I know that if I were to show movies to a public audience, I would have to pay a licensing fee. But what if I were renting DVDs to customers along with renting out to them a small, private outdoor pavilion with a movie projector/screen set up? They would be showing the movie to a small private gathering. Would anyone in this situation be in the wrong?
Checking Cornell on copyright law, the reserved rights include public performance and public display. If you have a DVD legitimately, you still can't display or show publicly without a license. So, the question would seem to be if this is a public performance.
A private performance is perfectly legal, and requires no further license. If the public is admitted in some form, it's copyright infringement.