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IFAI’s 2011 State of the U.S. and Canadian Tent Rental Market report shows hopeful growth.
By Jeffrey Rasmussen
IFAI market research reveals that participants in the tent manufacturing and rental industry have had to face challenges on more than one front, but real improvements are evident, particularly when noting trends since 2008. IFAI conducted a survey in August 2011 with U.S. and Canadian tent fabric suppliers, tent end product manufacturers and event tent professionals who rent to the party and event and commercial event marketplace. Survey participants included both members and nonmembers of IFAI and IFAI’s Tent Rental Division (TRD). Secondary research also supplemented the results presented in this summary.
Background and overview
Over the last 40 years as the popularity of tents has increased, so has their functionality. Their appearance has progressed as well. From classic striped and yellow-toned push pole tents in the 1960s and 1970s, tents have evolved into magnificent structures incorporating finely tuned architecture and engineering. This evolution has included a transition toward more striking all-white and vinyl structures rather than canvas structures.
The industry hadn’t seen a change in shape in a long time when more uniquely shaped structures, such as high-peaked tension tents, emerged in the late 1980s and early 1990s. Clearspans or A-Frame tents were developed in Europe to deal with severe weather, and in the last 10 years or so, clearspan tents became popular in the United States as the enforcement of building codes became more restrictive in major cities across the country.
Stricter building code requirements have addressed factors such as vulnerability to wind and the use of lighting in the décor, and have also provided guidelines to assure that tent structures are the proper size to safely accommodate the number of people expected for the event.
The tent industry responds
Although the impact of the down economy since the second half of 2008 has made for a difficult operating environment for tent fabric suppliers, tent manufacturers, and event rental professionals, prompting many end product manufacturers and tent event operators to reduce the scope of their business by cutting operating budgets, a positive development was the 5 percent growth in sales in the tent end product manufacturers market in 2010—a significant improvement over the 15-20 percent decrease in sales that they experienced in 2009.
Although better times occurred in 2010, the U.S. economy has been in a slumber in the first half of 2011 with growth of just 0.7 percent, the slowest pace since the recession ended two years ago. The White House budget office predicts that the economy will grow by just 1.7 percent in 2011, a percentage point less than the Administration predicted at the beginning of the year.
For 2011, the continued slow economy has hurt sales results for suppliers, end product manufacturers and tent event operators, and the economic malaise has resulted in a downgrade for the projected growth rate in the tent end product manufacturer market in 2011, now projected to be flat to an increase of about 1-2 percent.
This is contingent upon whether or not consumers and commercial organizations continue their conservative spending patterns in the fourth quarter of 2011. The good news revealed in IFAI’s survey is that the commercial event business is beginning to come back and outdoor wedding events have been increasing in 2011.
Today’s trends
The economic climate in 2011 has fostered a competitive environment among tent event operators. This has resulted in widespread price cutting throughout the event professional market. Tent event consumers remain cautious in their spending behaviors in 2011; there are fewer events as well as a reduction in scope in those events held in the commercial and party event market sectors. Burdensome state and city safety regulations and building codes continue to make hosting tent events more expensive, requiring more time and expense for the event operator in order to meet the necessary building code and permit requirements.
IFAI’s survey indicates that fabric suppliers’ businesses have been impacted by cheaper products imported from China. Poor quality fabrics and low prices have adversely affected the reputation of tents with consumers, and have affected profitability for all market players. Consumer complaints have increased with the growing use of poor quality and cheaper laminates.
There has, however, also been a gradual shift to more coated vinyls, which has changed the product mix and affected the allocation of resources and sales. With the continued sleepy economy and high material and fuel prices, sales in the early part of 2011 were slower than anticipated.
Tent end product manufacturers report that there continues to be an influx of tents from China, sometimes with serious quality deficiencies—frames made from substandard aluminum and welding that doesn’t meet standards, resulting in tent frames that are not strong enough to withstand winds in excess of 30 mph. In other cases, fabrics have been represented to be flame retardant, but there were no test results to support the FR claim.
For tent manufacturers, there were fewer events needing their products, but corporate event sales were beginning to come back, which boosted confidence for a more sustained market improvement.
Market changes
Market changes were indicated by tent fabric suppliers, tent manufacturer and event professionals in IFAI’s survey. According to supplier respondents, high raw material prices have been prompting suppliers to seek efficient production processes and to qualify better partners. There has been a shift in growth from laminated products to coated products and inexpensive fabric is being used more to save money.
End product manufacturers report an overall flat to small increase in sales in 2011. They expect 2011 will show fewer companies doing business in this industry—some as the result of mergers, but others will go out of business.
For event professionals, building codes and permit issues continue to grow and more engineered equipment is being required. Commercial events are showing a significant comeback with more clearspans being used. A decline in event budgets, generally, will reduce rentals, but improved tent designs have been introduced that will help to offset this with reduced labor costs. Event professionals indicated that the use of track-type frame tents will grow and become more popular. Price competition has become intense as businesses vie for projects; profit margins are reduced as a result.
The reported outlook
Tent fabric suppliers and tent manufacturers are experiencing flat to a slightly positive growth of 1-2 percent in 2011. Tight credit conditions in the bank and lending community and a lack of spending by customers continue to affect growth. But IFAI’s survey indicates a balanced outlook with 43 percent of tent manufacturers reporting unfavorable sales growth, and the same percentage reporting favorable growth in 2011 compared to 2010.
Event professionals reported a much more favorable outlook for sales growth in 2011 compared to 2010, with 62 percent reporting that they expect favorable sales growth in 2011 versus 2010. Much of the sales growth experienced by event professionals has not necessarily come from renting tents but from renting add-ons, such as flooring, lighting and tables to their customers.
According to IHS Global Insight, the world’s leading economic forecasting authority, revenues in the party and event tent rental market segment will grow about 4 percent in 2011 and 12.9 percent by 2014.
Event tent operators surviving these economic times will be those who offer full service solutions to help protect their overall profit margins. More importantly, they must try to build their business based on delivering quality products and services to their customers at reasonable prices, and minimize competing on price in the long run.