Diminishing PCO profits as list of 'necessities' grow
Ros McLeod says PCO profits are diminishing not only because of rising venue hire costs but rather a raft of other now expected necessities compounded by an association’s desire for profitability.
Story by Ros McLeod
I recollect a conference we organised in 1992 where we hired an entire convention centre for $156,000. Today the same package costs $296,010. (The CPI increase in this same period is $250,558.65)
The registration fees for that 1992 conference were less than A$300 per delegate for Sunday evening to Friday afternoon including reception, morning and afternoon teas. Today, for a reduced package in terms of days, it costs around $1000, so it is more than triple the price.
This begs the question: what therefore, is eating into a PCO’s profits?
Certainly the technical requirements of conferences today are additional costs that we didn’t have many years ago. The need for wireless internet connections, videoconference capabilities, the creation and management of websites, and online registration systems are all relatively new and all cost money.
Alongside the technical aspects is management of the communication sphere. Yes, email and Skype make it much cheaper to communicate, however, it takes more labour today to run a conference than it did in the good old manual days. This is because where once a brochure was printed months in advance and everything was locked down right to when the conference began, today we see almost constant changes and amendments to programs, many of which have to be updated on websites and in electronic communications. And, to top it all off, delegates expect responses to their emailed queries almost instantaneously.
Time is another factor that reduces a PCO’s profitability.
In the 1992 case I mention above the conference was held from Sunday evening until Friday afternoon. The average conference today is generally two days shorter. This means that there is a reduced spend in terms of accommodation, hiring of venues, and food and beverage allocations. The reduced length of conferences thereby reduces a portion of the funds received by the PCO.
Perhaps regrettably, these factors: reduced conference days, a high level of technical requirements, and instant communication to delegates are only the tip of the iceberg. Marketing costs, both locally and internationally, are now imperative to ensure that the PCO gets the expected delegate numbers at their conferences; conferences demand high-quality speakers, many who come at great expense and demand that they travel in business-class luxury; and social functions have to be better than the last, thereby costing more.
So what is the real dilemma? The PCO has to spend more time to get the job done but their fees are not rising in tandem with costs. Venues have demanding owners who expect profits. Delegates, speakers, sponsors and exhibitors are all demanding more.
Association boards increasingly require profit from their conferences to supplement the association revenue. This can put additional strain on conference budgets and raises the cost to the members.
The perception that if the clients – the association members – are volunteering their time, then so too should the PCO is an idealistic one. From a business perspective we, unfortunately, cannot do that. I hear the same echo from many in-house meeting organisers too!
Like any business, conference management companies have overheads – staff salaries, office space, hardware and software that need to be upgraded and developed.
It is imperative for all PCOs to remind their clients of this fact, and remind them too of the rising costs of meeting management.
Like them we are in business because we love what we do and because we want a viable business model. With a little understanding from both sides it really can be a win win for everyone.
