Hall rent isn't the only income an exhibition center earns from an event, and understanding these revenue sources beyond selling booths helps organizers see the whole picture when negotiating a contract.

Food service: a source that is almost always exclusive

Food service is usually exclusive at most types of facility, since the in-house unit maintains a kitchen and full-time staff on the premises. Catering, especially for large programs, may or may not be an exclusive service of the in-house unit, depending on the facility. In general, food service is always a significant revenue stream for the venue.

Exclusive, preferred and recommended contractors

Many large facilities, such as convention hotels or private exhibition halls, have exclusive, preferred or recommended relationships with service contractors, both as a way to control quality and as an extra income source. These three types of relationship differ in how binding they are:

  • Exclusive contractor: designated by the facility as the only provider allowed to supply a given service or product inside the venue
  • Preferred contractor: favored by the facility over other contractors when winning contracts, and there can be more than one in this group
  • Recommended contractor: suggested by the facility when a customer asks for a list of potential suppliers, and several companies can be listed

If the contract has a revenue-sharing clause, the venue receives a fixed percentage of the contractor's revenue. The venue may also encourage customers to pick contractors on the preferred or recommended list if that brings it higher revenue.

Local taxes also contribute

Beyond direct income from services and contractors, restaurant tax, tax from special taxed districts and local alcohol tax also create additional event-related revenue, though that is income for the local government and does not go directly into the pocket of the venue or the organizer.

Why organizers should understand these sources

Understanding the venue's revenue structure gives the organizer a more realistic view when negotiating: a venue may be willing to cut hall rent if it can make up the revenue from food service and the accompanying contractors. Conversely, if the organizer brings in outside contractors who are not on the venue's exclusive or preferred list, it is quite likely to meet extra fees or an outright refusal.

Knowing these revenue sources beyond selling booths also helps organizers make the right choice when comparing several venues, not just comparing the rent written in the contract but also the accompanying constraints on food service and contractors.

Negotiating based on an understanding of the venue's revenue structure

When the organizer understands where a venue's revenue beyond booth sales comes from, they can make more specific negotiation proposals instead of just asking for a general discount. For example, if the venue earns significantly from food service, the organizer can offer to commit to a minimum F&B spend in exchange for lower hall rent, an exchange that benefits both sides because the venue still reaches its desired total revenue even with lower space rental.

The risk of ignoring contractor-related fees

A common mistake among organizers new to the job is comparing only the hall rent between venues and forgetting to check the accompanying exclusive or preferred contractor lists. If a venue requires you to use electricity, internet or security from its exclusive contractor at prices far above the market, the true total cost of the event can far exceed the original rent difference. So when comparing several venues, the organizer should ask for the full list of exclusive contractors and their reference price lists at the RFP stage, before making the final decision.