Artexis Easyfairs, the Benelux venue owner and event organiser, has taken the strategic decision to formally merge into a single organisation with a joint vision for serving the global exhibition community.
Artexis, the name of the company’s venue business, as owner and manager of structures in Belgium and Sweden, provides customised services it hopes will ensure the success of its events, while making a big impact on municipal, local and regional economies.
Easyfairs, the company’s events division, retains its aim to make exhibiting easy for all participants through a wider range of multi-format events. These include, but are not limited to, the ‘all-in format’ the company made its name with, whereby it provides uniform space, stand building, services and promotional resources, a space-rental-only exhibition format, the conference and exhibition (confex) format, together with business summits.
But this is not the only union Artexis has announced in the past year; clearly the company is on the move.
With the recent announcement of its Artexis-SMG joint venture, the group is now looking to make an even bigger impact on world stage, taking its business of managing publicly and privately owned exhibition halls and convention centres into new waters.
US-based venue-management firm SMG has, in the last few years, been looking at international expansion in general. It wants to crack Europe in particular. In 2011 SMG was sold by the founding Pritzker family – they of Hyatt hotel chain fame – with sights set on going global.
SMG is at play in two distinct businesses. One is convention centres, better known in Europe as congress and exhibition centres; and theatres, museums and sports arenas, which sit outside the scope of the Artexis-SMG joint venture.
But while the input of enterprising private sector dynamicism has done much to enhance the profitability of municipal venues it manages in the US, SMG is is yet to become a major player in Europe.
President of the new Artexis-SMG joint-venture, Håkan Gershagen says the missing element was a deeper understanding of not just the European exhibition sector, but Europe.
“In us they found another potential partner that could possibly serve as a recipe to get into Europe. We rather recently realised that this was an area that we wanted to expand into, and when we saw the SMG business model we fell in love with it,” he says.
Artexis currently runs eight venues in two countries; Belgium and Sweden, and both nations are excluded from the partnership with SMG.
“SMG in America is managing municipality-owned convention centres, where 99 per cent were making a loss,” he continues. “These venues were not built to make a profit, they were built to attract business tourism and generate an economic effect in the city and the region by filling hotel rooms; that’s what the model is in the US. You come as an organiser and try to rent from Sands in Las Vegas, or McCormick Place in Chicago, and the first question they ask is: ‘How many hotel rooms will you book?’, which is a question that is never asked in Europe because that is not the business model. So in America convention centres are making a loss, but that’s fine because the city blossoms from the economic effect and the hotels are full.”
Into this model arrives SMG, bringing with it commercial professionalism that is applied to the management and in doing so the loss is reduced.
To appeal to the management of these venues, SMG puts its money where its mouth is. There is, according to Gershagen, “a rather reasonable” fixed management fee and a subsequent variable or incentive fee based on the improved performance of the business. This performance is not only financial, other criteria are measured such as customer satisfaction, organiser, exhibitor and visitor.
“Typically SMG has a short-term contract, three possibly five years, so it knows it needs to deliver at the end of the contract, if the agreement is to be extended. The SMG team is on its toes to perform, and it does,” says Gershagen.
However, SMG very rarely lets people go as part of the process, when it assumes the management of a venue, a fact that surprised Gershagen when it was brought to his attention, given the sharp turnaround and imposition of a new operating environment. “I assumed SMG would be removing or replacing 30 per cent of the staff in the process of getting these results, but this is not the case,” he comments.
In the example of Chicago’s giant McCormick Place, the venue had 168 staff of which SMG retained 168, including the CEO. The key difference is that all of them went through a “massive training programme” to ensure they were people who enjoy their work, and who enjoy seeing customers happy.
“Where they do make a difference is in the crucial relationship with trade unions,” says Gershagen. “They renegotiated all the trade union contracts and then got everyone singing from the same hymn sheet, showing the world that they could improve the situation. You need to be a private organiser to do this. You can’t do it as a municipality or a facility.”
The owners of the venue, which nine times out of 10 is the municipality, pay all the cost and take all the revenues except for the aforementioned incentive and fixed fee to SMG.
“They have their own investment programme that they need to pay, but they are being advised by SMG how to spend it wisely. They agree it typically on a three-to-five-year investment plan. And as with all businesses, they have more needs and more wishes than they have money. Reporting that is important, but then, the Americans are very good at reporting, and we’re learning a lot at Artexis.”
With Belgium and Swedennow under its belt, Artexis’ partnership with SMG could pave the way for new breed of exhibition centres in Europe.
This article was first published in issue 1/4 2015 of EW. Any comments? Email Rebecca Shahoud
