NEC mains price hike raises fears of industry instability
24-Dec-10by Annie Byrne
Industry opinion has split over potential industry fallout following The NEC’s decision to increase mains prices by 9 per cent from April.The Birmingham-based venue’s sales director, Richard Pegler, attributed the additional costs to updating and maintaining equipment, staffing, energy and services. He was conscious of The NEC being the first venue to announce a price rise for 2011, but claimed it managed to keep mains increases within 3.5 per cent over the last few years despite other venues raising prices substantially. As reported in EN, Harrogate International Centre and Earls Court and Olympia were among those to raise electricity prices by over 10 per cent in 2009. At the time, each claimed blamed substantial hikes in electricity and energy resources charges. The NEC’s 9 per cent increase stems from an annual costs review, Pegler said. He insisted the venue would still be competitive against exhibition spaces across the UK. “We have wanted to keep costs as low as possible and have done this for the last few years. Unfortunately, we reached a point where the cost base is increasing, and the cost of services is increasing. The only way to offset that is with our pricing,” he said. “We have to both mitigate costs, but also pass on extra charges.”Association of Event Organisers (AEO) chief, Austen Hawkins, expressed disappointment and claimed any price jump would be difficult to swallow given the state of the market. Side-effects could include smaller exhibitor stands, or customers looking to other media for marketing and branding, he claimed.“In these recessionary times, any increase has to be carefully viewed and considered, particularly given the international market we’re operating in,” Hawkins told EN. “To put prices up when the Government is planning massive spending cuts and changes, and when there’s more media competition than ever, is not the best timing for the exhibition industry.“I recognise The NEC has a business to run. However, a 9 per cent rise is bound to have an affect on our customers and that has to be a worry to our industry.” Incoming Event Services Supplier Association (ESSA) chair and MD of Aztec Event Services, John Robson, feared more venues could increase electricity prices in 2011.“Clearly we don’t want mains increases – it’s bad for us [as suppliers] and for the industry,” he said. “There have been energy price increases and we can’t get away from it. I’m not saying the amount of the increase is justified, but The NEC is not necessarily the bad guy as all venues have done this at different times.”For Robson, the bigger problem was the way energy charges were handled at the coal-face. “If we take away the money venues are making from the electricals – which I think we should do – then the space price has to increase,” he claimed. “Ironically, the venues aren’t the ones charging the exhibitors. The contractor, who makes a small margin on it…is the one who is seen to be charging more. We’ve all got a responsibility in this chain to be reasonable about how much margin we take.”In a bid to improve its value-added services for organisers and exhibitors, Pegler said The NEC was reviewing its facilities to deliver IT services in a more price competitive fashion. This included launching public Wi-Fi via a cloud computing model.