Consolidations Reshaping Business Events Industry

Author: David McMillin       

mergers

A merger between AEG Facilities and SMG could mean more concert business at the Palm Springs Convention Center, operated by SMG. (Palm Spring CC photo)

Over the past year, consolidation has touched nearly every corner of meetings and events: data and exhibitions with the Informa-UBM acquisition, event technology with the Cvent-Social Tables deal, and attendee-housing and event-space options in the Marriott-Starwood merger. In February, M&A activity moved into the venue-management arena with the announcement that AEG Facilities and SMG plan to join forces.

The new company will be called ASM Global, overseeing a network of more than 310 convention centers, arenas, stadiums, and performing-arts venues stretching across five continents. It’s big news, but for Gregg Talley, CAE, FASAE, president and CEO of Talley Management Group, it’s not completely unexpected. “With all the consolidation we’re seeing, this move shouldn’t come as a surprise,” Talley told Convene. “We’re still moving through the effects of Marriott and Starwood and seeing the continued roll-up of companies and partnerships across the industry.”

Show Business, Meet Business Events?

mergers

Gregg Talley

Talley pointed out that hotel consolidation is rooted in a simple equation — adding more rooms and square footage under the same umbrella — but he said he believes that the differences AEG and SMG bring to the table can create greater value for event organizers. “There are some interesting synergies that this deal can open up,” Talley said. “When you look at some of the service offerings, particularly in the entertainment division of AEG, and spread those out to SMG facilities, there can be a meaningful difference for clients in these venues.”

AEG, the parent company of AEG Facilities, works with some of the most-recognized names in show business. The company has produced tours for Taylor Swift, Bruno Mars, Katy Perry, and a range of other chart-topping acts. It also oversees more than 20 music festivals, including what is arguably the most-recognized festival brand in the U.S.: the Coachella Valley Music and Arts Festival in Indio, California. At the Palm Springs Convention Center, which is currently operated by SMG, that connection is fueling rumors in the community. “Speculation has already begun that major acts could soon perform at the facility,” Bruce Fessier, a reporter at the Desert Sun in Palm Springs, wrote shortly after the deal, was announced “although no one is saying Beyoncé will appear in the convention center’s 112,000-square-foot exhibit hall just because she likes the manager of the venue.”

Cost and Global Implications for Organizers

Whether any of the communities where the newly formed company’s convention centers are located can expect to host sold-out concerts where conventions have been held remains to be seen. But Brad Mayne, CVE, president and CEO of the International Association of Venue Managers (IAVM), said he feels certain that event organizers will benefit from the deal. “AEG and SMG have been very successful on their own, and bringing these two entities together will strengthen the ability to manage and care for their clients,” Mayne told Convene. “If you’re a show organizer who uses multiple buildings across both companies, you’re going to see somewhat of a standardization. It won’t be exact, but [organizers] will be comfortable knowing that you can expect the same level of professionalism in those locations.”

mergers

Brad Mayne

Mayne said he expects the newly combined company to have more negotiating clout as a result of its size with vendors across a range of services such as catering, AV, security, and cleaning. “The more venues you manage, the greater strength you have to leverage in negotiations,” Mayne said. “You can say to a vendor that if you’re willing to accept the terms of a deal in one venue that you can help them get into other venues that you manage.”

Talley said that the newly merged company’s larger footprint might also prove to be helpful for organizers who oversee events in multiple regions of the world. “So many of us are working globally,” Talley said. “One call can help us tap in to more experience in international markets.”

While some organizers may already know where they are aiming to take their upcoming events, Talley also sees ASM Global as a possible extension of the destination marketing world. “Historically, the only way to know about a destination was through the DMO. Now, there’s potentially another salesforce who can tout the benefits of a place where they have a building,” Talley said. “It tells the destination’s story from another perspective.”

The Waiting Game

With any significant merger, the deal must pass regulatory scrutiny, and there could be potential hiccups in the approval process. “Many of the buildings ASM operates are owned by public entities,” Dave Brooks at billboard.com wrote after the announcement, “and it’s unclear how regulators will view a company that gives tax-payer owned buildings less options for management contracts.”

The company will have to navigate those complexities, but Talley noted that the unique role each convention center plays in its destination will alleviate some of the issues. “How the building is viewed by a community varies,” Talley said. “In some, it might be viewed as a loss leader, and in others, it may be mandated to make a profit. That creates a difference in how the building is positioned. There may be some concern about how a bigger company will impact pricing, but in my mind, that concern is tempered by how these venues operate in different communities.”

Mayne said he expects the merger to be completed with few hurdles. “The fact that there are other private management firms such as Spectra and VenuWorks helps the deal,” Mayne said. “Some of those other firms have cut out a niche for themselves in secondary and tertiary markets. There is still healthy competition in the marketplace from a venue management standpoint.”

There’s proof of that healthy competition deep in the heart of Texas where city officials in Dallas voted to turn management duties of the Kay Bailey Hutchison Convention Center over to Spectra. It’s the first time in the facility’s history that a private management firm will oversee convention booking and operations. There are plenty of other venues that remain on the run-it-yourself track, too. While the latest consolidation move may make big headlines, Mayne pointed out that many destinations opt to handle their convention center management duties on their own. “Private management isn’t for every single building,” Mayne said. “The vast majority of IAVM’s membership is municipally-owned and operated. So while you can get the benefits of standardization of a larger network of private management firms, you can also run a venue as well on your own. You just have to find the right talent to do it.”