CES Vendors Battle Costs, Display Products in Hotel Suites

Money is tight, but one has to wonder whether the aggressive tactics at the 2010 CES really help anyone.

The International Consumer Electronics Show, first held in 1967 has grown into the world’s premier event for showcasing technology innovation of all kinds.  Since 1978 the show has been held during the winter in Las Vegas.  It is now thoroughly entrenched in the city’s economy bringing vital business and prestige to the city.  And for consumers it provides them with unparalleled information to form their buying decisions for the next year.

The 2010 Consumer Electronics Show has been mostly a great experience so far.  From solid state drives to in-car infotainment, there’s been a wealth of information on exciting incoming products.  However, buried in that technological beauty, a bit of the ugly side of the business reared its head today.

In 2009, CES was much smaller than it was this year.  Hit by the recession many vendors simply chose not to go to the show or dramatically scale back their presentation.  Those who did stay, but were battling cost-cuts learned to adopt cost-saving tactics such as holding business meetings in the suites they rented at local Las Vegas hotels and showing off their product lineup.  Some of these vendors had displays on the CES floor, others did not, but all had one thing in common — those who stuck it out and stayed were supporting the local economy (via hotel bookings, food and drink orders, etc.) and they were sharing information on exciting products with consumers.

This year many returned to the show, but they returned a bit wiser — or so they thought.  They deployed similar techniques (in suite meetings and product displays, etc.).  That’s where the trouble started.

The CES management became quite irate over vendors independently showing at hotels.  You see, while casinos traditionally do decreased gambling business during the week of CES (this was readily apparent this year), they are reimbursed both by additional patronage of both the nightlife and food, but also directly by the Consumer Electronics Association (CEA).  The traditional food chain continued with the CEA, which in turn received this revenue from sponsors and businesses who wanted to display products or hold meetings at the show.

However, facing some smaller parties avoiding paying exhibition fees and exhibiting in their rooms, the CES began cracking down today.  They requested that hotel security kick out any vendors holding meetings or exhibiting in their rooms.  DailyTech was surprised to hear of this, beginning at a lunch meeting.  A vendor, to remain anonymous, claimed that they were coerced into paying an additional $10,000 exhibition fee to the CEA, despite having fully paid for their suite.  The alternative was to be kicked out of their suite and be unable to exhibit or meet with clients.

The surprises were to continue when we met with another vendor.  As we came into their suite at our scheduled meeting time, we found them to be packing.  They were being kicked out for exhibiting.  And packing up was not enough to satisfy the CES staff and hotel security — they were not allowed to hold business meetings in their suite either.  Not long after we left, one of their employees contacted DailyTech.  They had been kicked out of the room they had paid for in full.

More importantly, the vendor’s chief representative reports that they had contacted the hotel management before the show and asked if there were any limitations on showing product in the suites.  The hotel management at The Venetian reportedly said there were not. 

States our source, “I asked the hotel staff if there were any limitations for using the suite.  They said the only limitations were how many people were at our parties.  They didn’t say there were any limitations on displaying product.  We set up our product on the first day.  Then on Wednesday a cleaning person came in and reported what they saw to management.  From there we got kicked out on Thursday. The system is not okay.  We did everything they asked us to do, though.  We can not show any product, we can not hold business meetings, though.  The main problem is they didn’t let us know about this in advance. “

The source said they would be coming back to CES next year, but that they were disturbed by the dishonest behavior of the hotel management and CES staff.

A security guard at The Venetian confirmed these reports further, saying he had been involved with “solving” a “lot of problems” at CES.  When we inquired what these “problems” were, he stated, “The problems aren’t with CES itself, but with people who didn’t go through the proper channels to display the products and hold their business meetings.”

Thus far the reports of the incident have been confined to The Venetian and The Palazzo, but similar incidents may have occurred elsewhere.  According to our sources as many as 30 small electronics companies may have been kicked out of The Venetian and The Palazzo on Thursday.

There’s absolutely no argument — CES is a wonderful opportunity for all parties involved.  But the hotels must ask themselves — amid vacancies and business slowed by recession, is kicking out paying customers the right answer?  The party kicked out had already paid the hotel a great deal, not only for the suite, but for food and drinks at an event the night before.

And for CES, one must wonder whether this is the kind of harsh image the show wants to project.  After all, if small companies can’t afford to have a booth on the main floor, they obviously won’t get the same high profile coverage that a major floor vendor like, say, Intel gets.  However, by being on site, it would seem they are helping the show, by adding to its allure, giving larger vendors more of a reason to attend (to carry out business with smaller suppliers), and helping customers learn about new products.

If the vendors can’t pay, they can’t pay.  One smaller company was already kicked out we witnessed today, likely more have been or will be as well.  Is this really good for CES, an industry flagbearer?  And is it really good for the Las Vegas economy, so dependent on the show?  And even if it is, why wasn’t the CEA and hotel management more clear about restrictions on exhibits and meetings in Las Vegas hotels this week?  Those are intriguing questions that must be asked.