Listen instead on your Monday Morning Drive:

When I use the term “exclusivity” in the context of live events, what do you think of?

If you’re like most disgruntled owners, you think of one thing: in-house AV contracts.

I can’t tell you how many conversations in this industry start with complaints about in-house AV contracts and how they “unfairly” affect local companies more than larger national suppliers. After 40 years, the arguments — and many of the players — remain the same.

Conversely, I fully support my clients who pursue in-house relationships with third-party providers. I’m not of two minds. We can be frustrated by the lack of access to some venues while wanting that business for ourselves.

That said, let’s unpack in-house AV contracts and explore what we can do about them.

Understanding In-House AV Contracts

The concept is simple: Hotels and convention centers contract with AV service providers to be the primary or exclusive AV provider for the property.

The AV company typically pays a commission to the venue — or, more accurately, the venue withholds a commission when transferring the guest’s payment to the provider. This arrangement turns AV services into a profit center for the venue.

This is basic outsourcing. Venues could easily provide the AV services themselves by purchasing equipment and hiring staff, but at some point, the venue’s depth of capabilities will fall short, requiring outside AV providers to step in.

Contracting with a larger AV company as their preferred or exclusive provider offers the venue greater capacity and reduces the risk of losing profits to another company. It’s just business. Management has the right to control what happens in their building as much as AV providers have the right to pursue customers who may choose to host events in that venue.

The Guest Has the Power

As a young man, I dated a girl whose mother had a very wealthy boyfriend. We’ll call him Rex. Rex would take us all out to the nicest restaurants in town, where we would sit at the best table and eat custom salads that weren’t even on the menu. (I know — I was a spoiled kid.)

One particular evening, my girlfriend’s little brother ordered a cheeseburger. This was a four-and-a-half-star restaurant — they didn’t serve cheeseburgers, pleaded the waiter. Rex turned to the waiter and, only slightly disgruntled, said, “There’s a restaurant next door. Get one from there; have chef re-plate it. Give the kid his burger.”

In AV terms, sometimes the venue has to defer to the guests and let them bring in the team that’ll make their event successful. The lesson here is simple: Ultimately, the guest has the power to choose venues and negotiate services.

Discerning buyers with significant spending power can dictate their terms to the venue. As an outside AV provider, aligning yourself with these buyers can help you navigate exclusivity agreements.

Professional planning groups also play a crucial role in negotiating better deals for their members. They hold the buying power and teach event planners how to make these relationships work for everyone.

The Pros and Cons

In-house AV contracts have both advantages and disadvantages.

On the plus side, they’re convenient for customers, especially for smaller events. Having meeting support readily available makes life easier for many buyers. Additionally, guests can receive a single bill and negotiate a larger purchase, potentially reducing AV costs while increasing spending on food and beverages.

However, in-house providers may not be as adept, innovative, or skilled at handling large events compared to outside providers. Commissions and service fees can also add significant costs for the guest. Moreover, many in-house providers are national companies — they can squeeze out local providers who lose out on business because of venue exclusivity.

Do the pros outweigh the cons? Again, that’s up to the guests.

Addressing Questionable Practices

Some venues may employ questionable practices to force guests to work with their in-house providers, such as manipulating costs for internet access, rigging, power, or shadow technicians, to name a few.

These tactics don’t reflect well on our industry, but the venues that support these practices are as much to blame as the third-party providers that contract with the venues. We can debate whether these bad faith practices are pervasive or isolated, but ultimately, the guest has the power to choose venues and negotiate services.

In-house AV is inherently good. The execution isn’t always perfect, but let’s face it — none of us are.

Strategies for Outside AV Providers

As an outside provider, after decades of circular arguments, the solution remains the same: Educate your clients about what you do and how to ensure they can use your services for mission-critical work. Help them identify restrictive clauses and teach them negotiation tactics. While it may not always work if their buying power is limited, focus on providing value rather than worrying about the competition.

If you’re an outside AV provider and a customer sends you an RFP for an event at an exclusive venue, don’t get grumpy with them for signing a bad contract. Instead, do right by the buyer and support them in any way you can. Everyone wants repeat customers, and rising tides lift all boats.

Advice for In-House AV Providers

For in-house providers, protect your space by not overextending yourself. If you take on general sessions beyond your capabilities, you risk making yourself, your customer, and the venue look bad. 

Work with outside providers and subcontract to them when necessary. Focus on taking care of the show elements that best fit your profile and serve your customer instead of undermining the competition.

Final Thoughts

In-house AV contracts have inherent benefits for venues, providers, and buyers alike. While the execution may not always be perfect, open communication and collaboration among all stakeholders are essential for creating a thriving industry.

Focus on educating clients, providing value, and supporting the whole industry. By working together and prioritizing customer satisfaction, we can navigate the challenges of venue exclusivity agreements and create a rising tide that lifts us all.