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September 14, 2010

KNOWLEDGE CENTRES:Global future looks positive for exhibitions

The recent 'Global exhibition organising market: assessment and forecast to 2014' report published by AMR International paints a bright picture for the exhibitions industry, and highlights how smaller conference-style, knowledge-led gatherings will be the future for the more mature markets. Pete Roythorne talks to chief executive Denzil Rankine about the reports main findings

The $25 billion global exhibitions industry can look forward to a happy future, despite a 13% decline in 2009. That's the conclusion of the recent report 'The global exhibition organising market: assessment and forecast to 2014'.

The key drivers for this optimistic view of the industry’s long-term prospects are the improving macro-economic conditions, combined with the ongoing need for face-to-face interaction between buyers and sellers. As such, the market is forecast to grow by an average 4.8% a year to 2014, outperforming other business-to-business media, such as print magazines.

“We found that most mature markets had actually been growing in the run-up to the recession; square metres may have been stable, or there may have even been the odd decline, but due to price increases revenues actually increased,” says Denzil Rankine, the chief executive of strategy consultants and exhibition acquisitions specialist AMR International, which produced the report.


Networking news: The knowlegde economy will be the
key driver for the mature markets moving forward


Significant variation in growth
While future growth will be driven by the recovering economy in most markets, growth will vary significantly by country, the study predicts.

“The UK and Spain will hardly see any growth between 2009 and 2014, but we forecast that Germany will grow by a compound annual growth rate of 5.3% over the same period. This is due to the biennial show cycle, which resulted in a trough in 2009, plus because many German shows have sector-leading positions and will be able to capitalise on economic growth in emerging markets,” says Rankine.

“Also, the global exhibitions sector growth rate is lifted by the strong performance of emerging markets, with China, Brazil and India all performing well.”

Indeed, China was once again the top performing exhibitions market worldwide in 2009, spurred on by its continued economic expansion. But at 5%, market growth was a far cry from the double-digit rise the domestic exhibitions sector enjoyed prior to the global economic crisis. The only other markets to avoid decline in 2009 were those of India and the Gulf Cooperation Council, thanks to positive gross domestic product growth and venue capacity expansion, respectively.

But while all major Western exhibition markets contracted in 2009, none of them fared as badly as Russia, where the market plummeted by 32% following a period of several years of lively growth.

A tale of tier two cities
Looking ahead, AMR’s report sees China, at least in the medium term, maintaining pole position, growing at an average 10.5% a year to 2014. It also points to significant growth of around 9% annually for India and Brazil. Particularly in China, but also in Brazil and Russia, ‘tier two’ cities and regions outside the traditional centres of exhibition activity will play an increasingly important role in driving growth.

So, with the growth centres focused on the emerging markets, what will the West have to do to keep pace?

“Shows in mature and emerging economies do not necessarily compete for the same marketing budgets, but some western shows may well lose their leading position to others in emerging markets,” explains Rankine.

“Organisers need to maintain the competitiveness of their mature market shows by catering to exhibitors’ changing needs. At the same time, organisers should try to capitalise on emerging markets' growth by establishing a presence there. While this is challenging, there is a good chance that organisers have some assets in their portfolio the brands and exhibitor relationships of which they can exploit.”

For organisers without the financial muscle to establish a physical presence in emerging markets, Rankine suggests they may want to look into partnering with a local organiser, or an international organiser that already has an emerging market presence.

Face-to-face remains important
However, AMR also forecasts a return to growth for all western markets by 2011. Among them, average annual growth rates to 2014 will range between around 1% for Spain to 5% for Germany.

“Exhibitions have good long-term prospects not only because of improving economic conditions, but also because of the ongoing need for face-to-face interaction between buyers and sellers,” says Rankine. “Our research shows that social networking and virtual events pose no fundamental threat to the exhibitions industry. On the contrary, they can complement physical exhibitions, strengthen the event brands and even help to attract new exhibitors.”

Rankine is also upbeat about the effects of a trend towards less business travel.

“While international business travel has dropped during the recession, we do not foresee a long-term decline that would affect exhibitions adversely, and make exhibitions less international in general,” he says. “However, with economic activity in BRIC [Brazil, Russia, India and China] countries and other emerging markets continuing to outpace western economies, some sector-leading events will move to these nations. Competition to western shows will increase, and some of them will see a decline in international exhibitors and visitors as these groups focus on growing shows in BRIC.”

So, if it’s not technology and reduced business travel, what are the big challenges for the exhibitions industry?

According to Rankine, it's all about keeping up with changing customer and economic demands. He points out that many exhibitors have emerged smarter from the recession, and may re-shape their presence at events with less of a presence on the show floor, and a transition in spend towards internally hosted distributor shows or single-vendor events. Rankine believes that in the longer term, the winning show models are likely to change more substantially.

AMR's report predicts that mature markets, in particular, will see a gradual shift away from shows where technology and wide product ranges are physically displayed on large stands. Instead, in the 'knowledge economy' exhibitors will focus on networking, demonstrating expertise and exchanging knowledge with other market participants.

Conferences are the future
“In the long term, most large venues in mature markets will be fully filled less frequently than before the recession,” says Rankine. “Highly focused vertical events that offer networking opportunities and content – which we expect to become the winning show model in mature markets – will not necessarily require large halls.”

Rankine believes organisers will need to cater to these changing requirements by providing venues with adequate meeting facilities and networking opportunities.

“The choice of city in which the event is located will play a more important role,” he says. “The ideal host city will offer plenty of attractive hotels, restaurants and bars for networking and entertainment, while not being too large to prevent delegates from dispersing too much.”

Meanwhile, the trend towards the knowledge economy will continue in western nations.

“In these countries, the networking and exchange of knowledge will be crucial to differentiate from more manufacturing-centric economies and exhibitions in BRIC and other emerging markets,” says Rankine. “Adding attractive content to mature markets exhibitions will make them more relevant to exhibitors and visitors alike.”

For more information on the report, visit www.amrinternational.com/reports/

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