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Trade groups taking a beating in downturn

By Mike Musgrove
Monday, November 9, 2009

Bob Dziuban, executive director of a Fairfax-based trade group for manufacturers of prescription eyeglasses, has been working overtime the past few months. His organization's annual trade show is coming up, and he's been trying harder than ever to give potential attendees a way to justify the expense of a trip to the Washington area.

Basically, that amounts to lobbying for better deals with hotels and pinching pennies. "The challenges have been greater this year than at any time in the past, there's no question about it," Dziuban said.

Times are tough for trade associations, just as they are for the industries they represent. Two-thirds of trade groups anticipate a decline in revenue in 2010, according to a survey conducted by the American Society of Association Executives. Trade groups bracing for a drop in income reported that they expect a 16 percent drop in revenue this year.

Trade shows are one of the major ways that groups such as Dziuban's Optical Laboratories Association make money; the outright cancellation of a show can be disastrous. "Associations rarely cancel meetings," said John H. Graham IV, president and chief executive of the ASAE. "What we do is cut back."

That's just what the OLA has done for its upcoming show, a two-day event that used to last three days. This year's gathering will be held in early December, instead of November as in years past, because attendees can probably get cheaper airfare at that time. To sweeten the deal, attendees who stay for the whole show may be eligible for a $100 credit off their hotel rooms at the Gaylord National Resort and Convention Center.

Trade groups aren't the only ones experiencing tough times. Gaylord Entertainment, which owns the hotel, reported a loss of $12.9 million (32 cents a share) for its most recent quarter, compared with a loss of $5.5 million (16 cents) a year ago.

Michael Hart, editor of Tradeshow Week, a publication that covers corporate get-togethers, said that although many trade associations are headquartered in Washington, the economic downturn is mostly being felt in the "big three" cities that have established convention hospitality as a major business: Las Vegas, Chicago and Orlando.

Washington isn't necessarily perceived as a fun "junket" town, and that's one factor that plays to the city's relative advantage in tough economic times, said Greg O'Dell, president and chief executive of the Washington Convention Center Authority, which owns and manages the Walter E. Washington Convention Center. At a time when businesses are cutting frivolous expenses, it's not so bad to be thought of as a serious place.

"We haven't seen a lot of cancellations," O'Dell said, "but we've certainly seen customers looking hard at food and beverage and other expenses." The fact that Washington offers inexpensive entertainment, such as free museums, has helped some show organizers lure attendees, he added.

For the trade group business, the gloomy times may be just beginning. Trade groups are a step or two behind the curve, in terms of feeling an economic pinch as well as benefiting from an eventual recovery.

"Associations are essentially a lagging indicator" of a bad economy, Graham said. "We didn't start feeling the impact until spring and summer, but we're going to be feeling it until next spring and summer."

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