There are upsides and downsides to renting exhibits. Learn the pros and cons to help determine whether rental is right for your program. By Candy Adams
s an exhibit manager, chances are you've pondered the question, "Should I rent, or should I buy?" There's an industry rule of thumb that dictates renting an exhibit property (not including the cost of designing and producing custom graphics) will run about one-third to one-half the cost of purchasing a similar exhibit. So if you're going to use the same basic configuration of exhibit properties more than three times, you'll probably want to invest in purchasing rather than renting. On the other hand, if you'll only need to use an exhibit once or twice, renting may be the best way to go. Some exhibit-rental vendors even offer a "try before you buy" option to exhibitors who aren't sure of their needs, with a negotiated percentage of the rental fee being applied to the subsequent purchase of the exhibit properties.
Aside from cost and frequency of use, here are some other common reasons exhibitors opt for – and against – rental properties.
If your booth's square footage or shape changes from show to show, dealing with varying footprints can be difficult with owned properties. However, rental options can help you sidestep that challenge. Simply rent larger or smaller exhibit properties to suit your needs, or add or remove rental components to make your exhibit fit whatever size space you've contracted for at the show.
When renting exhibit properties, size does matter. Few exhibitors find renting 10-by-10-foot booths financially feasible based on the minimal cost of plain back-wall configurations and nominal furnishings. But when you exhibit in larger linear booth spaces (such as 10-by-20 feet) or island booth spaces, the practicality of exhibit rental increases. That's because you've moved from a standard pop-up back wall to a hard back wall that may need to support visual displays and products.
Rental also gives exhibitors the opportunity to try out various types of exhibit properties (e.g., custom, system, hybrid) and layout configurations to determine the design that works best before making a three- to five-year commitment with a large capital outlay. What's more, it offers flexibility to exhibitors who participate in shows in various strategic or vertical market segments where a different look and feel is required, either to appeal to that market's attendees or to display differing sizes or types of products.
Aside from the properties themselves, flexibility also comes into play with scheduling. For example, some exhibitors may have an inadequate inventory of exhibit properties to cover show-schedule conflicts. These can include back-to-back shows where expedited shipping costs can bust a budget or overlapping show dates that don't allow the required exhibit properties to be available when needed. Having access to an extra rental property or two can help mitigate these types of situations.
Startup companies may want to have a larger or more impressive exhibit to launch their brands but may not yet have the financial resources to invest in a large capital purchase like a custom trade show exhibit until they're more established. So they use their available funds to rent an eye-popping exhibit rather than making a larger cash outlay to purchase a much less impressive property.
With rental, there are no ongoing costs of ownership such as recurring maintenance and refurbishment costs, inventory/warehouse handling, monthly storage fees, and insurance premiums. You also won't incur repair or refurbishment costs, so you won't be hit with post-show expenses to fix minor dings or scratches. It's estimated that ongoing repair of an owned exhibit after each show can total approximately 3 to 5 percent of the total value of the exhibit. And, in a slow economy, even companies with a long track record of exhibiting may want to conserve their cash and rent rather than purchase to replace their outdated exhibit properties.
It's estimated that ongoing repair of an
owned exhibit after each trade show can
total approximately 3 to 5 percent of the
total value of the exhibit.
If you do have the cash on hand to purchase a property, your firm's financial policies may play a huge role in deciding whether expensing exhibit property rentals or capitalizing purchased exhibit assets makes better financial sense. Rented exhibits are paid for as a one-time expense rather than being capitalized as a depreciating asset. Custom rental components are completely paid for after their first use. So, you should negotiate the purchase of such pieces if you think you'll need them again. Plus, not all companies want to own their exhibit properties for a number of strategic and financial reasons.
For example, many of the companies I've worked with establish a $10,000 threshold on the purchase of assets that will be capitalized and depreciated, usually over a three- or five-year period. I have also had a number of clients who had no choice but to rent a property since their exhibit-marketing programs were subsidized by government funding or grants that simply did not allow the purchase of capital assets.
Ease of Use
Companies who want to offload the majority of the tactical exhibit functions (e.g., ordering show services such as transportation, material handling, labor, utilities, etc.) find the turnkey management of simple rental-exhibit packages convenient and cost effective. This can be especially true if your exhibit-management team is lean and you're renting due to tight schedules between shows.
Furthermore, renting means you won't have to deal with end-of-life exhibit-disposal fees, a cost that many exhibitors don't consider when purchasing an exhibit. If you rent an exhibit, all you have to do is ship it back to the exhibit house when you are done.
And for exhibitors coming from outside the United States or going to foreign destinations for occasional shows, it makes more sense to rent near the show site rather than purchasing and shipping exhibit properties overseas. Dealing with the expense of shipping through brokers and hassling with customs regulations can add unnecessary complexity and cost to international exhibiting.
Lack of Options
You may have difficulty locating an exhibit house or contractor with properties that suit your specifications and design needs both strategically and physically. Not all exhibit houses keep an extensive inventory of rental properties on hand, and a modular/system exhibit may not portray the brand image your company needs. Even if you do find a property you like, availability isn't guaranteed. Since other exhibitors are drawing from the same inventory of pieces, you'll need to commit as far in advance as possible to make sure they're available in time for your trade show.
It's important to realize that rental exhibits will often show some wear and tear, since most properties aren't brand new. And they may be built from less expensive materials than you'd normally find on a purchased custom exhibit property.
There may also be limitations on how much customization the rental vendor will be able – or will want – to do to adapt its rental properties to meet your needs. So unless you are renting a fully customized exhibit, you'll likely be making some design concessions. That means your rental exhibit will probably still look like a generic rental without your company's own personal touch.
Exhibit-rental proposals aren't standardized. The rental cost may or may not include trial setup and preview, shipping and documentation, onsite supervision during installation, graphics, material handling, installation and dismantle, and other show services. So, you could have a price tag of $1,000 and sign the contract, only to find out later that the cost only covered the physical exhibit and not any of the necessary ancillary components. Therefore, always ask for detailed, line-item proposals so you know what's included – or excluded – in the rental price.
Note that if you rent an exhibit property from the trade show's general services contractor, it generally bundles the cost of material handling and a fixed I&D labor fee in the negotiated rental cost, which can give its proposal a financial advantage over those of exhibit houses.
Rental exhibits might mean a higher overall ongoing cost to exhibit since you have no equity in the exhibit properties. For example, if you built and purchased a $100,000 exhibit and used it at three shows within a year, you would then own the exhibit property and therefore could use it for the next four years of its depreciable life and only incur ongoing expenses. But if you rented the same property for $34,000 per show, at the end of the first year, you'd have paid approximately the same $100,000, but would have no exhibit to use in years two through five.
There is also a potential for higher I&D costs with rental properties that may not have been designed for the required configuration, especially if the exhibit house didn't provide a full trial setup to iron out any kinks. And you may have to pay more for the design and production of exhibit graphics each time a rental is used, unless you're planning on using the same rental multiple times and storing the graphics between trade shows.
From cost effectiveness and flexibility to limited options and hidden fees, renting an exhibit property is not a one-size-fits-all solution for every program. However, now that you know the main reasons for and against rentals, you're better equipped to answer the age-old question, "To rent, or not to rent?"