Consumer show organisers to absorb VAT increase

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Several consumer show organisers say they will retain existing ticket prices in the face of the 2.5 per cent VAT increase to avoid potential visitor fallout.The VAT rose from 17.5 per cent to 20 per cent on 4 January and applies to a range of UK goods and services. While exhibition venues, organisers, contractors and suppliers will be required to factor the additional VAT percentage across their products and services, industry representatives point out companies and tradeshows should be able to claim back or offset the additional charge as part of general business tax practices. However, consumer show organisers who include VAT within ticket prices will be forced to either pass on the additional cost to end users, or absorb it and risk lower profits. Although Upper Street Events reviews ticket prices on an ongoing basis, commercial director Dan Holmes told EN it planned to stick with existing rates and absorb additional VAT costs at least until the end of the financial year. The organiser will run its first event of the New Year, the London Art Fair, from 19 January at the Business Design Centre and opted not to adjust the ticket price. “Our budgets [for the financial year] are set already, so we’re just going to take it on the chin for now,” Holmes said. “We have the capacity and financial flexibility to do so.“We’re very visitor focused and realise people want to have a great day out, as well as get good value for money,” he added. VOS Media is also keeping prices as is for 2011 events including next week’s London Bike Show and The Outdoors Show at Excel London. MD Damian Norman said it was important not to inhibit visitor attendance in any way. “We can’t just increase prices just because it’s after 4 January,” he said. “It’s tough enough selling tickets in the current economy – people have less money, and you have to give them more value.“The 2.5 per cent will make a difference across the year, but strategically, passing on this cost as standard isn’t a particularly smart move. Consumer shows need to deliver audiences more than ever before, and putting up any additional barriers for people is cutting off your nose to spite your face,” he added.Rather than increase base-level prices, VOS has introduced a range of “premium” ticket packages over the past year tailored to different shows and visitors, Norman said. These include a premium ticket combining entry to the co-located London Bike Show, Outdoor Show and London International Boat Show with additional offerings such as exclusive maps designed by celebrity adventurer Ray Mears. Those wanting to go to VOS’s Vitality Show in 2011 can also buy a £40 Gourmet Pass including entry to the show, a glass of champagne, three-course meal and products bag, Norman said. “The challenge is to find more creative ways with your offering, rather than being lazy and just passing on the 2.5 per cent increase,” he added. “Very few shows are seeing visitor increases.”MD of the Association of Event Organisers (AEO) Austen Hawkins expected consumer show organisers would eventually increase ticket prices, much like their retailer counterparts. Several retailers, such as John Lewis and Marks and Spencer, have opted to retain prices for most of January, while other stores are introducing the VAT rise as new product lines are released. “I think the public is educated enough [to accept the VAT rise] by the increase in costs in other sectors,” Hawkins claimed. “Ticket price rises may have an affect on attendance, but all businesses selling to consumers are in a similar boat and will be making similar decisions which consumers will have to deal with.”But industry veteran Phil Soar believed many consumer show organisers would try to avoid increasing ticket prices.“Given the importance of price points, I would assume most consumer organisers will keep their prices at £10, £15 or £20 for example and hence lose 2.1 per cent of their income,” he said. “This sounds quite small, but if they are running at a 10 per cent profit margin overall, it obviously has the potential to be rather a large hit.”
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