Think Your Business Is Bad?

Last week we had the pleasure of hosting five sales people from a major first rate hotel chain in the FEMA office. While they were all from one chain, they represented different properties in different cities, trying to determine the possibility of our association having a future convention or Spring Management Clinic in any one of them.

Normally we try to concentrate these first page rambles on the farm equipment industry. Nevertheless, the problems with the current economy as expressed by these hotel representatives got us to thinking that, “Maybe, we’re not so bad off.”

When any organization books a convention anywhere between three and five years ahead (be it an association or profit-making company), it commits in the contract to a specified number of sleeping rooms the organization will reserve over the course of the meeting. Typically, in order to determine the number of rooms needed on specified days, we look backwards and base it on attendance numbers from previous meetings.

When asked how our industry was holding up during the current economic conditions, we responded that we were troubled that only 80% of FEMA’s rooms booked last April in Phoenix were actually used during our Spring Management Clinic. (It should be mentioned that if 80% of the rooms contracted for are used, attrition clauses which are paid for by the association and are based on a sliding scale according to the number of rooms used, are waived.)

Interestingly, the hotel salespeople unanimously expressed disbelief that our room usage was as high as it was. They’re now regularly receiving reports of organizations using as few as 40% to 50% of the number of sleeping rooms versus the number originally contracted for.

Most of us are familiar with the stoppage of new hotel construction in Las Vegas. (See the related article later in this publication.) How would you like to be in that business?

Generally, when we talk to members and ask what business is like, the response is much more likely to be local than national. Take the market for cotton planters in southern Texas. Having experienced a drought of historic proportions there, it’s unlikely that the home real estate market in Houston or
Miami will have much of an effect on it.

For that fact, the U.S. agricultural market is beginning to look more and more like 2007 than 2008. And that wasn’t a bad year! Those in the farm equipment business that truly believe 2008 wasn’t anything but an aberration must be smoking something that has never visited the bowl of this editor’s pipe.

As we stated in previous Shortliners, the ag market, unlike the general consumer economy, is not based on the whims of Mr. or Mrs. Homeowner. It doesn’t depend on the speed of the latest computer, the size of your neighbor’s flat screen or the desired height of the ceiling in your McMansion’s family room. Rather, it relies on the price of farm-produced commodities, weather, farm real estate interest rates, export markets, input costs — a whole host of verifiable revenues and expenses. The psychology of the consumer or the market does not have a place to bear in it.

When looking at your sales, turn the TV and radio off. And don’t pay too much attention to the gyrations of the Dow Jones Index. Instead, concentrate on the ag market and what it might mean to you and your company. (Informa’s Policy Report, a daily email available to members from the FEMA office upon request, is a good place to start.) Numerous other sources, Ag Equipment Intelligence, Farm Progress Friday, Kiplinger’s Ag newsletter, a host of consumer magazines focusing on agriculture and, of course, the Shortliner, all concentrate specifically on the ag industry.

And while you’re at it, focus your promotion dollars on farm equipment shows, which continue to expand your market beyond what you may consider “normal.” After that, if you’re really into “blue funk,” then turn on the 6:00 p.m. nightly news.