The Vegas Model
Hotels have long relied on the corporate event for a sizable part of their revenues; for many of the larger ones, it’s not unlike the Las Vegas business model, in which the rooms are giveaways that lure the real money that comes from the casino, or in the corporate world, from the endless stream of events that range from conferences to massive new-product introductions. AV systems, lighting and staffing in particular, have always been key for that business. However, that AV sector took the same hit, estimated at as much as 50 percent, that the hotel-event industry took during the economic downturn, starting in 2007, as companies pulled back on trade show participation and other types of events.
When you go through something like that, there is a natural tendency to want to look for omens, some kinds of harbinger for the future, to base a strategy on. That omen might be the merger, last November, between two of the largest players in the hotel AV space. Kelso & Co., the holding company for PSAV, which provides AV and related services to more than 800 hotels in the U.S. and elsewhere, acquired Swank Audio Visuals, which supplied similar services to another 375 hotels in the U.S. The combined new company, to be known as PSAV, will have an estimated nearly $1 billion in revenues and contracts in place with about 1,200 hotels.
Reversing the Recession
The newly minted company is certainly a behemoth, and it comes at a time when the hotel industry in general has experienced a substantial recovery, with rates and occupancies up around five percent a year for the past two years. Corporate activity is up also in that time frame, and the billions of dollars companies have been hoarding, waiting for a better time to spend, have been flowing more freely in the last year, with an increase number of corporate events taking place globally in the last two years.
However, there are headwinds. According to industry trade publication Special-
Events.com, producers of corporate special events predict that their workload and budgets will likely be much the same in 2013 as they had been in 2012, projections that are down from this time last year; only 40 percent of respondents say they expect to produce more special events than in 2012, while 57 percent expect to produce roughly the same number. And those same forecasters suggest that budgets for corporate events will remain static, so the new PSAV will have to contend with more aggressive competition from companies like Freeman and American Audio Video Labs, both of which have significant stakes in the hotel AV business.
Service and Support
I asked Steve Dumond, who was divisional sales manager at Swank AV and retains that title for new PSAV, how the company will approach this tenuously resurgent market. He says that it will be a combination of customer service and technology. New platforms will be getting additional investment, particularly video mapping, which Dumond says is going to replace the conventional pipe-and-drape stage for events and trade shows. Using software systems like Red Hen and coolux, and applying new stage technologies like Atomic Design’s modular Pillows and Wafers will achieve what he says has to be the equation for success emerging from recession. “What [corporate] customers are asking for is something new, something cutting edge, something that they can use to differentiate themselves, but they also want cost-effectiveness,” he says. “To deliver that, we need to invest in and rely on new technologies.”
The video-mapped staging, which uses projectors to create 3D virtual environments, delivers that, costing a fraction of what hard sets require, with the added advantage of being especially green — with no staging or scenery to trash at the end. PSAV is also adopting Swank’s SwankDraw software, a smartphone and tablet apps that allows their sales personnel to lay out the look of an event site virtually on the client’s own devices — a less-expensive way to put new ideas in front of the client with its own “wow” factor.
There’s another aspect to expanding hotel AV to consider. Dumond says that staffing their hotel installations has become trickier, as experienced systems operators were harder to lure away from their existing positions during the recession. That led him to rely more on the technology academies for personnel, but he found that applicants are woefully underprepared for what it takes to handle AV in a high-pressure corporate environment. “We’ve had to essentially retrain them from the ground up and it’s been a slow process,” he told me. “They get the foundational knowledge they need, but not the real-world sense of the interpersonal skills you need to function in this type of environment.” Dumond says he’s looking for applicants who also have some kind of customer service experience on their resumes as well as technical know-how. “Even working in a department store gives you the kinds of skills you need to keep clients satisfied,” he says.
Glitz vs. Growth
No, it’s not doing lights for the Stones or projection for Madonna. But the hotel/hospitality sector is going to be a growth area for AV once the economy finds firmer footing for the long run. Mitt Romney almost got it right: corporations aren’t actually people, but they are like people — they want a good deal and they want to made to feel special. And they pay a lot better.
