How sports, leisure, convention industries are dealing with inflation, labor costs
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The International Association of Venue Managers recently held its annual conference at the Phoenix Convention Center. Many conversations focused on how the events and meetings industry is dealing with high inflation and low staffing.
The industry overall is about 70% back to pre-COVID attendance levels. But prices are not. Kate Christensen runs a Chandler-based event planning business. Companies call her to find a venue and make all the arrangements.
She told conference attendees prices are making some jaws drop, “For instance, a resort here in Phoenix is now charging $10.50 a bottle of water, a regular little 16-ounce water, plus, plus.”
Plus, plus refers to taxes and gratuity.
“And that plus at that particular resort is 24%,” Christensen said.
So that $10.50 bottle of water actually costs $13.02. To find savings, some events may cut back on service during breaks and instead offer drink and snack carts where guests pay on their own.
Christensen may consider boxed lunches, buffets or speak directly with the chef, “And see how we can plan our meal that is going to be maybe not substantially less but a couple dollars off of a plate of a group of 500 makes a difference.”
“It’s also labor engineering, right. That’s the big saver,” said Greg Fender, executive vice president for Sodexo Live, a company that handles concessions for various venues.
He said the sports and leisure sector is doing about 70% of pre-pandemic business — not enough to sustain higher labor costs.
“It’s at all levels. It’s at parking, it’s at cleaners, it’s on the food side,” he said. “Every one of those numbers has gone up, it’s not gone down. And it’s not a 10% lift, it’s not a 20% lift, it’s 30 and up.”
It’s not just the entry level or temporary staffing issue, it’s in the mid-level management,” said Michael Hughes, managing director of Access intelligence LLC.
His research found almost 80% of convention center executives report staffing is very or extremely challenging.
“I think that partly relates to the work from home, that you’re competing with groups that allow remote working,” Hughes said. “I think this is the biggest issue in the industry. I think this is going to be the long-term challenge.”
"I think this is going to be the long-term challenge."
— Michael Hughes, Access Intelligence LLC
During two sessions I attended, there was no mention of COVID’s impact on staffing levels or employee concerns. But it was a concern for conference organizers. They required attendees to show proof of a negative COVID test. Not everyone could and panels were quickly reduced or replacements added.
“The person from our team that was supposed to be here was coming from Canada, he has COVID, he didn’t make it in,” Fender said.
Masks were mandatory — or supposed to be. During my visit, the vast majority of speakers, exhibitors and guests were unmasked. In one session, I counted fewer than ten people out of 70 wearing masks.
Andrea Smalls did. She’s director of operations for the Georgia International Convention Center.
“Our job is to gather, is to help people gather,” she said. “To be able to get back into our venues and get people back in our venues, it’s amazing.”
During the conference, Maricopa County experienced high transmission levels, which prompted the Centers for Disease Control and Prevention to recommend people wear masks indoors.
“If it means I have to wear a mask, let me wear a mask, and I want to be a leader in that movement. It’s not a political statement. It’s a health statement, it’s a business statement. I want us to stay in business," Smalls said.
COVID did produce some positive changes, according to Danielle Lazor, west region vice president for Aramark. Her company handles food and beverage operations at stadiums, arenas and convention centers across the U.S., including Phoenix.
“We really doubled down on technology,” Lazor said.
Depending on the venue and the technology — self checkout, scan and go, mobile ordering through apps– she said service can be 50% faster.
“But we’re not seeing that labor savings quite yet because we just need to have more labor in the back of the house preparing the food to be able to deliver on a different point of sale ratio,” Lazor said.
She and Fender said supply chain disruptions and costs have created opportunities for local businesses.
“The distribution lines are completely broken and so we’ve really had to look high, wide and deep for new partnerships and a lot of that is coming out of the local community,” Lazor said.
“In the past, I think, national products or larger scale products, it was less expensive to ship it in and because everything else is going up between gas and shipping and labor, those cost advantages are less and you’re being driven even economically into the local market,” Fender said.
While venues and markets differ, Hughes shared a prediction for the overall convention center industry, “I really think the next 12 months are absolutely critical. I mean if there’s other waves and so on, or if we can’t break into that 80-90% attendance recovery, then I’d be more concerned, but I’m in the positive camp as I said.”
Based on his surveys of convention center managers and event producers, most expect a full recovery by late 2023 or early 2024…that will be four years since the first confirmed COVID-19 case in the U.S.
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