Did You Know? You have Options
More and more clients are respectfully declining venue in-house A/V service exclusivity conditions in meeting and event contracts. Many are also "de-negotiating” any clauses that might require them to pay “A/V corkage” (for bringing in their own vendor and/or for lost revenue compensation for the venue and its in-house vendor). This is basically a matter of reading the fine print and striking out the A/V exclusivity clause with the stroke of a pen!
You can also ask if there are any exclusivity clauses for A/V services in your event contracts, and request that they be removed. This does not necessarily mean you won’t use in-house services; it just means you wish to exercise your right to shop around. Venues need your business, educate yourself before making a final decision on who to contract your work with.
Generally speaking, venues that offer in-house A/V services enter into fixed-term contracts (three or five years) with external vendors, including national A/V service companies, which then deploy their own equipment and staff to work on events for the venues’ end-clients. Venues and in-house vendors then divide the revenue from the provision of A/V services.
The cost savings obtained from paying open-market rates for equipment and technicians can be significant. If you rent all your equipment from a single external vendor or your established service partner, it will be delivered, installed and even operated for much less. You pay for the equipment rental itself, a one-time delivery/collection charge, technical operatives (with no cost markups), and no revenue is divided between the parties involved.
What does “in-house” mean exactly? In most cases, this is a situation where an AV company is contracted to provide AV services at a hotel, convention center, or other venues. In exchange, they pay a percentage of their revenue to the property. At other times, in-house providers may be part of a preferred vendor list. Another, increasingly frequent, situation that has sparked major headache among planners, is when this in-house provider is actually an employee of the hotel who has minimal experience with AV … whether they are usually a banquet manager or something similar (and yes, this has happened!).
The seemingly innocuous in-house concept has generated countless conversations, several letters for advice, and many online discussions. The issue generally arises after a planner signs their contract with the property. In skimming over the AV section, they miss a clause that states they will have to pay anywhere from five to 40 percent (ouch!) of their total AV billing to the in-house provider should they choose to bring in their own service provider. This is commonly referred to as a corkage fee — and it is a red flag to alert planners they need to strike through this portion of the contract! Even if you’re not sure yet who will provide the AV, it is imperative to leave yourself with options and not subject yourself to such a restrictive situation.
So how do you circumvent in-house v. independent provider challenges?
•First and foremost, if you have an AV provider that you’ve enjoyed working with in the past, contact them before anyone else. This way, you have service you know and trust as well as pricing you can rely on to be fair.
•If not, then take your mama’s advice and shop around! Definitely obtain a bid from the in-house provider, but don’t be afraid to contact two or three independent providers for more bids (the main reason why it’s so important to eliminate the corkage fee from that contract).
•Never assume that in-house is the most affordable or convenient. Believe it not, most of the in-house companies are no longer keeping anything but the most basic of equipment on-site.
Finally, I suggest two key questions to ask any service provider:
1. How soon can you respond to additional equipment needs?
2. Will I have a dedicated project manager pre, during, and post-event? During the event, what will be their availability? (e.g. How many simultaneous duties/events are the expected to handle? Will they be available 24 hours/day?)
This truly is just the tip of the iceberg. Obviously, you’ll still want to ask all of the usual questions of your service provider, but at least this will help with your decision on whether to go in-house vs. independent.
If you would be interested in receiving an addendum you can add to your contract or would like to learn more, please feel free to contact us.