How did the decline in price-value relationship begin?
The in-house AV price-value relationship isn't getting any better in light of the recent acquisition
As a leading AV event management team, we hear your concerns over in-house AV teams raising prices, restricting your options, and giving poor service in return. We all know that the in-house AV model’s price-value relationship is steadily eroding, and this declining model won’t get any better following the recent acquisition of Encore by PSAV. Let’s explore how this has become such a problem and what you can do about it!
1. Planners feel pressured to use an AV provider they don't want to work with
While hotels tighten their grip, customers feel pressured with heavy-handed sales methods and service monopolies. Throughout the past hotels have long supported events with their own AV teams, in recent years, hotels have demanded higher commissions from the in-house providers. These commissions can be up to 50% of the event’s AV spend, and the AV providers pass that higher internal cost on to the customer (you!).
The in-house AV companies and Hotels have responded by restricting the customers’ options, requiring customers to use their in-house AV services. Thus, the price soars while quality declines as companies cut costs more and more.
2. Cost-cutting creates friction between the customers and the in-house AV provider
Customers are understandably frustrated with the industry on the whole. Planning a great event shouldn’t be so stressful. But it gets worse: with the recent consolidation of the two largest in-house providers—PSAV and Encore—the competition has disappeared. PSAV is now free to raise prices even more and further restrict your options. In the years to come, expect even more restrictive contractual language as hotels force you to use their in-house PSAV team for your events.
3. Lack of competition means a decline in the value of AV services
Why are customers upset with the experience provided by the in-house AV companies? Three words: profit over service. To save on costs, the in-house AV companies transfer old and used equipment between locations and expect their teams to do more with fewer people while hitting higher profit targets.This environment prevents AV teams from providing great service and erodes the value of the product (your event!). Fortunately, educating yourself about your customer rights and your options is a simple way to avoid the in-house team’s poor service and high costs.
Take back control of your event's AV production
The audio visual and creative production of your event should be one of the most exciting and enjoyable parts of event planning. Unfortunately, the industry’s decade-long consolidation has ruined this part of the event planning experience. But the bright side is that, as a meeting planner, you can take your leverage back by prioritizing AV during your site selection.
While in-house providers have been the “easy” button for customers, the price-value relationship should make you think twice before pushing that button. If you’re spending over $15,000 on AV per event, then make AV one of the items you include in your contract negotiations.
How do you start? Demand the right to bring in an outside provider without excessive fees for standard event services like rigging, power, and internet. In addition, require the hotel to waive exclusive language about using the in-house provider for any portion of your event.
As the customer, you have the right to a supportive event site, so find out immediately if the hotel is interested in your event without including the in-house audio visual team. If they are truly interested in your business, they will waive these restrictions and fees. You’re free to select the audio visual partner that will give you the best value and experience for your event. The key is to have this discussion prior to contracting with the hotel and include specific language in your contract that will allow you to keep your freedom.
What are the benefits of using an outside AV provider?
Often times, outside AV providers are easier to work with than an in-house team. The third-party event company is invested in your success, from how your AV proposal is built and the different creative options they provide to offering package deals to save you money. In addition, you can work with the same team on every event, regardless of where your events take place. You build a strong partnership with a group of professionals that work with you on each event improving the experience event after event year after year.
Use an outside AV provider to receive better value for your event budget
An outside provider also offers competitive pricing and better value for the money you’re spending. Why? The majority of the cost is poured into the event experience instead of hotel commissions.
We know your pain: you feel forced to use the in-house AV provider, and you’re hesitant to change sites when the hotel begins pressuring you to use their services. But remember that threatening you is unprofessional, and their bullying should give you a good look at the culture of that hotel or venue. They’re putting their own business first. Take a stand against being coerced into subpar service that seriously impacts your event’s success.
As a meeting planner, you are bringing people together to share ideas, to learn, to network, and to build relationships. Your event is your vision. The audio visual elements of your meeting directly impact the outcome. Find a good partner that delivers exceptional service, creativity and value for your money.
Where DO your AV fees go when you use the in-house AV provider?
Want to know more about why in-house pricing is so high and the value is so low? Let’s take a look at the average hourly rate paid to AV technicians that work for PSAV or other in-house providers.
Based on industry data, an AV technician average rate is $15.00 an hour. But, the price you’re being charged for this technician to operate your event is on average $100 an hour. At $100 an hour, you’re expecting to pay for an expert, but where does that $100 really go?
- $48+ goes to the hotel as commission (which offers no value to your event)
- $20 goes to the in-house AV company’s profits (again, no value to your event)
- $23 pays the employee their base rate, plus taxes and benefits
- $9 covers their wages for being on-site and supporting other customers (yeah, no value to your event)
The numbers don’t lie: Instead of an expert for $100 an hour, you’re getting a low-paid technician, which explains the in-house team’s lack of expertise. Sometimes the in-house team will hire specialty labor to mask this issue, however the basic economics still hold true as they are not able to afford a real professional engineer.
On the other hand, creative production companies that hire experienced engineers charge $80.00 an hour on average. The difference? This engineer has the industry experience to charge at least $50 an hour as their cost base, which is double the in-house technician or engineer’s cost base.
And as a third-party company, that $80/hr provides higher quality service all around, instead paying hotel commissions. In the end, the hotel’s in-house team charges a lot more for AV engineers with half the experience of a third-party company. The question is simple: who would you rather form the foundation of your event?
The answer is clear
The basic economic model of in-house AV doesn’t allow the in-house AV department to provide a successful price value relationship. So choose a production team that prioritizes your event and wants to partner with you long-term.
If you are feeling the pressure and want to preserve your AV value, give us a call and see how we can help you gain back your leverage with the hotel and get a better AV experience for your event. Our goal is to bring VALUE back to your event's AV.