Listen instead on your Monday Morning Drive:

I can’t count how many conversations I’ve been a part of that started with complaints about in-house AV contracts.

The arguments about how venue exclusivity unfairly hurts smaller local companies more than larger national suppliers haven’t changed in 40 years. Heck, some of the same players are still in the game.

But here’s a tough pill to swallow: Unless it breaks the law — and yes, we need laws that protect competition — there’s no such thing as unfair competition. Sometimes our strategies for dealing with competition are inadequate.

If you’re more concerned about what your supposed competitor is doing than what you should be doing, you and I need to talk.Focusing on the competition wastes time.

The Business Reality of Venue Exclusivity

Since the beginning of our industry, AV service companies have contracted with hotels and convention centers to be that property’s primary or exclusive service provider. The AV company pays a commission, often a large one — or, more accurately, the venue withholds a commission when transferring guest payments to the AV provider.

Sometimes, the guest pays the AV provider directly, who then sends the commission to the venue. Either way, AV services become a profit center for the venue, just like a restaurant.

This is basic outsourcing. A venue could provide AV services themselves by purchasing equipment and hiring staff to sell and deliver that service.

There was an entire company called MVP that helped hotels do this, and they were great at it. Many venues still handle AV internally. But their capabilities max out at some point, and outside AV providers step in to support guests.

The benefit for venues? Contracting with a larger AV company as their preferred or exclusive provider means greater capacity and reduced risk that an independent AV company will do the work and cut the hotel from its profit.

Understanding the Model

Think about hotel restaurants. Third-party companies operate most restaurants in major hotels. Marriott might be the last major chain still operating a few restaurants under its own brand.

You sign the check; it goes to the hotel. But try walking into a hotel and ask to rent their ballroom to build a pop-up restaurant that would compete with their existing restaurant. You’ll be denied.

Those hotel restaurants invest in infrastructure, decorate to their brand, rent the space, and provide commission to the venue. Why should AV be different?

Venue management has the right to control what happens in their building, just as AV providers have the right to pursue customers who may choose to host events in that venue. Remember — venue-based AV companies resent outsiders as much as outside companies resent them.

Note: Most people in the supply chain are good folks, but just like you, they like to win too.

The Power of the Guest

Let me share a story from my younger days.

I often went to dinner with my then-girlfriend’s family, including her mother’s wealthy boyfriend, Rex. At the finest restaurants in town, Rex would get the best table and privately tell the head waiter exactly how he wanted the evening to go.

One night, at a four-star restaurant, my girlfriend ordered sweetbreads, someone else had veal, I had a rack of lamb… and her little brother wanted a cheeseburger. When the waiter said they didn’t serve cheeseburgers, Rex spoke up:

“There’s a restaurant down the hallway and another down the street that serves cheeseburgers. Go get the man a cheeseburger.”

The kid got his cheeseburger. Certain buyers have this power. Does yours?

Sometimes venues must defer to guests and let them bring in the team that’ll make their event successful. Align yourself with discerning buyers, and exclusivity agreements will matter less.

The Pros and Cons of In-House AV

As a buyer myself, I see the benefits of in-house AV.

For small meetings, the convenience of in-house support makes my life easier. One bill covers everything, and I can negotiate better deals by bundling AV costs with food, beverage, and room nights. With 400 room nights, you can negotiate to comp the internet fees and much more.

The drawbacks? In-house providers often lack the skills needed to execute events, and costs can climb quickly. Adding commission and leveraging exclusivity adds significant expense for the guest — and that’s before we even talk about service fees.

Third-party providers with deep resources serve more guest needs, which benefits the venue, too. But local companies lose out when national companies squeeze them from the market.

Then again, most hotel operators are national companies, too.

Facing Reality

The elephant in the room is the questionable pricing practices venues use when they force guests to use in-house AV providers.

Internet access, rigging, power, shadow technicians — these practices don’t reflect well on our industry. The venues supporting these practices share the blame with the third-party providers that contract with them.

Professional meeting planning groups hold buying power. They teach members to negotiate better deals and make these relationships work for everyone.

Making It Work as an Outside Provider

After decades of circular arguments, the solution remains simple: Educate your clients. Event planners need to know how to use you for mission-critical work. They need to understand how to find venues that allow outside providers and how to negotiate terms.

Will it always work? No. You might lose that battle if they don’t have enough buying power. Focus on building relationships with clients who can champion your services.

Making It Work as an In-House Provider

Protect your space by staying within your capabilities. When you try to handle general sessions beyond your skill level, you make yourself look bad and leave your customer unhappy. The venue also won’t be pleased.

Work with outside providers. Subcontract to them when needed. Take care of the show elements that fit your profile, and serve your customer instead of undermining competition.

The Path Forward

The concept of in-house AV makes good business sense for venues, providers, and often buyers. The execution isn’t always perfect — whose is? — but the guest maintains the power to choose venues and negotiate services.

If you’re an outside AV provider and your customer sends an RFP they had no right to offer because they signed an exclusive venue contract, direct your frustration toward the client for signing a bad contract.

Everyone wants repeat customers. Do right by the buyer, and everybody wins. A rising tide lifts all boats.