Ask for the word around party rental and you'll hear a better forecast for business in 2012. Two-thirds of party rental operators replying to the latest Special Events survey expect to handle more events this year than they did in 2011. This is the third year in a row that party rental has predicted better business and a big boost from 2009's dismal outlook, when just over a third thought business would pick up.

However, one common — and disturbing — reply to many questions in this year's forecast was simply “I don't know.” Blame it on the wild ride of the world's economy over the past year, but today even seasoned rental operators are gun-shy about predicting the future.

[The entire study is available for a nominal fee; visit specialevents.com/research.]

WHAT'S NEXT?

Indeed, the No. 1 challenge facing party rental in 2012 is “an uncertain economy,” respondents say, making it hard to chart a business plan.

No. 2 on the list of headaches for 2012, our readers note, is the challenge of competition from other rental operations — specifically those who discount rates to laughable levels.

“The biggest problem facing our industry as we work to recover from the recession in 2012 is pricing,” says Nate Albers, CEO of TentLogix, based in Stuart, Fla. “Many companies in the rental industry are charging less for rentals than what we were charging when we started in 1996, and the overhead costs have increased exponentially.”

But cost-cutting and the tough economy have weeded out some weaker players.

“One helping factor to individual growth has been the loss of some of the smaller rental companies during this recession,” notes Larry Green, head of Rentals Unlimited of Stoughton, Mass.

COSTS CLIMB

The No. 3 challenge is a byproduct of No. 2 — in a market where clients demand low rates, how can operators cope with rising costs?

“Increased costs and lower margins make it very difficult to buy new equipment and plan for new growth,” notes Dan Hooks, CERP, president of Charlotte, N.C.-based Party Reflections.

Ironically, even only mild improvement in the economy brings back some business hurdles that seem like ancient history. For one, fully a third of respondents to the 2012 study say they are challenged by a lack of appropriately skilled labor, the highest rate in four years. A third of respondents say they are “adding additional staff” this year, the highest hiring rate seen since the '08 forecast.

Keeping a lid on labor costs is a top priority for M&M The Special Events Co. of Carol Stream, Ill.

“Labor remains our largest single expense category, and we are continuing to find ways to rein in those costs,” says company head Mike Berk. “We have adopted GPS on all of our vehicles, which not only tells where they are but how long they are at a stop. We compare the time — labor cost — against the revenue and see if it falls within our targets. We are sending our managers out on more jobs to watch the installations, and supervise to reduce the time and cost per job.”

To fight for market share, the No. 1 response for 2012 is “adding new inventory.” And despite tight credit, some rental leaders are making the investment in new products.

“We're listening to our customers and expanding our product line with the latest trends in tabletop, tents, linens, furniture and services,” says Todd Johnson, CEO of Aztec Events & Tents of Houston. And Aztec hasn't stopped there: “We just completed our new showroom and design center to showcase our new products and attract a wider range of new customers,” he adds.

GOING UP

In a sign that the market is firming up, 30 percent of respondents say they are going to raise rates this year, and a brave 9 percent are adding new locations.

“We have already opened a satellite location in a major metropolitan area close to our headquarters, and we will focus our efforts toward giving it the resources that it needs to grow and take advantage of a new market for us,” Hooks says. “We are also looking for another similar opportunity in the opposite geographic direction in order to expand our brand and reach new customers.”

CONFIDENCE GAME

“We need to stay confident about our company and the industry,” Johnson says. “The more confidence we have as a leader in the industry inspires our employees, clients and potential customers to partner with us on their event.”

RESOURCES

AZTECT EVENTS & TENTS
www.aztecusa.com

M&M THE SPECIAL EVENTS CO.
www.mmspecialevents.com

PARTY REFLECTIONS
www.partyreflections.com

RENTALS UNLIMITED
www.rentalsunlimited.net

TENTLOGIX
www.tentlogix.com