Is consolidation changing party rental? CONSOLIDATION WILL RULE because big operations offer better choice and better prices. Consolidation will fade because nothing can replace the personalized service of the independent operator. In the world of party rental, both of these opinions are justified.
Tom Wright, head of Denver-based Rent-Rite West, a five-unit operation, says consolidation is inevitable thanks to the growing prominence of special events. "Corporate America has really driven the size [of special events] to such a degree that big companies have to say, `These are big pieces of business,'" he says.
"The trade show people are looking at the party rental people," he adds. "The size of events, the level that customers are asking for, is making companies like Freeman and GES - who used to think of these as little party rental stores - see them as direct competition to the large exposition companies."
WOOING THE CORPORATE CLIENT The appeal of high-end corporate clients outside its traditional construction company customer base has led Greenwich, Conn.-based United Rentals down its path into special events. According to John Milne, United's chief acquisition officer and vice chairman, the $3 billion-a-year company began experimenting with providing temporary power to targeted special event customers two years ago. "We realized it could complement our more traditional business," he says.
"We had this small piece of the pie - generators and chillers," he explains. "We decided we were missing the service that is the leading entry into special event projects - the tent company." United snapped up Remsberg Tent of Frederick, Md., and Hood Tent and Events of Orlando, Fla., this year.
But United is not interested in other aspects of party rental, such as linen and tableware. "That's a business that requires close, tight relationships with the catering side," he says. "We're providing special event customers access to new equipment, on your job site when you need it. We have the ability to buy it cheaper, utilize it better by moving it around the country and, when we don't need it, push it back into our construction rental fleet."
He sees continued expansion in special events: "I see us moving to a national brand over the next year or two."
A firm that is creating a full-line party rental presence on a wide geographic scale is Houston-based Stellar Event & Presentation Resources. With its takeover of Rancho Dominguez, Calif.-based Abbey Event Services in August, Stellar has built a stable of five full-line party rental operations (in California, Texas and Georgia) plus companies offering staging, sound and lighting. All told, the company pulls in about $60 million annually.
"We're putting everything together that goes under a tent along with a corporate event," Stellar CEO Tom Tucker says. "Caterers and event producers are big clients of ours, but one distinction we make: We are not event planners. We're the hardware, the planner/producer is the software."
Tucker describes Stellar's growth strategy as an "aggregation": "We're putting together a portfolio of prominent businesses in this industry." He predicts Stellar will "probably be heading east and north. There are good companies on the horizon that we want to take a look at."
STAYING IN CONTROL Mary Crothers, president of Toronto-based party rental firm Chair-Man Mills, sees the consolidation trend as "more a U.S. thing than Canadian. It's not so much a buzzword up here.
"Toronto is a big city, but the rental companies are all run fairly individually," she notes. "Rental companies have their niche. Our main competitor has his market, and we have ours."
Although she acknowledges the expanded buying power that large companies wield, she questions if a far-flung operation can maintain quality. "How can you be hands-on?" she asks. "You have only one reputation. You want to make sure that the same quality is coming out of Houston as Dallas."
In contrast, Jim "Smitty" Smith, general manager of Orlando-based Kirby Rental Service, sees the upside to consolidation. "As long as the big boys don't come in and start using predatory tactics - lowballing prices - we're all for it," he says.
"When you get somebody that can come in and take over a company that was struggling, that can immediately afford more help and bigger, better, newer [inventory], bigger, better, newer is always what attracts the eyeball," he says.
Smith sees the chain operations as filling their own niche. "Franchises are actually better at walk-ins than we are," he says. "A smaller operation can devote time to a single customer."
Although Kirby has turned down acquisition offers repeatedly, Smith says, he turns to the big operations at times. "We subrent as far as South Florida all the way to Indiana and Illinois. We have close relationships with bigger companies for bigger structures."
BETTER THAN A BRAND? Consultant Keith Klarin, Perfect Party Consulting Services, Palm City, Fla., encourages independents not to underestimate their strengths.
"I see no value at all in a national brand," he says. "I feel that personal service and attention to detail and quality is what makes a party rental business successful."
Independents can react more sensitively to local tastes, Klarin says. "Regional tastes are absolutely a factor," he says. "An example is the black and white fad of a few years ago. It was very hot in the West - where most fads start - and then spread east. Many Southern wedding receptions are simply cake and punch. People in Kansas would be awestruck by the bar mitzvahs in the Northeast.
"The biggest mistake the small independent can make is to lower prices," he cautions. "This would lead to harder work, less customer service, lower quality and eventually their demise."
RESOURCES: Chair-Man Mills, 416/391-0400; Kirby Rental Service, 407/422-1001; Perfect Party Consulting Services, [email protected]; Rent-Rite West, 303/399-9947; Stellar Event & Presentation Resources, 713/681-5664; United Rentals, 203/622-3131