The global exhibition organising market suffered a dramatic decline in revenue following the global economic crisis. It wasn’t until 2012 that the industry showed significant signs of recovery. This has been consolidated further in 2013.
Revenue in the market returned almost to pre-downturn levels, demonstrating the fact the demand for face-to-face remains robust. Confidence in the industry is high; the major players – Reed, UBM, ITE, the German Messen – are extending their reaches into new cities and new countries; innovation has been higher than ever – in pricing and in digital; and acquisition activity is on the rise.
In 2013, the overall theme across the 13 markets covered in AMR’s latest report is one of healthy growth. This growth is set to continue – our forecasts show five per cent CAGR to 2018.
This recent historic growth has not been a simple case of emerging versus mature markets. The industry has been reshaped to some extent by the economic crisis, and growth has been uneven across markets, with some unexpected results. In 2013 China overtook the UK and France to become the third largest exhibitions market by size (after the US and Germany).
Exhibitions growth across the BRIC economies 2013 fell short of the levels achieved in 2011-2012, but remained at a very healthy average rate of seven per cent. This is forecast to continue to 2018.
Events driven by domestic consumer demand have fared best in the BRIC economies, as GDP and spending power increases among the population as a whole. Some nervousness hangs over some of the more export-led events as demand from the West remains uneven. Having said that, Hong Kong, a market that relies heavily on re-export from China, has seen growth of eight per cent. Shows such as the Hong Kong Electronics Fair and the Hong Kong International Jewellery Fair have seen significant growth.
Against this backdrop of growth, both Brazil and Turkey were seen to falter in 2013. Following a period of significant momentum, both were relatively flat markets in 2013.
Discussions with organisers in Brazil point to earlier overconfidence in the market having led to unrealistic pricing levels, especially for domestic exhibitors. This has required some recalibration to bring the market back to more realistic levels. Turkey has been handicapped by economic uncertainty, and a relatively weak exhibitions infrastructure. The underlying dynamics are sound in both markets. The readjustment in Brazil should enable the market to benefit from growing domestic consumption, and the growth of an exhibitions culture in the regions. Turkey is expected to benefit from the greater certainty in the underlying economy, increasing space sold at existing shows and price increases from 2015 onwards. AMR expects both markets to return to healthy growth.
Despite the recent success of emerging markets, the mature economies still represent 68 per cent of the total exhibitions market. The two largest markets, Germany and the US, both saw solid growth in 2013. The vast machinery, manufacturing and processing show, Hannover Messe, helped drive German numbers, growing by about a third.
However, some mature geographies remain challenging for organisers. The UK, France and Italy were the three toughest markets in 2013.
Acquisition activity accelerating
With growth and confidence returning to the market as a whole, acquisition activity has been accelerating. The Onex acquisition in the first half of 2013 of Nielsen Expositions and its subsequent acquisition of GLM were the first major post-downturn transaction milestones. The largest venue in the UK, the NEC is in the process of being sold by the Birmingham City Council; and VSS is in the final discussions of selling its major US exhibitions portfolio, Advanstar.
Of course, confidence in the market also means that vendor price expectations have been pushed up. Recent multiples have been in the region of 10 times EBITDA. With a long list of both strategic and financial buyers vying for each acquisition, prices are likely to remain high.
The reach of the major international players, Reed Exhibitions, UBM, ITE and suchlike, continues to spread. Through launch, geocloning and acquisition, they continue to build on their well-established platforms in the first tier of emerging markets. The leading organisers are also strengthening their interests in the next tier of emerging economies, such as Mexico, Indonesia, and South Africa.
Those major European organisers that have previously been fairly inactive in emerging economies are now actively exploring entry routes. Although late to the game, they are typically focusing on JV and acquisition opportunities in their own sectors and making them work.
With the arrival of international organisers and exhibitors, the professionalism of events in emerging economies continues to rise. These markets are seeing innovation in show models, closer exhibitor engagement, and better visitor quality management.
As the initial flurry of JVs and acquisitions slows down in the leading cities of the BRIC economies, organisers are exploring the next tier of cities within Brazil, China and the former Soviet states. There is an excess of venue capacity in these nascent, regional markets; the challenge for organisers is to develop a sustainable show culture.
Innovation and invention
Time for introspection in the exhibitions sector during the downturn has led to innovation and invention among organisers, especially among those in mature markets. Considerable efforts have been put into content, into getting closer to underlying markets, and into visitor engagement.
The use of digital tools has been at the forefront of these initiatives.
The focus has been on oiling the wheels of an event, improving performance and therefore exhibitor and visitor satisfaction.
Digital is yet to have a major impact on organiser income as an independent revenue stream, but this is surely set to increase and accelerate.
AMR believes that organisers have yet fully to explore of the use of new media to increase the ‘noise’ of an event in its market and of its resulting footprint beyond the show floor. This use of digital is likely to be explored and developed further in the near term.
And similarly, the investigation of the possible uses of ‘big data’ is at a very early stage relative to other areas of B2B.
Ownership of the data around an event is one topic which will exercise the minds of organisers, both as an opportunity and as a potential threat.
Having perhaps been slow to explore pricing models, the exhibitions industry has put this under the microscope in recent years.
Introduced, tested and refined in mature markets, these new models – usually based on value to exhibitors – are increasingly being extended into the events markets in emerging economies.
AMR’s remodelled Globex market report (‘The Global Exhibition Organising Market: Assessment and Forecast to 2018’) is now available for purchase.
This article was first published in issue 4/4 of EW. Any comments? Email Antony Reeve-Crook
