In Business Q and A

Kevin Rabbitt, chief executive, GES Exposition Services

Interviewed by Richard N. Velotta / Staff Writer

Kevin Rabbitt Photo by R. Marsh Starks

One of Las Vegas' largest nongaming companies had an executive changing of the guard when the new year was rung in earlier this week.

Paul Dykstra, who has been the chief executive of GES Exposition Services since 2000, will transition to the top post of GES' parent company, Viad Corp., in the first quarter of 2006.

Taking over for Dykstra in Las Vegas is 34-year-old Kevin M. Rabbitt, who had been executive vice president and chief operating officer of GES, which has 500 full-time employees and has a "casual" workforce of more than 3,000 union workers.

Rabbitt, who has a master's from the Harvard Business School, joined GES in 2002 and has a background in operational review, service and process improvement and best practices implementation.

Prior to joining GES, Rabbitt was a senior consultant with Bain & Co. and also served as the president and chief operating officer of the Texas Ice Stadium in Houston.

As one of the city's largest trade shows -- the International Consumer Electronics Show -- gathers in Las Vegas this week, Rabbitt talked to In Business Las Vegas about GES and the convention industry.

Question: Las Vegas continues to be one of the hot spots in the convention industry universe. Is the city maintaining its lead, pulling ahead or falling behind competitors in other cities and why?

Answer: At the very minimum, it's at least maintaining its lead, but it has a number of things that will make sure that it remains a market leader for many years to come. It has world-class hotels, it has world-class convention centers between the Las Vegas Convention Center, Mandalay Bay and the Sands (Expo Center) as well as all the other properties that are along the Strip. It also has fantastic attractions and then has another element and that is a lot of direct flights. There's no reason to think that Las Vegas won't continue to be the absolute leader in the trade-show industry in years to come.

Tell us about GES' operations. What does your company do? Who are your major competitors?

GES is considered an official services contractor for the events and exhibitions industry. What that means is a show organizer such as the Consumer Electronics Show is going to put on a trade show. They hire GES to produce that trade show. We do everything from the look and feel of the show to the overall floor planning with the Consumer Electronics Association and then do a series of services for the exhibitors. So we work for the show organizer to coordinate the entire show, and then we also sell services to individual exhibitors in the show. Those services could include an exhibit that they need for the show -- from a 10-foot-by-10-foot exhibit to an extravagant 50-foot-by-50-foot double-deck exhibit. We also rent furnishings, carpet tables, chairs that exhibitors need on the show floor. We also provide transportation for their goods, from wherever they start from to the show and back. We provide a plethora of services across the entire show, serving both customers, the show organizer and the exhibitor.

From a competitive standpoint, GES is a market leader. Between us and Freeman Decorating, nationwide, we've got about a third of the trade shows produced in North America. We do about 4,000 events or shows a year across the country, and in Las Vegas, our corporate headquarters, we do the vast majority of the major shows, including the Consumer Electronics Show, the National Association of Broadcasters, the International Council of Shopping Centers, the Snow Sports Show, MAGIC, World Shoe (Exposition), just a whole host of shows that occur every year, and a couple of shows that happen every other year or every third year, like ConExpo/ConAg that happened last year. MINExpo is another one.

CES is the largest of those shows?

It's the largest annual show that we do. It opened Jan. 5. ConExpo/ConAg would be a little bit larger, but occurs every third year.

Some people probably don't realize that GES has a national presence and that the facility here represents more than just a Las Vegas location.

Being headquartered in Las Vegas, we've continued to make a large investment in this city. We've got a 900,000-square-foot facility here, our flagship operation, at the 215 (Beltway) and Decatur. I would like to rattle off some of the key stats so people can get the scale of what that operation is. With the two different warehouses there, you could fit two Titanics, one in each facility. You could sit probably four Goodyear blimps, maybe five if you angle them correctly. We have enough carpet in there that if you lay it end to end it would go to Los Angeles and back, enough electrical cable to go 275 miles. These are investments that we've made. We see this as the largest convention market and we're proud to be headquartered here. We haven't lost sight that we have a duty to give back to the community. As one of the largest nongaming companies in the city, we still remain very active. Our senior executives sit on some key boards and participate on a number of the community service organizations here. The Red Cross, the Nevada Cancer Institute, Opportunity Village, the Clark County Public Education Foundation and a whole host of other things we give -- our time, our in-kind donations and our monetary donations. We take that very seriously and it's one we're going to continue for years to come. We really appreciate everything the city is for us and we want to continue to give back to it.

Las Vegas has three of the nation's top 10 convention centers. How does that affect GES? Is it good that all those centers produce a steady revenue stream or is it challenging to secure enough employees to handle every show site's needs?

The answer is both. We absolutely are excited that there's that many top-tier convention facilities in the city. This is our corporate headquarters and our flagship operation and a fantastic place to do shows. There have been some growing pains as Mandalay Bay has opened and you can have simultaneous very large shows going on at the same time, so there have been some challenges making sure the labor force is large enough to handle all that, but we work with our union partners, whether it be the Teamsters or the Electricians or the Stagehands or any of the other union partners we have to continue to train workers and make sure that we have the workforce.

You may want to explain that -- these guys don't work for GES, right?

They become employees of GES, but we officially manage the union workforce that sets up and takes down conventions. Some of the union employees actually work full time for GES. They work in our warehouses or are kept busy in a 40-hour week throughout the course of the year. But the vast majority of our workforce is what we call a casual workforce, so they could work for GES, for Freeman or they could work for anybody else. They're officially employed through the union, but their paychecks are given to them by the contractors that hire them.

Does GES provide convention services for some of the convention facilities at local resorts? What percentage of the company's business is generated by them?

We produce shows not only at the large convention centers, but we also produce them at all sorts of hotel properties here in Las Vegas and throughout North America. From an overall percentage standpoint, it would be a high number of shows. It could be half to a greater percentage of shows, but in terms of the magnitude of the business, it would be much less, maybe 25 percent of our overall business.

Do any of the convention facilities offer services that are competitive to yours? How does that affect your relationship with those centers?

In very rare instances does the resort actually supply the services we do in-house. They actually look to have preferred relationships with suppliers such as ourselves. Those preferred relationships give them the expertise they need to service their clients while they can focus their attention on their core business, whether that be the overall hospitality business or it could be gaming, or it could be food and beverage as well. It's a very close relationship we actually have with the resorts and one that is mutually beneficial.

Conventions, trade shows and meetings bring buyers and sellers together. How important are such meetings to a company's overall marketing strategy?

Absolutely critical. Not only is GES a company that supports industry because it's what we do, we also exhibit in shows on a regular basis, where we interact with our customers and teach them about our industry and teach them about the service we have. I can tell you it is a major component of our marketing program, and the exhibiting clients we work with very closely will tell you that they view the face-to-face marketing as one of their key components to actually generating sales as opposed to brand awareness or new product introductions. There's also a heavy, heavy component of using these shows to set up meetings to actually consummate deals. So it's absolutely a critical component in the overall marketing and overall business.

Does GES encourage companies to put more marketing dollars in their budgets for meetings?

For the exhibitors we deal with on an ongoing basis, we will help those exhibitors understand where we think the best place is for them to put their marketing dollars. We certainly encourage them to participate in this medium as a way of doing it. The other thing we'll actually do is help them to design their booth in a way that encourages business occurring on the show floor. Certainly we encourage spending in this area, but I would be remiss to say that we certainly don't do this frivolously. We don't encourage unnecessary spending either.

I want to follow up on something you just said. You help tailor what a company is going to look like on the trade show floor. Are there different ways to present that?

There are huge opportunities to adjust the way you present a message. One is the general size of the exhibit. You could have a 10-foot-by-10-foot exhibit, the smallest you would see on a show floor, but you find 200-foot-by-200-foot exhibits that are sometimes double-decked, so there's an upstairs and a downstairs. Size is one element. Another element is how inviting is it for potential buyers to come into your exhibit? How open is the design? What's the meeting space? Is there enough room for private areas to talk? There's also a whole host of specific things you can do to make your exhibit more attractive. Graphics packages, high-impact graphics, high-impact lighting. We do that on the show floor. While exhibitors are exhibiting at a trade show, we also help them with a simultaneous special event that is occurring in conjunction with the trade show for their VIP clients. At the MINExpo, Caterpillar is a large exhibitor of ours and Caterpillar was certainly a large presence at the show. During the evenings of the show, we actually built them a faux mine made out of foam that was about 180 feet by 180 feet that had Jumbotrons inside of it and they used as an entertaining area for their distributors and VIP clients. You'd walk through the mine to get to the experience.

Are meetings and conventions threatened by technological advancements of the Internet and videoconferencing?

That was certainly a concern of the overall industry in the early 2000s and the late '90s, but if you remember at that time, the Internet was going to take over everything, including you and me. So it really hasn't become a threat. What it's really become is a way to supplement what you're doing. The Internet and Web are the most cost-effective way to market what you're going to do prior to the show to make sure that you're attracting the appropriate people to your exhibit. It's also become a way to extend the experience for people who have been to your exhibit after the show. You can kind of keep the experience going in an online site. So it's really become more of a complement than a threat.

After a slump in early 2001 and the devastating effects of 9/11, the convention and meetings industry appears to have rebounded. What's in store for the industry in 2006 and in the years ahead?

You're dead on. The convention industry had a steady stream of growth dating back to the mid-1970s. And then, in about mid-2000 when we started to see the tech bubble burst a little bit, it started to go downhill. That was accelerated with 9/11. Starting in late 2003, you started to see the key indicators starting to trend upward a little bit. We've now had eight straight quarters of growth in the industry and we anticipate 2006 to get us back to the level of the high-water mark prior to the climb. So I think we've reached back to the levels of where things were at prior to the downturn.

We certainly don't see it going down at all, we anticipate some modest growth. I don't anticipate the very steep growth on an ongoing basis. I think corporations overall are cautiously optimistic and cautiously optimistic means they add a little bit more to their marketing budgets each year. When they add a little more to their marketing budgets, it means a little bit more in the trade show budget. We've seen that over the last couple of years and we anticipate seeing that again on an ongoing basis.

What is the biggest challenge facing the convention and meetings industry in the next five years?

The easy answer would be any of the things we've seen in the last couple of years, right? It would be terrorism like 9/11; it would be hurricanes that impacted an entire city, not just the convention industry in New Orleans; it would be SARS like we saw in Canada, or it would be a labor strike like we saw here in Las Vegas. Those are the easy answers, but I wouldn't put those as the biggest challenge. The biggest challenge, in my opinion, is going to be to continue to help exhibiting companies find ways to increase their return on their marketing investments put into trade shows in the face of rising costs. Everyone has seen the rise of the cost of gas when they fill up their own cars, but there's a whole host of petroleum-based products that are absolutely critical to producing trade shows, like carpeting. Those types of costs are continuing to rise. Labor costs continue to rise.

As all good businesses do, as all customers do, they're demanding more for less money. So one of the largest challenges for companies such as GES is to find cost-effective ways and substitute products to keep costs down and look for ways to enhance the marketing methods of customers so you can clearly see the return on investment and continue to invest more dollars in the overall marketing. That would be the first large challenge.

The second large challenge for the industry would be there has been an influx in exhibit space throughout the United States. Building exhibit space is a long-term investment. It's a three-to-six-year plan, from planning through approval through construction through completion. I think when convention centers were seeing what was happening in the growth since the early '70s and I think they were very excited in the late '90s and started putting in plans to expand space so there has been an explosion of space across the convention market. You've seen it in Las Vegas: Mandalay Bay has come on and the planned renovation to parts of the LVCC (Las Vegas Convention Center). So I think the challenge that adds is the increased movement of shows. Shows are moving from one location to another at a faster rate and cities like Las Vegas can have multiple major shows going on at one time. The challenge is that companies such as GES have to be even more flexible in our workforce, more flexible in the movement of our equipment and then work with our union partners to make sure we have enough quality labor to produce those shows.

You mentioned the overhaul the Las Vegas Convention and Visitors Authority plans at the convention center. How will that change the meetings, trade show and conventions industry in Las Vegas?

It will continue to strengthen it. The Las Vegas Convention and Visitors Authority is a fantastic organization that is certainly a leader in this industry and one that is looked up to across the country. They've done a great job of listening to their clients, the show organizers, and have said, "What can we do to improve our facility and improve our city?" and have taken that back and turned that into the renovation that is being planned. They've also reached out to companies such as GES and said, "What types of things can we do from an operational standpoint to make it easier to make sure that we produce exhibits efficiently for our clients?" and have taken that feedback as well. It's going to do nothing but strengthen the overall Las Vegas market.

What is the current state of GES' relationship with labor unions in the Las Vegas market?

I'd say they're very strong. The labor strike that occurred in late 2004 was certainly well noted in the media. From there, it's been a lot of effort in building those relationships and continuing to strengthen those. We have seen very strong signs of strengthening. We consider the unions to be fundamental partners of ours in producing our business and I think they see us as when we're doing our job it's a way they continue to grow jobs as well. So it's a good relationship overall.

Are there cities doing a better job than Las Vegas at recruiting conventions, trade shows and meetings? Which ones and what are they doing better?

Las Vegas is certainly the leader. Orlando has had a lot of success in recruiting conventions. The elements of what draws conventions are manyfold, things that we talked about before. You have world-class facilities and convention centers and certainly Las Vegas and Orlando both have those and Orlando has recently gone through an expansion as well. Do you have hotel rooms that are close in proximity to the convention centers? Do you have attractions and great restaurants? Both cities certainly match there. Do you have ability to get in and out of the city quickly and with direct flights? Both of them have that as well. Those are kind of the high-level, key things for attracting conventions. But then, there's also the work the Convention and Visitors Authority does and it's friendliness of doing business and it's willingness to get out and listen to clients and make sure they're taking action on things clients are asking for.

How are growth and the expansion of convention centers nationwide affecting GES?

We have a very good model from a footprint standpoint. We have offices in every major convention city and we have some satellite offices in some secondary convention cities. We also have a hub-and-spoke system that we can produce anywhere in North America, at least in the U.S. and Canada. We can get to and from just about any convention center we need to get to. We still focus on the major convention markets because they're most attractive to us, but a lot of our clients will have multiple shows that move into all sorts of cities but with our current footprint, we're able to service those with no problems.

What's the outlook for New Orleans?

Your guess is as good as mine from the overall city standpoint. We see the same news reports. The convention and visitors authority down there is hopeful that sometime after the first quarter of next year they can start hosting conventions again. I certainly hope that is the case. It's a great city and a great place to have a convention. But I think there are other factors out there that will determine whether they can meet that timeline or not, but we certainly hope they do.

Are there any particular issues for GES and other convention services suppliers with the push to host more events with delegates and exhibitors from China?

I wouldn't say specifically from a GES standpoint hosting exhibitors from China, but a lot of our show-organizing clients are consistently looking for international exhibitors and we've seen a steady increase of international exhibitors at our shows. They create new opportunities for us, opportunities to make sure that we can help them move their stuff through Customs, opportunities to make sure they don't have to ship exhibits, that they can rent them here, and kind of teaching them the overall trade show model in the United States, which is a little bit different than the way it occurs in Asia and also throughout Europe. International exhibitors overall create an opportunity, and one that we play a key role in helping educate.

Richard N. Velotta covers tourism for In Business Las Vegas and its sister publication, the Las Vegas Sun. He can be reached at (702) 259-4061 or by e-mail at velotta@lasvegassun.com.

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