Jwc discusses the industry’s teething issues and triumphs.
- Global
Despite global economic volatility and uncertainty, our industry once again has proved to be very robust. Several of the major publicly listed international trade fair companies have published their preliminary results for 2016, among them Informa, UBM, Reed Exhibitions and GL Events. Nearly all of these companies have more than outperformed global and domestic GDP developments. UK-based companies like UBM, Reed Exhibitions and Informa could also benefit from strong F/X tailwinds. UBM’s total revenue increased to £863m (+12 per cent) while profit grew to £235m (+19 per cent). Informa’s Global Exhibitions Division increased its revenue by 17 per cent to £307m, and profit to £119m (+21 per cent).Both company’s expectations for 2017 remain positive as full consolidation of Penton by Informa and of Allworld by UBM will take place.With this strong growth, UBM overtook GL Events in revenue and is now closing the gap to Reed Exhibitions to become the largest integrated event company globally. Reed Exhibitions launched 32 new events in 2016 and reports an underlying revenue growth of 5 per cent. GL Events is performing below their peers with a revenue growth of only 1 per cent and an increase in operating profit by about 10 per cent. However, the operating margin of GL Events (8 per cent) remains low when compared to their competitors.Several German trade fair companies have also published their preliminary results for 2016. Messe Düsseldorf and Messe München have reached revenues of over €400m, which translates into a growth of 42 per cent and 44 per cent respectively. While the German trade fair market is fundamentally stagnating, most of the growth is a result of the market’s cyclicality. Messe Frankfurt remains the largest German company with a revenue of €640m, which is close to its record revenue of €647m of 2015.
- SpainThe Spanish economy as well as the country’s trade fair business is showing signs of recovery. The IMF projects a positive economic development for Spain with modest GDP growth, stable inflation around 1 per cent and a slowly declining unemployment rate. At the same time, IFEMA has reported good results for 2016 as an outcome of the improved economic situation, which was reflected by an increase of rented exhibition space and trade show attendance numbers. As a result, IFEMA’s revenue has increased by 8.2 per cent compared to 2015 and by 13.3 per cent compared to 2014. Additionally, Fira Barcelona has reported that 2016 was a successful year with a revenue of €165m, 7 per cent higher than in 2014 and 56 per cent higher than 2015.
- BrazilRecent years have been turbulent for Brazil with governmental changes, corruption scandals, civil society protests and economic decline. These challenges have been mirrored in the country’s trade fair business, which is the largest in South America. However, the situation appears to be slowly calming with Brazilian trade fair companies reporting a positive outlook for their business activities in the last UFI Global Exhibition Barometer. Turnovers and profits are expected to be higher than last year, but still the economic situation is seen as the major hurdle for growth. At the same time, some German trade fair companies are laying more focus on the Brazilian market. Koelnmesse for example has restructured the function of its Brazilian subsidiary, which is now not only responsible for the local trade fair business but will also take over the sales operations in Brazil for all Koelnmesse events. Additionally, Messe München has founded a Brazilian subsidiary, Messe München do Brasil Feiras, to start business activities in the country.
- Turkey
Turkey’s economy has been hit by a sharp decline in the tourism sector, one of the most important sectors for the country. Particularly last year’s terrorist attacks and the domestic political turmoil contributed to the decline in international tourist arrivals. Turkey is one of the most popular tourist destinations and contributes about 4 per cent to the country’s GDP. The frequent terror attacks in 2015 and 2016 led to a 30% decrease of European tourists to the country, who used to make up half of all visitors. According to the IMF, a 10 per cent decline in foreign visitors translates into a 0.3 - 0.5 per cent decrease in GDP. As travel security is also a strong influencing factor for the trade fair industry, the recent developments in Turkey are of course a threat to the country’s trade fair business. In addition, the anti-democratic and anti-liberal moves of the Turkish Government are becoming a real hurdle for a free economy and as such will have a further negative influence on the trade fair business.
- Russia
In 2017, the recession in Russia is forecast to be less severe compared to recent years. The economy has a good chance to return to growth this year if the oil price stabilises at a level above $45 – $50 per barrel. These slight positive outlooks are good news for the trade fair business as well, as within the past 3 to 4 years the Russian trade fair sector declined dramatically due to the tough economic conditions. We believe that the business has reached the bottom and will be on an upward trend this year. Organisers are already reporting that bookings are up by 7-10 per cent.
- Africa
The trade fair business in Africa is now being supported by a new industry association, the African Event Alliance (AEA), which was launched by the Exhibition and Event Association for Southern Africa (EXSA) at Meetings Africa in February 2017. The alliance was formed primarily to forge networks across Africa and set industry standards for the African exhibition industry. The AEA will thus be responsible for standardising the qualifications in the trade fair sector throughout Africa, creating event industry standards, as well as encouraging and guiding the formation of regional business events organisations. The initiative is aimed at strengthening Africa’s trade fair industry and gaining more visibility. It remains to be seen whether this alliance will be able to create common initiatives between exhibition companies from Maghreb, Sub-Saharan and South Africa.
- China
The Chinese Government initiative to drive globalisation, as oppose to the protectionary measures of the US Government, will support the country’s efforts to internationalise its trade fair business. Among other goals, the 2015 Chinese State Council proposal to promote the exhibition industry states that the Government will support domestic organisers to “go global” and hold exhibitions overseas and provide subsidies to SMEs for domestic and overseas exhibitions. We, therefore, expect increasing activities of Chinese organisers particularly in South East Asia and a rising number of Chinese companies at European and American trade shows.
