As goes Maine, so goes the nation," according to the adage that putatively predicts American presidential elections. Replace "Maine" with "Las Vegas" and you'd get a pretty good predictor of the health of the corporate event market in the U.S. Corporate events are the stars of the city's meeting infrastructure, and the more elaborate they want to be, the more they are drawn to Vegas' over-the-top 24/7 entertainment circus. Mercedes-Benz used to think nothing of dropping $1 million to bring its dealers to town to hear Sting do a private performance.
That changed late in 2008 when the credit markets dried up, sending corporate America into a tailspin for profits and spending. A few ill-considered wing-dings by financial companies in 2009 – AIG's $443,000 gala at a five-star hotel just days after the Federal Reserve gave it an $85 billion bailout comes immediately to mind – brought even more scrutiny onto corporate events, which had quickly become extravagant wastes of scarce resources in the public's eye, or more precisely, in the perception of shareholders, who were compelling companies to cut way back on their event and meeting expenditures.
That kind of dog wags a long tail, and the companies that provide the technical support for those events – the lighting, projection, staging, pyro and sound that set them apart and make them memorable – have been feeling the effects, nowhere more intensely than in Las Vegas.
Downsizing and Cancellations
Michael Cannon, CEO of lighting systems provider 4Wall Systems, says his Las Vegas rental office began to feel the slowdown in event work by November 2008, and by Q2 of 2009 it hit a bottom that it hasn't pulled up from much yet. "There was a lot of downsizing and cancellations last year," he recalls. "The conventions had their budgets cut, too, but the work was still there, though scaled back. But the corporate parties were what took a nosedive. Mercedes flying dealers in from all over, renting $50,000 worth of moving lights – that's gone now."
Ironically, this extended pullback in corporate event spending comes at a time when Las Vegas has more event space than ever. The massive City Center project came online earlier this year, and with it came the Aria Hotel & Casino, where a 300,000-square-foot convention and event space also produced a juicy job for systems providers, including 4Wall. They put 86 dimmer racks, 10 relay cabinets, 59 ETC Unison Paradigm architectural processors, 176 DMX nodes and 5,264 dimmer circuits online there. It was 4Wall's largest dimming installation to date, including 288 custom-built utility wall boxes, and the second largest single building install ever for ETC, the dimming and control manufacturer.
But like Las Vegas' overbuilt residential real estate market, the city's huge event capacity will also take time to be absorbed by a truncated corporate market, which saw the number of conventions and meetings held there down 13.6 percent last year, with attendance at those events down nearly 24 percent, according to the Las Vegas Convention and Visitors Authority (LVCVA).
Available Value
However, the LVLCA tells PLSN that while the window for event bookings has shortened in the last two years, making forecasting more difficult, companies this year are starting to book firm dates again. "Corporate events are not booking as far out as they used to," says the LVCVA's Jeremy Handel. However, he adds. "Last year there was a good deal of interest, but not many actual bookings; now, companies are actually booking space rather than just shopping. The value that is available in the destination right now has made it a great time to host a meeting in Las Vegas, and companies [are] loosening the purse strings and taking advantage of that value."
Mario Educate, president of OnStage Audio (OSA), says he's been seeing some of that. "There are more quote and RFPs (request for pricing) going out, but there are also more clients actually going forward with their shows so far this year," he says.
Pricing Pressures
OSA added video and projection to their range of services two years ago, just before the bottom fell out of the market. Educate says while that had been implemented on a limited basis before, he's using Las Vegas' tentative comeback to market it more widely, as well as a way to counter the effects of one of the turndown's worst aspects. "I'm not sure what was worse: the drop in business or the need to drop prices during the last year or so," he explains. "While some of the [event] work is starting to come back, [clients] are looking for the same prices as last year. It's hard to raise them at this point because everyone had dropped their prices."
Scott Harmala, CTO and VP of engineering at ATK Audiotek and sister production company Versacom, which have been feeling the pain, too, wonders if a prolonged slump won't engender more consolidation in the corporate event market. "Even if you've got about the same amount of work as before, which we do, it's still not at the same price levels, and the overhead has not gotten any lower," he says. "If pricing doesn't recover at some point, I wouldn't be surprised to see some of the larger companies picking up some of the smaller ones that got squeezed out as a result." The real danger, at least in the short run, is that that dynamic tends to result in institutionalized price reductions.
Corporate effusiveness, like the stock market, tends to be a leading indicator, and stocks are up over last year. Many companies aren't pulling out all the stops for their events because of costs, but others are simply keeping it muted for the sake of appearances. So, while the Las Vegas corporate show market may look pretty beat up, there's a car company and a classic rock act having a lunch meeting somewhere.
