Source: Robin Roth, Senior Contracts Editor, Conferon, Inc.
E-Specs: April 1, 2002

One of the issues to consider when negotiating a facility contract is whether vendors such as audiovisual or security suppliers are exclusive. If they are, a more flexible arrangement can often be negotiated. When deciding between an in-house or outside vendor, carefully weigh all the factors such as the cost benefits vs. the service delivery, quality of equipment and familiarity with the facility. Mike Burns, Vice President, Mid-Central Region for Conferon, offers the following highlights of this issue.

There are normally advantages to using in-house contractors. Familiarities with the meeting rooms and with the particular workings of the facility are assets. Their presence in the building often leads to strong relationships with all departments, and their knowledge of the day-to-day operations can be applied to your benefit. Simply put, they will probably know who to go to and how to get things done for you. When using in-house contractors, a group will often save on costs for lodging, meals, equipment storage and load-in.

Some services are better off exclusive, like phone, Internet, and security services. Most of us would not trust people to come into our business and start tinkering with our phone lines or Internet system. In the case of security clearly in-house employees are better connected with who to call, what to look for and what to do when a security issue arises. At times, prices can be negotiated for exclusive services. Understanding what services are exclusive and diligently researching the "going" rate in the same city or region is critical to successful negotiations. The identification of and costs for exclusives should be determined before signing the facility contract.

What then are the downsides to using exclusive service contractors? Exclusives almost always pay a high price for this right and for benefits such as being included in facility marketing or sales kits. AV providers, even when they are not exclusive but in-house, charge a premium ranging from 30% to over 50% to help pay the facility for the in-house or exclusivity right. Some of these fees are in lieu of rent charged to the A/V provider. An in-house provider is likely to have multiple clients in the facility at the same time, whereas an outside contractor is working just for you.

Most convention centers have exclusive catering arrangements. Exclusive caterers will often equip the convention center kitchens and concession areas and be responsible for the overall cleanliness of those areas. It is rare to see, but some convention centers will allow several pre-approved companies for catering so that there are alternatives besides the high-end caterer for more downscale needs like box lunches. A clause should always be included in your contract that gives you the right to use outside vendors with no surcharge from the hotel or its in-house supplier.

(Note: This information is not intended to be "legal advice." A qualified attorney should be consulted to review all contract issues.)