The reality is that selling exhibit space in this economy is a real problem. Here are some suggestions to make it less so.
First, go back to the basics and sell the intrinsic advantage of a trade show. The exhibitor will actually see, for example, 100 highly qualified prospects in person at a fraction of the cost (in time and travel) to reach them one by one in their office. But be sure you are turning out these qualified prospects—and can prove it.
Next, accept and indeed embrace the prospect's need to reduce their total costs from, say, $50,000 to $30,000. Create a unique plan that downsizes their physical presence (booth) but provides other valuable services, such as sponsoring the Power Buyers reception. You used to get 20% of the $50,000; now you want 50% of the $30,000 (do the math).
Finally, always work with your customers. For example, Fred Rosen of Key3Media suggests doing multi-year deals with the bellwethers. That way you do not have to go through the adversarial process of renewing them annually. Also, he suggests that you not take the last nickel off the table; you should both leave happy.