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Going Up: Rental Industry Ready to Raise Rates

Yes, the economy is strong, but rising costs and uncertainty about what’s ahead are putting pressure on profits.

Event rental is poised to raise rates this year. A strong economy and rising costs make the move a smart one, rental operators tell Special Events. Our “2019 Rental Industry Forecast” shows that 32 percent of operations plan to boost rates in 2019. And as one big California operator says, “Everyone else should, too!”

Tough competition has long pressured rental operators to keep rates low; operators grouse that clients will say that inventory is already “just sitting” in the warehouse. But today’s strong economy is the perfect time to make the change. “The overall economy could not be better for the industry,” says Dan Hooks, CERP, president of Charlotte, N.C.-based rental group Party Reflections. “So if you are not adapting to be profitable now, you will certainly be in worse shape and out of position if and when the economy turns again.”

The average rate increase planned for 2019 is 5.25 percent, respondents tell Special Events. However, this figure varies widely, from a low of 2 percent to as much as 15 percent. Several operators note they will boost rates selectively, targeting high-cost items in particular. At AV Party Rentals of Newhall, Calif., labor-intensive items such as tenting, flooring and staging will go up the most, says president Rusty Parr.

Twenty percent say they will raise delivery rates this year, largely due to more complex, customized orders and the rising cost of fuel. “Locally we have increased them by 20 percent to account for the vast fluctuation in gas prices,” notes Dave Reedy, owner and project engineer of Forest Hill, Md.-based Party Palace Rentals.

LABOR HEADACHES The booming economy means confident clients are ready to host events. But the flip side: Low unemployment makes finding qualified workers a nightmare. “Orlando's unemployment rate this month is 2.5 percent,” notes Ann Taylor, head of A Chair Affair in Orlando, Fla. “I also attribute the split shifts we work to the problem; it's hard to find people willing to work in the morning, go home in the afternoon, and return that evening to work until the early a.m. hours. At times we resort to temporary labor staffing, which drives up our expenses.”

Several operators bemoan the sagging work ethic of younger employees. “Even with offering higher wages we find the mind-set among younger people very different …”

See the full story in the Summer issue of Special Events. Not a subscriber? We can fix that; just click here.

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