Special Events
IN THE CLEAR?

IN THE CLEAR?

IT'S Clear: The event rental industry is bullish on business in 2007. A total of 76 percent of respondents to this year's Special Events Magazine event rental survey predict they will handle more events this year than in 2006 — the most optimistic forecast in the five-year history of our survey.

As long as the economy stays strong, so will event rental. “On a macro level, the concerns of the party rental industry echo those of the entire economy,” notes Michael Berman, president and CEO of Milpitas, Calif.-based Stuart Rental Co. “Our corporate clients still show signs of strength with record earnings and increased hiring, but geopolitical risks and a sluggish housing market could slow everything down quickly.”

COOL WITH COMPETITION

In a climate where consolidation is the topic of the day, the event rental industry seems to be taking it in stride. Only 9 percent of respondents say that “consolidation of the party rental industry” is a big challenge for them. In fact, concern over “increased competition” in event rental dropped from No. 2 last year to No. 5 this year on our list of business worries.

Most operators say that having strong competitors makes them stronger. “Competition is getting fiercer as big guys gobble up other big guys and customers expect more, which makes all of us sharper,” says Mike Berk, president of Carol Stream, Ill.-based M&M The Special Events Co.

Philip Silverman, head of San Diego-based Raphael's Party Rentals, agrees. “Consolidation of event rental businesses has been good for us,” he says. “It's less competition, and customers still like the family, locally owned businesses.” He is making it a point, however, to keep his clients all in the family. “I as owner have started to aggressively go out and meet customers, talk to them and get their feedback on what we can do better,” he says.

One caveat about consolidation: Investors must commit to the business, and not cut and run, rental professionals say. “As long as good people continue to run these businesses as enterprises, not purely as balance sheets, this scenario can and will work,” Berk explains.

HELP WANTED

But even a robust rental market brings its headaches. A big one: finding the workers to make events happen. In this year's survey, respondents say that the challenge of finding suitable workers is their No. 2 concern, a challenge they listed at only No. 4 last year. A total of 55 percent of respondents say they are adding additional staff to adapt to today's event rental marketplace — a striking jump from the 34 percent who said so when we first asked the question in 2004.

“Having expert knowledge of the equipment and tools has always been critical,” explains Valerie Braun, marketing director with McCook, Ill.-based Chicago Party Rental. “As our events get more sophisticated, so does the demand for experienced personnel and proper training.”

Milwaukee-based Karl's Event Rental is tackling the problem by investing in education for its human resources team with the goal of hiring better employees, says company president John Schlueter. Strong employees will “take ownership of job installations and deliver the best customer service to all of our customers,” he says.

Los Angeles-based Classic Party Rentals, which has made headlines with its consolidation push, is at work integrating the varied talents of its growing management team. “Brought together by The Special Event show [in January], we had several ‘best practices’ meetings among our location managers,” explains Michael Miner, vice president of marketing and strategic accounts, “trading innovative ideas on everything from equipment care and delivery practices to unique event touches to share with our clients.”

PRICE PRESSURE

The No. 1 headache for rental operators has remained the same since the Special Events rental forecast kicked off five years ago: the problem of increasing costs in the face of pressure to hold down prices.

Mark Clawson, head of Salt Lake City-based Diamond Rental, says that delivering a high level of service at a reasonable price will be his No. 1 challenge this year, “when most of the ‘not apparent to a customer’ costs such as insurance, fuel, labor rates, etc., continue to skyrocket.”

For Chicago Party Rental, rising insurance costs have put the bite on business, Braun says. To cope, “We are looking at implementing even stricter training and safety measures to avoid accidents both in the warehouse and on job sites,” she says.

“Every product we have is perishable — nothing looks good forever,” notes James “Smitty” Smith, general manager with Orlando, Fla.-based Kirby Rental Service. “Once you have rented an item a few times, it needs to be replaced. If you don't charge enough to replace that item, you'll never grow your business.”

Much pricing pressure comes from within the event rental industry itself, in the form of newcomer competitors who lowball prices. “Rental operators who are in business to make quick money threaten the business prospects of themselves and their clients,” Berman says. “Our customers are producing these events to celebrate their life's achievements and milestones. The minute a rental company starts to treat these events as just another job is exactly the moment it creates a dissatisfied customer.”

WHAT'S NEW?

Another constant in our annual survey — what steps rental pros are taking to adapt to the marketplace — remains “adding new inventory.” For the fifth year in a row, this strategy holds the top spot, cited by 86 percent of respondents this year versus 80 percent last year.

Classic Party Rentals is beefing up its line of offerings across the board. “In addition to new and exciting tabletop product lines, we will aggressively grow our range of colors and styles of specialty linens and cutting-edge lounge furniture and increase our decorative swagging capabilities to really customize our events and bring our clients' vision to life,” Miner says.

Besides scouring trade shows geared to party rental, operators look beyond their industry to get a jump on the next trend in fashion. “Our purchasing people do a great job of sourcing new inventory from vendors that don't typically sell to the rental or special event industry,” Clawson says. “This takes some legwork — for example, attending markets that are more typically focused on interior design — but it is worth the effort.”

In a clear example of good news/bad news, even a strong rental market brings its share of challenges. “We have found that managing through growth is probably more difficult than managing through a downturn,” Clawson says. “It's also a whole lot more fun, which makes all the difference.”


RESOURCES

Chicago Party Rental, 708/485-8010; Classic Party Rentals, 310/535-3660; Diamond Rental, 801/262-2080; Karl's Event Rental, 414/831-7069; Kirby Rental Service, 407/422-1001; M&M The Special Events Co., 630/871-9999; Raphael's Party Rentals, 858/689-7368; Stuart Rental Co., 408/856-3232

PARTY CRASHERS

What are the greatest challenges facing your rental operation this year?

percentage responding
Increasing costs in the face of pressure to hold down prices
2003 49%
2004 53%
2005 57%
2006 56%
2007 53%
Labor shortage/lack of skilled labor
2003 39%
2004 41%
2005 42%
2006 47%
2007 52%
Shorter lead times
2003 37%
2004 39%
2005 46%
2006 40%
2007 40%
Insurance costs
2003 n/a
2004 63%
2005 62%
2006 47%
2007 40%
Increased competition
2003 38%
2004 42%
2005 43%
2006 48%
2007 37%
Constantly offering new inventory
2003 n/a
2004 34%
2005 28%
2006 43%
2007 34%
An uncertain economy
2003 72%
2004 48%
2005 53%
2006 33%
2007 25%
More problems getting permits
2003-2005 n/a
2006 9%
2007 15%
Consolidation of client base
2003 5%
2004 7%
2005 7%
2006 5%
2007 5%

SALES-BUILDING STRATEGIES

What steps are you taking to adapt to the event rental marketplace this year?

percentage responding
We are adding new inventory
2003 80%
2004 83%
2005 81%
2006 80%
2007 86%
We are pursuing new clients
2003 74%
2004 78%
2005 76%
2006 74%
2007 70%
We are increasing marketing efforts
2003 80%
2004 68%
2005 69%
2006 63%
2007 62%
We are adding additional staff
2003 n/a
2004 34%
2005 47%
2006 45%
2007 55%
We are adding new services
2003 43%
2004 42%
2005 40%
2006 46%
2007 41%
We are raising prices
2003 28%
2004 27%
2005 34%
2006 38%
2007 40%
We are streamlining operations (e.g., reducing staff hours, etc.)
2003 35%
2004 26%
2005 29%
2006 20%
2007 23%
We are adding new locations
2003 11%
2004 8%
2005 10%
2006 10%
2007 15%
We are cutting prices
2003 6%
2004 10%
2005 4%
2006 4%
2007 2%

Totals exceed 100% because multiple answers are possible. © Prism Business Media

PARTY PLANNING

What do you predict in revenue from business/corporate events versus social/private events in 2007 versus 2006?

Revenue will go up this year over lasta
From business events 68%
From social/private events 64%
Revenue will stay the same this year as last
From business events 21%
From social/private events 30%
Revenue will go down this year over last
From business events 1%
From social/private events 1%
Unsure/no answer
From business events 9%
From social/private events 6%

BUSY NEW YEAR

How will the number of special events you handle this year compare with last year?

We will handle more this year
2003 70%
2004 71%
2005 70%
2006 69%
2007 76%
We will handle approximately the same number
2003 18%
2004 19%
2005 15%
2006 20%
2007 29%
We will handle fewer this year
2003 3%
2004 2%
2005 2%
2006 2%
2007 1%
Unsure/no answer
2003 9%
2004 8%
2005 13%
2006 8%
2007 4%
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