This could be another blog called “The result of unintended consequences.” #AudienceAdvocate
A few weeks ago, I posted a LinkedIn note about the client issues associated with exclusive in-house-AV contractor PSAV.
Outrageous charges to use this power?
How did we get this far? PSAV quoting $14,715.00 for 3 days of power (400 and 200 amp). There is no rationale for this. The hotel has already installed the power. At $14,000/week x 40 weeks - $560,000/year pure profit. We are not even asking for the hotel to provide breakout boxes. We are OK paying their electrician $100 for 10 minutes to hook up the power. It is outrageous. This is one of those costs that are hidden from the audience. Why not a more reasonable charge allowing the client to spend more on F&B, something the guests will remember and want to return.
Since January 23, 2017, this post has resulted in:
- 300,128 views
- 592 from PSAV
- 20,259 who have the title of Salesperson
- 7,463 who are CEO or Executive Directors
Here are screen grabs from February 16, 2017:
After reading all 303 comments, 1,078 thumbs-up and 112 shares, I am convinced now that the problem is not PSAV or ENCORE, but the hotel/venue’s decision to protect their monopoly service provider, who, by the way, is owned by investment banker Goldman Sachs[i].
Where does that leave the corporate client, association executive or wedding planner? We are all at the mercy of a system that often offers high-priced, inferior product with no hope of innovation or excellence.
From a client’s perspective, here are the results of this monopoly:
- Restricted trade practices created by exclusive AV contracts with PSAV, ENCORE and others enable the major hotels and convention centers to earn millions beyond their usual F&B and room rates.
- These contracts force clients to use the in-house AV company for power, internet connection, house sound, rigging points, motors and truss at usury[ii] rates.
- My recent experience at a New Orleans-based convention hotel exposed the latest route of my client’s budget: PSAV charged more than $45,000 for rigging and power (before the hotel’s additional 26% “service fee) for a $120,000 budgeted show.[iii]
- PSAV offered to reduce the $45,000 estimate if the client would agree to use PSAV equipment for video, audio, pipe & drape and lighting.
- If the client was able to provide their own tech and crew after a bidding process, the hotel would not reduce the cost for rigging and power. The rigging and power charges excluded the potential competition.
- Clients pay show producers to write the specifications for the best equipment and support crew the competitive market allows. No bidder was able to offset the power and rigging charge off the top and still provide what the event required.
- Restricted trade practices and substandard equipment and services experienced by most clients, as represented in the recent LinkedIn post, is what happens when there is no competition.
- It is no secret that venues have little or no space to house the large screens, speaker systems, rigging and truss. In many cases, the in-house AV contractor is relegated to office space in the projection booth above the ballroom.
- Equipment is often bounced around among properties, with no time or tech space to check out gear and make any necessary repairs before it is installed in yet another meeting. In three of my last three PSAV venues, the gear simply didn’t work properly – due to lack of maintenance and training.
- The in-house AV manager depends on a city-wide inventory at other venues or 3rd party sources out of their control. In recent experience I was told by the hotel AV sales person “I am at the mercy of what the dispatcher sends us.”
- The hotel sales staff are told to say, “Our in-house AV company can supply all of your needs, at competitive prices.” No, they can’t – often because the venue requires up to a 60% kickback for granting the right to exclusivity.
- There is no way the price can be competitive because PSAV, ENCORE and other exclusive in-house AV providers do not pay top wages and maintain proper inventory of the latest technology.
How do Marriott, Hyatt, Hilton, Intercontinental, Wyndham and the major convention centers expect to deliver critical services in a fast-growing industry for demanding programs, with sub-par crew (often underpaid – according to many who commented) and outdated, poorly-maintained equipment?
Check out previous editions of my blog to see how the in-house team doesn’t even know to keep the bottom of a screen 5’6” above the floor so everyone can see. “The screen skirt is only 30” is the excuse.
Until MPI, ASAE, PMCA, ILEA [iv] and other groups that purport to represent the meeting client stand up to their funding base (hotels and destinations) and expose the corruption this issue highlights, meeting clients will continue to be held hostage to these practices.
Meeting planners need help to demand competitive rates from venues, on AV, video, audio and staging, along with a fair price for power, rigging and internet.
Please subscribe to this blog and leave your comments on the record for the industry to see. This should be a living document with your comments and suggestions.
[i] http://www.hospitalitynet.org/news/4063004.html November 19, 2013 - PSAV® Announces Agreement to be Acquired by Goldman Sachs
[ii] http://alqlist.com/InterestRateSummary.html Newsletter of the Commercial Collection Agency Association of the Commercial Law League of America - SUMMARY OF MAXIMUM PERMISSIBLE RATES UNDER STATE USURY LAWS (MARCH, 2010)
[iii] https://www.dropbox.com/s/tff7xbqhspnzfri/REDACTED%20PSAV%20Estimate%20on%20lighting%20and%20rigging.pdf?dl=0 PSAV New Orleans 2017 power and rigging quote
[iv] Meeting Professionals International (http://www.mpiweb.org/About), Professional Convention Management Association (PCMA) (http://www.pcma.org/), American Society of Association Executives™ (ASAE) (https://www.asaecenter.org/), International Live Events Association (ILEA) (http://www.ileahub.com/)
