Making Rent

To rent or not to rent — that is truly the question for exhibitors today. Should you rent an exhibit, thus saving yourself time and money? Or should you purchase a custom one, complete with personalized details, but a hefty price tag to match?

For most start-up companies, nonprofits and companies not interested in owning property, renting an exhibit is often the best option.

An Industry in Flux

Renting trade show exhibits — instead of buying custom creations — has been a growing trend in the exhibition industry since 2001. After the September 11 attacks, the rental market imploded and exhibitors found themselves in an unstable industry. According to the American Business Travel Association, in 2001, 77 percent of United States-based companies had reduced all but essential travel.

Even more, “the tragic events of September 11 created a significant spike in all areas and that tended to obscure exhibition performance for the entire year,” according to a study by the Center of Exhibition Industry Research (CEIR).

“Truthfully, after 2001 a lot of custom houses and exhibit houses went out of business and renting definitely became the mold because the companies were not putting the money into capital expenditures,” says Candy Adams, a San Diego-based independent exhibit management educator, speaker, consultant and writer. “All of a sudden these people who once had elaborate exhibits were back to a 10 by 10.”

Paul Conway, president of Nimlok New York City, a provider of exhibits and rental solutions, echoes Adams’ sentiment.

“When I started the business in 2001 after September 11, 80 percent of our business was rentals because of the uncertainty as far as where the industry was going,” he says. “Rentals made a lot of sense back then and they still do for some.”

However, the exhibition industry has since rebounded, posting its fourth straight year of growth in 2006, with all the major metrics pushing past pre-2001 levels, according to the 2007 edition of the CEIR Index annual measure of industry performance. Since 2000, the industry has grown an average of 2.3 percent annually.

Going with the Pros

When weighing whether to rent or purchase, there are several factors to consider. For Adams, the usage question is key: How many times do you plan on using the exhibit? The rule of thumb is if you rent it three times, you should have owned it, she says.

“Three is the magic number. Then you could have used it the fourth and fifth times for free. There are times when I may do a show that comes up every two years and I want to do it in a big way. Do I want a property sitting there being unused … for two years, with the cost of them?”

The average rental exhibit is 20 feet by 20 feet to 30 by 40 and can be as large as a 100 by 50 double-decker or 100 by 100.

But don’t let the term “rental” fool you. Just because it’s a rental doesn’t mean it’s basic, according to Conway.

“Our rental business and rental inventory is very custom. One of the reasons we’ve been successful is because we are able to offer products that are [more] unique than what is typically available,” he explains. “Our biggest advantage is we have the ability to change our inventory and make it look as if it’s … custom-made.”

The advantages of renting exhibits can far outweigh those of purchasing. By renting, the exhibitor is able to experiment with different looks and test out the exhibit without a commitment. This works well, especially for new companies.

Other advantages of renting include not having to pay storage fees or insurance costs. More importantly, rentals often come with a few unexpected perks, says Adams.

“If you rent an exhibit, the exhibit house assists you by giving you the drawings and telling you about the electrical needs,” she says. “If you negotiate it, some exhibit houses also send you one of their [installation and dismantle] supervisors, who know how to put the exhibit together, as part of the rental cost.”

The Cons of Renting

Of course, there are a few cons as well. For example, by renting, you may feel as if you’re throwing money away rather than building capital. Marci Banks, director of marketing for trade show exhibit rental and services firm MG Design, believes that although rentals can be an effective way to exhibit, they aren’t always the best-case scenario.

“If your trade show schedule is frequent and without overlapping shows, it might make more sense to create custom properties built specifically for your needs. Rentals are a good solution, but you run the risk of properties being rented by another company at the time you need them,” she says. “Also, while you can customize some rental properties, you then run into additional costs. If you are trying to make a brand statement that is consistent from show to show, custom properties are definitely a better choice.”

Under certain corporate policies, companies cannot own property, and a rental exhibit can be listed as an expense, instead of a company asset. Renting an exhibit costs a third of what it costs to build and own it. However, renting is a more practical financial and long-term option than purchasing, Adams adds.

“Every year you own an exhibit, it depreciates. Take $150 per square foot for a 20 by 20 booth (400 square feet) at a cost of $60,000. The first year I own it, it’s worth $60,000, the second year it’s worth $40,000, and the third year it’s worth $20,000. Year four I’m sitting on something that I have to pay to have put and transported to a hazardous waste landfill,” she says. “So, just to get rid of it — it’s going to cost you. On top of the fact, for three years, you paid storage at 25 to 30 cents per cubic foot.”

What do you Really Need?

Overall, for exhibit managers interested in renting a trade show exhibit, Adams advises to remember to stay true to your corporate image and not to skip the RFP.

“Start with the basics. What do I need? Is it the right size to go into my space? Is it my corporate look? Most of the exhibit houses still have big flats, white squares that you can rent and do a whole lot of modification to with color, lights and fabric. And more and more people are doing that,” she says. “Look at the must-haves and would-be-nices and go out and start looking on the Internet and at exhibit houses to see what’s out there and what price. Find places that have property that fit into what you are and still give you the things you need.”