that because that giveaway is going to be of great value. Chris, what specifically do the venues say are the reasons why event planners should use their in-house AV company?

Chris Gerhart: Well, they’ll use arguments like, “Oh, they know the venue better.” But in all reality that’s not a significant pain point that a lot of our customers face. The reality is, and this can be said for any outside production company, we do 150+ events a year at all different venues, and some we’ve been to before, some we haven’t. The site visit can teach you just about everything we need to know about the venue we’re going into. They’ll also say that they’re better equipped to handle anything that might pop up. The reality is that’s just fearmongering.

Lara McCulloch: So, then, in reality, what are some of the issues that crop up if a planner is using their in-house AV?

Chris Gerhart: Well, there are a handful. Probably one of the biggest challenges that event planners will encounter is that the in-house AV company is servicing a number of other events. So, as a planner, if you’re not taking over the entire property, you may be one of many clients. When you have an issue or a question, the techs aren’t there to resolve it. You call them and they tell you they’ll get to you as soon as they’re done with the other issue they’re working on. Even if they don’t have any other events going on at the same time, the in-house av supplier have an office at the venue, usually tucked away in some back hallway. When your sessions are running live, they’re going to disappear back to their office.

We hear all the time. I’ve got countless customers that say that if they’ve ever used in-house, the conference audio visual company was nowhere to be found when they had a problem – so they had to go hunt them down. In those moments, seconds feel like hours. It’s a disaster situation if you get into a jam and you need somebody right away. Even if it takes you two minutes to track them down, it’s two minutes too long. That’s probably one of the biggest complaints that we hear from people who do get forced to use in-house. They get stuck and they don’t get the level of service that they need.

The other thing is that if it’s an event that builds and grows year after year, and if you have an audience that you’re trying to attract year after year, you don’t want to have to reinvent the wheel every event with the audio visual company that you’re partnering with. With in-house companies, you’re going to likely have a separate team every single time. When you work with an outside company, you get the advantage of a consistent team that will travel with you. There’s a lot of added value in that.

Lara McCulloch: If I put myself in the shoes of a planner, I imagine that’s one of the biggest sticking points about this whole thing…if I’ve developed a relationship with somebody that I know and trust and if I’m working on an event where I’ve got one chance to get it right, that sense of security is really, really important.

Chris Gerhart: Yeah. The relationship between your conference audio visual provider, a production company and a meeting planner, is probably one of the more important ones at an event, right? Think about all the things that happened that you have the opportunity to fix in an event. If things aren’t going in the right direction: the seating in the room is awful, we can fix it before the doors open and the event kicks off. Once the event starts and you’re actually live, there is no second take. If something goes wrong, you’re SOL, so to speak. It can reflect badly upon the event planner. It can reflect badly on the organization hosting the event. That trust factor is huge.

I don’t know how you build trust factor in a couple of month planning process where you’ve never worked with that provider before. It’s one thing to do it in the first year of a recurring relationship and then see it build and build and build in future years. But to constantly reinvent that trust factor with new companies feels a bit crazy.

Lara McCulloch: Are there any cost implications? A lot of times when you’re working with a venue, they’ve got an in-house AV company. You would think that the cost savings of that would be passed on to the planner.

Chris Gerhart: No, it’s actually quite the opposite. A good number of planners will be aware of this. Some may not be. Most in-house conference audio visual companies are actually independent companies that are contracted with the hotel. They have an office there. They operate as an extension of the hotel’s department, but they’re really a third-party company. To secure a contract with the venue, they have to pay significant commissions. I’ve seen commission structures upwards of 60% on everything: equipment, labor, everything. In those cases, 60 cents on every dollar that an event planner spends at that venue goes back to the hotel, not even to the company producing the event. As a result, the audio visual rates are marked up more. The AV supplier isn’t able to offer discounts or incentives or programs or bonuses to make things more effective.

Think about the logic and the math. If you have an AV tech that’s getting paid…let’s just say for the sake of easy math…$50 an hour. If 50% of that is going back to the conference audio visual company, 50% is going to the hotel, 50% is going to the AV company, that’s $25 to the AV company. They need to make some margin on that too. That means you’re getting $10 or $15 an hour labor, which is not going to give you the results you want for some of your key event roles like your lead audio guy or lead video guy.

Going back to my earlier comment, do you want to be reinventing the wheel with a company that’s got such razor-thin margins and they can’t really put together a program that’s effective? It doesn’t make a whole lot of sense. In my experience, there’s not a lot of savings to be had with in-house providers. You would think there would be, but there isn’t.

Lara McCulloch: We have a comment from Faroze. He said, “They pay a percentage plus lots of free event internally.” Do you know what that means?

Chris Gerhart: The only thing I can think of is maybe he’s talking about percentage of the commission. If that’s what you’re referring to, maybe give us a thumbs up just so we know we’re answering your question. The in-house conference audio visual company get first shot at bids as well.

Again, just on the grand scheme of things, they’re cutting their margin razor thin having that contractor at the hotel. In that sense, it’s nothing against them, but when they’re operating at such razor-thin margins, they don’t have the flexibility to pass savings on to the end customer. They’re running a risk of cutting corners that could be detrimental to the end clients that are coming there and paying top dollar but not actually getting a top dollar outcome.

Lara McCulloch: Let’s talk about the important thing here, which is, what do you do in that scenario? You are the planner. Your venue says, “We’ve got our in-house AV company and they’re who you’re going to be using.” How do you negotiate out of this… or can you negotiate?

Chris Gerhart: Yeah, so kind of depends on where you are in the process. If you’re in the negotiation phase, knowledge is power. Knowing that the in-house company is 99.9% a third party provider, you realize where the revenue structure for the hotel comes from. So when an event planner puts out an RFP, and a hotel is responding, what the hotel really cares about is the food and beverage and the room nights. That’s where they make their money. AV revenue for them is kind of an incidental. It’s an add-on. If they get it, great. If not, it’s not the end of the world. I can tell you that the hotel would much rather have the food and beverage and the place booked up.

The worst thing for a hotel is similar to that of the owner of a conference audio visual company. I don’t want equipment sitting on our shelf. For a hotel, they don’t want rooms that are empty. At the end of the day, if they can make money on the AV, great, but if you push back even just a little bit, it’s something that they’re going to be willing to waive. And if they do fight you on it at all, just push a little harder. They’re not going to hold to their guns and lose room nights and food and beverage over a few thousand bucks they might make on their AV commission. It just doesn’t make sense.

The flip side of that is if you already have a contract in place. It’s a little more limiting. Once, again, because an outside production company is not paying the commission to the hotel, there may be the ability for them to offer savings enough so that you can offset the cost the venue will charge you. A venue will still allow you to bring an outside provider, regardless of what your contract says. The contract might just stipulate fees that are going to be associated with you bringing an outside provider. So if you get to a situation where you’re trying to bring an outside provider and there are gonna be fees, just check with your conference audio visual provider and see what their cost structure is.

If there are discounts to be applied, you might offset those costs. And that’s kind of a year one solution. In future years, you can negotiate the contract in such a way that you don’t have that penalty in the contract for future events. But the other thing is that you have more negotiating power when your event is a multi-year or repeat event.

If you were to go back to your original sales rep, or perhaps the director of sales or even the general manager of the hotel, and say, “Listen, I’ve got another event…” (whether it’s the same client, if you’re an independent meeting planner maybe a different client), “…and we want to book at this venue (or even another one of your venues)….” If you get to the right person who has the right connection to their broader organization, there’s a strong possibility that they’re going to bend and waive on the in-house conference audio visual clause. Because, again, it’s just not that big of a financial incentive to them to risk the loss of the food and beverage and the room nights. That’s really where their bread and butter is.

Lara McCulloch: Got it. And what about if you’ve agreed to go forward with their in-house conference audio visual, and things were unexpected? I.e. you didn’t get the experience you were looking for. How do you deal with that post event?

Chris Gerhart: If you’re working with the in-house conference audio visual provider, recognize that they’re a third party vendor. So, you’re going to be signing a contract with them. Make sure that contract with them is ironclad. I mean just because you sign the contract with the venue doesn’t mean you have to read all the terms in the contract with the conference audio visual company that’s in-house at that hotel. So go through that contract and make sure you’re protected. I mean there’s no reason you shouldn’t be able to put some bilateral protections in there.

Of course they’re going to be the ones who create the contract and present it to you. And of course it’s going to be written in such a way that is highly advantageous to them. But go through it, redline it, mark it up. You know, look for areas where, hey, I’ll agree to all your terms, but if you don’t deliver on this, that, or the other, here’s what happens in response. Unfortunately after the fact, the best you can hope for is probably some monetary compensation if they dropped the ball and screwed things up. But I mean listen, at that point it’s better than nothing. Right?

Lara McCulloch: Awesome. Okay, so if we loop back, you said it really depends on the stage. I.e. whether you are in the RFP stage, you have not signed a contract or you have signed a contract. Let’s go back to RFP stage. What are some of the things that event planners should be asking for, demanding, requesting, at that stage to make sure that they get their preferred conference audio visual supplier in?

Chris Gerhart: That’s a really good question because just asking for that clause to be removed is not enough. We have a customer that we’ve been working with now since 2008. The very first time we worked with them, it was a tough situation. We were not in-house AV company and didn’t have to pay the commissions that allowed us to win the business because our discount structure worked in such a way that it offset the cost they would have paid to bring us in. But in that situation, they thought they had covered all their bases. Their contract allowed them to bring in an outside conference audio visual provider. And when they started to negotiate the other aspects of the events, rigging, internet, power, they realized that just a bunch of other expenses that were disguised as a penalty, or rather penalties that were disguised as expenses.

For example, the internet that was quoted a la cart to the client was $25,000 dollars. If they had gone with the in-house conference audio visual company’s audio visual bid, then that same internet package was $5,000 dollars. Well that’s just another form of a penalty. So in negotiating with the venue, I think it’s important to get any clauses related to ‘you must use our preferred in-house conference audio visual provider’ struck completely right off the bat. But secondarily, pre-negotiate. Take a look back at what you used last year for AV (i.e. What did we use/pay or use for your internet and/or power last year?

Or, get with the production company that you do prefer to work with, and get them to quote the full product & service needs for your event. Get that quoted in advanced, and get that built into the contract…so that those fees are locked in. That way they can’t gouge you if you choose to use them or not. And then the other thing is make sure that gets put into your hotel contract. When you put together the RFP, say these are all the things I’m looking for. Make sure that’s written into the contract.

And then the last thing I would recommend is a catchall statement in the contract that says, there will be no other penalties. Incidentally, I always recommend leaving in the contract that you will accept a bid from the in-house company. I don’t think there’s anything wrong with that. It kind of makes everybody play nice in the sandbox, you know? So there’s nothing wrong with accepting the bid, but I think being strong armed into using the provider is wrong. It just doesn’t give you options as a planner.

But yeah, putting a clause in the contract that will say there will be no other penalties associated with me bringing in an outside provider means that even if you haven’t covered the wifi cost differential that they might try to charge, you can push back and say, no, that’s a penalty.

Lara McCulloch: Got it, those are awesome tips. What about if in the scenario where you have basically you’re in the contract stage with their in-house AV company. What are some of the things that people need to be looking out for? That people need to be reading or negotiating at that stage to make sure that they are optimizing their experience, minimizing their spend, all that kind of stuff?

Chris Gerhart: I think, at that stage, it would probably be mostly related to the labor side. We all theoretically have access to the same equipment, and theoretically with the right model, we can all buy the same equipment, right? So I’m not going to so much focus on the equipment. Obviously if you’ve ever been to a venue and had bad experience with the equipment, you may build in some safeguards related to ensuring that they have up-to-date equipment, things of that nature.

There’s a strong possibility the equipment is not going to be what makes or breaks your experience. At the end of the day, it’s an electronic, I think we all understand that a computer or projector or whatever could fail. But, I don’t think is what makes or breaks the experience. I think was does is the labor piece. So, I would build in some verbiage into the contract that talks about check-in points: service, expectations, where will the techs be while the rooms are session? How many techs will we have on the floor during these sessions? You know, as a planner, you don’t want to have to walk around with a clipboard and say, “Yeah, I saw Bill, I saw Bob, I saw John, we’re covered.” But if you have an issue and you don’t get it resolved, you have something in your contract that then says, “No, Bill, Bob, and John were supposed to be on the floor. I couldn’t find any of them. Where were they?”

Lara McCulloch: Those are awesome. I love that because, just as you were saying at the very beginning of this, one of the biggest challenges or issues that could arise is that experience, is not having the response that you need. So building expectations in to the contract at the very beginning seems to be a really important point.

I just wanted to highlight, we have Dell, who’s joined us, who’s said, “Hey, Chris. I’ve worked with you and your company on several events and you all consistently produce excellence. Working myself in the role of a crew chief and PM, my belief is that on the bigger events, oftentimes, gear and sometimes deco may be required to be provided by in-house, but if I can use A level independent contractors I know produce consistent excellence. I can utilize the gear and some people, and surround them with my people I know enough to do excellence. Of course, having too many low level or union guys involved can negatively affect the production as a whole. I think we can agree on this.”

Chris Gerhart: Well, yeah, absolutely. It’s really referring to the quality of the labor, right, and I think that that goes a long ways. I think in the initial part of that comment, there was a point about how a lot of times, in-house is going to throw in certain things. Again, commodity type items. It could be as simple as some lighting and spandex or whatever. At the end of the day, that looks great, but if it doesn’t function, I think a lot of customers would rather have a more simple set and have everything run smoothly.

I think that the second part of that comment was really referring to the quality of labor. He made a point about union. I’ve had mixed experiences. I’ve had some amazing experiences with unions across the country. I think, in general, it’s just that you get hit or miss with unknown labor sources, in general. My experience is that a quality team goes miles further than a stage set. Quality equipment is important, but again, I think most customers, most people in general, understand that electronics can have malfunctions or whatever the case may be. How you respond to that is really what matters.

You’ll never find a conference audio visual company that hasn’t experienced some electronics not working the way it’s supposed to. How you respond to that, how you prepare for that and the backups you have, that’s what’s important. When you have in-house companies, theoretically, a client should feel like there’s a safety net there because, “Oh, if something goes wrong, they’re right there. They have the equipment.” I mean, I’ve had situations before where an in-house AV company came to me as an outside production company at their venue and asked to borrow a piece of equipment from us because they were having an issue with a piece of their equipment, in-house, and didn’t have any backup equipment on site. So they were relying on us as an outside company to help supplement equipment that they had, that was giving them issues.

I think that there’s a lot of misconceptions about the safety net that an in-house provider offers, or the quality of this or the understanding of that. Like I said, that’s kind of putting lipstick on a pig. It’s not really solving the core issue and that is the direct connection, the partnership that you can have with that end customer, and how that can build in time.

I’ll tell our customers that the first experience together is going to be great. The next several years after that are going to be unbelievable because once we get through the first event, and understand how each other work, and start to build on that the partnership becomes lasting.

Lara McCulloch: Right. Amazing. Okay, so that’s probably a good place to cap this. If you had to very quickly share your top three takeaways, you know, if you learned anything from today, here’s the top one to three things that you really need to think about, what would they be?

Chris Gerhart: Probably, again, that knowledge is power. Remember that an in-house AV company is 99.9% of the time actually a third party vendor, so don’t let the hotel strong arm you into using them. Even if your contract doesn’t cover for it, push back a little bit. You’ll be surprised how far you can get.

Lara McCulloch: Right.

Chris Gerhart: Two, pre-negotiate, pre-negotiate, pre-negotiate, and cover your bases. Don’t think that just getting them to strike that clause about the in-house conference audio visual provider has exclusivity over this is going to fix it all. Get your rigging, power and wifi pre-negotiated. I’ve seen venues charging for risers and podiums now. Just get all that stuff built into the contract so you’re covered.

And I would think the third one is think about the long term partnership value. If you can join up with a company and build that long term relationship with them, I think you’re going to see an ROI that’s virtually immeasurable in terms of the success and quality of your events as they continue to grow and expand on their own.

Lara McCulloch: Good top three. If there’s any other questions that come up outside of the Live, Chris will be answering them. Just write them in the comments section and we’ll be here for you.