Event Planning – Industry Analysis
Endra Newell

Overall Summary
Event planning is the organization, preplanning and preparation of countless details required for an event as well as the management of these details during the time the event actually occurs. It is the event planner’s responsibility to ensure all details of the event are being managed from selecting the appropriate venue to ensuring all invitations are printed and sent. They are accountable for the event running smoothly and effortlessly on the host’s behalf.

History and Evolvement
About 30 years ago, event planning was a service that the average person did themselves without seeking assistance from a third party. Event planning was indeed a service utilized more so by the wealthy and/or successful corporations. Fast forward to present day and an event planner has become more of a necessity than that of a housekeeper or nanny. The demand for such a service has increased due to time constraints of an individual, recognition of the industry amongst the middle class and the lowering cost associated with the use of such a service. This service is looked upon as one that eliminates the hassles and headaches of putting a tremendous amount of effort into planning and executing such events without enjoying yourself in the long run. According to the Bureau of Labor and Statistic, employment of event planners is expected to grow 20% from 2006 to 2016.

Threat of New Entrance
The event planning industry is one that sustains low risk when entering due to start up costs being low as most event planners start their businesses out of their homes initially and have “helpers” as opposed to “workers”. This industry can easily be entered however it is one that has also grown tremendously in the past decade. According to research conducted by Dr. Joe Goldblatt, CSEP (Certified Special Events Professional), worldwide spending for special occasions are around $500 billion annually. Goldblatt, also the founder of International Special Events Society (ISES) and founding director of an Event Management Program at George Washington University stated, "Suffice it to say, the marketplace is large enough to support and sustain your endeavor”. The basis of this statement is due to the diverse areas in which one can expand within the event planning industry such as wedding planning, conventions, trade shows, entertainment, and charity events. One can also venture into a different aspects of this industry as a photographer, caterer, etc. Advertising costs are low as well due to most entry level professionals using word of mouth as their advertising strategy. The average profit margin for an event planner was 15% in the year 2001. Most recent studies show that it is now ranging from 30% to 40%.

Breakdown of the Industry
This industry can be broken down into two segments which are corporate and social.

Corporate: This would include companies, charities and non-profit organizations. This by far is the largest segment of the two which make up the industry. These types of events range from fundraisers and receptions with cost effective/high impact requirements to conventions, holiday parties and launch parties which require a much higher budget and impact. According to the Meeting Market Report conducted for Meetings & Conventions Magazine, the total number of meetings held in the United States was well over 1 million. Due to the decline in the economy, the corporate segment of the event planning industry had experienced a decrease in profits and activity. Corporations were more focused on staying out of the red, thus cutting back on the amount of lavish expenditures. However with our improved economy and the trend of corporate America to outsource their meeting-planning functions, Corporations are now outsourcing as opposed to keeping event managers on their payroll as it is more cost effective for them. In the corporate events industry, planners normally charge a fee for their services, plus a handling charge for each item they contract. In some instances, a project fee or flat fee will be charged

Social: This part of the industry includes events such as weddings, birthdays, graduations, baby showers, anniversaries, etc. The consumer base for this type of market generally includes people in middle to upper income levels that lack the time and expertise to coordinate the event of their choosing. The market for social events is expected to rise as baby boomers are reaching their milestone anniversaries, birthdays, and celebrate retirement. In addition, their children are experiencing different accomplishments worth celebrating such as weddings, graduations, house warming, baby showers and christenings. With gay marriages being more accepted in more states such as New York most recently, there is sure to be an increase in wedding planning. Social events have a different fee structure than corporate events. In the social events industry, planners usually receive a fee for their services, plus a percentage of some or all vendor fees. The two income streams produce enough revenue for a profit.
Even though both market segments differ by the type of events and its attendees, the event planning service as a whole is favored due to a client’s lack of time to dedicate to the planning and execution of the event and/or lack of expertise/resources to pull off such an event.

Market Strategy
There are 50,000 to 60,000 event planners operating in the United States. This industry is reported to have combined annual revenue of more than seven billion dollars. How successful an event planner can be in this industry is dependent on a number of factors such as the servicing area, target market, specialization and client base.
Two major factors which drive this industry are corporate profits and overall economic activity. At one point in the U.S. sluggish economy, the corporate market downsized the number and size of events due to declining company profits. This creates a domino effect for that of social events. Individuals, who make up the client base for social markets, feel the effects by being laid off, having to take employment with a smaller income, and experiencing the mortgage rate increases. However, the decrease in social events are not as significant as corporate events as planners are willing to stay within the consumers budget as well as individuals still willing to celebrate achievements and milestones within the life.
On the up side, corporate profits however are forecasted to increase by 3.8% in 2011 as shown in a corporate profits report from IBISWorld. Looking over the next five years, estimates are that the industry will grow at an average yearly rate of 4.6% from 2010 to 2015.

Competitors

Hotels & Conference Centers: A major competitor in this industry, hotels and conference centers such as The Marriott, Hyatt Regency and entertainment venues such as Madison Square Garden, often have the space, equipment and staff on board to handle events and internalize costs. However they usually provide a less personalized service for a much higher cost.

Banquet & Catering Halls: Most used for somewhat high-level to midlevel events, banquet halls often provide the space and special touches one would need for their special. Details such as a personalized menu can be made to order by the venue’s chef. Linens and decorating can also be handled by this type of venue’s staff. Again the cost of which can be absorbed internally with much more access and buying power from suppliers as they host many events. Banquet and catering halls also have access to a much larger profit base than that of individual event planners stemming from their ability to advertise thru different media channels as well as word of mouth.

Other Event Planners: Most will be hard to pin point as only established companies advertise in this industry. The majority of individual event planners advertise by word of mouth or networking with vendors. The advantage they have is a more diverse experience and client base since they are responsible for managing everything as opposed to having different departments tasked with assignment. Depending on the specialization of the event planner, one can make significant changes to things such as customer/personable service and cost to overcome their competitive edge whereas other venues can not due to payroll obligations.

Threat of Substitution

The Internet and Do It Yourself Kits: While most would look upon this type of competition more as a substitution for event planners, it is definitely an option for consumers and will appear to be a more cost effective one. However, depending on the intricate details and size of the event, and individual can not only end up spending a higher monetary amount on their special event but expending an enormous amount of time and energy. This is due to them taking on the role of managing all details and tasks associated with the event and not having the contacts, resources and pricing agreements than that of an event planner. There are different software packages that an individual can buy to assist them with this project such as Event Pro Planner and Event Magic Pro. There are also different packages available through craft stores such as Michaels and Joanne Fabrics that assist individual in the creation of centerpieces, decorations and invitations.

Bargaining Power of Buyers

Buyers within this industry consist of individuals hosting events ranging from enormous grand openings to celebratory events such as anniversaries and birthdays to fundraising and charity events. The bargaining power of buyers in the event planning industry can differ depending on the type of event being planned and venue being utilized. If the event consists of a child’s birthday party and the venue is low in demand such as a community center, the buyer has a lot of bargaining power. However, if the venue is one that is reputable and high in demand, the buyers bargaining power is extremely low as venues of this stature such as the Italian Center in Stamford, CT, tend to have higher clientele and referrals.

Bargaining Power of Suppliers:

There are certain vendors such as a photographers, bridal boutiques, limousine/car services, bakeries, DJ’s, musicians, and caterers amongst others, that are critical in making an event a success as well as profitable. Major suppliers within the Fairfield County area are CT Limo LLC, Troy Photography, Michael’s, Joanne Fabrics, David’s Bridal, Party City, Oriental Trading and DiMare Pastry Shop. The bargaining power of these vendors will rely solely on it’s business relationship with the event planner as well as how much that event planner impacts its profits. For instance, The Italian Center in Stamford, CT brings in over 40% of Dimare Pastry Shop’s business. DiMare’s will not risk the loss of profit by bargaining prices with The Italian Center. Therefore, The Italian Center’s bargaining power is high and DiMare’s is low.

Sources:

1. Entreprenuer.com 2. U.S. Department of Labor and Statistics 3. U.S. Census Bureau 4. National Center for Health Statistics 5. Meetings and Conventions Magazine 6. google.com 7. yahoo.com