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August 16, 2009

International trade show market will continue to grow, says report

The global exhibition organising market was worth $29 billion in 2008, making it the “star of old media”, according to a new report from London-based strategy consultancy AMR International.

‘The global exhibition organising market: assessment and forecast to 2013’ report provides an independent comparison of the world’s largest and most promising exhibition markets. These include: the US; the key European countries of Germany, France, UK, Italy and Spain; the BRIC countries of Brazil, Russia, India and China; the Gulf Region (GCC) and Hong Kong.

While the market grew by a healthy average 5.6% a year between 2005 and 2008, the outlook for the near future is more subdued, said the study. In the wake of the global recession, the exhibitions market will only grow by an annual average of 0.9% until 2013.


Star turn: Exhibitions are still in the frame

“This figure is based on our own market models for the 12 countries assessed in detail in our report, and a further model for the rest of the world,” explained Denzil Rankine, AMR’s chief executive. “The forecast is based on our interviews with key market participants, third-party industry surveys, an assessment of the general health, structure and maturity of the individual markets, and an analysis of historical and forecast macroeconomic data such as GDP.”

Leading the way
Despite this modest growth, the exhibitions market will outperform traditional marketing media, such as business-to-business magazines, according to the report.

It also claimed that the face-to-face nature of exhibitions and inherent networking potential provide value that is unobtainable elsewhere. Exhibitions will also to some extent benefit from the decline in print media, as they have attracted increasing levels of sponsorship.

“As they will weather the storm better than traditional media, and as they can have high margins and excellent cash-flow characteristics, exhibitions are still the star of old media,” said Rankine.

The China factor
The study found that traditional, western exhibition markets still have the largest share of the global market. Worth $13 billion, the US by far is the world’s largest exhibition organising market, followed by Germany and France.

“In 2008, the UK exhibition organising market was worth $1.67bn, which makes it the world's fourth largest market. We forecast a 1.5% CAGR decline for 2008-13. This means the UK will perform better than, say, Italy, but will fare worse than Germany, for which we forecast only a slight decline between 2008 and 2013,” added Rankine.

However, the report revealed that emerging markets have started to catch up. Growing revenues by an average 11.4% between 2008 and 2013, and net space sold to exhibitors by 9.7%, China is predicted to become the world’s third largest exhibitions market by 2013. AMR are believes that these growth rates will be envied by players in more mature markets. Revenues in the Italian market, for example, are forecast to decline by an average 3.1% a year until 2013.

“China is indeed catching up the quickest, growing at more than 13% CAGR between 2008 and 2013,” said Rankine. “This means that by 2013, China will be the world's third largest exhibition market. Growth is fuelled by a continuing strong economic growth, which is no longer just based on China's role as a leading exporter, but on growing domestic demand for increasingly sophisticated products as well. An increasing availability of large, modern venues is also a contributing factor; it has to be noted however, that many regional venues suffer from under-utilisation, which will put pressure on prices for some medium-sized events with a regional focus.”

Looking at the Middle East, Rankine continued: “While we have seen a shift in power towards the Middle East over the past few years, we will not see the stellar growth rates of the past couple of years anymore, but after a significant slowdown in the wake of the global recession between 2009 and 2011, we expect growth to return to over 10% p.a in the medium term.”

Rankine believes this is mainly due to expansion of exhibition space, the lack of which has constrained growth of several large events so far. “Our forecast takes into account the mothballing of the ambitious Jebel Ali project, which we believe would not have been that successful anyway,” he added.

Tough for the West

While China, other BRIC countries and the Middle East undoubtedly hold great potential, the study concluded that succeeding in these markets can prove difficult for western exhibition organisers or financial investors.

Challenges include the lack of capable local management, a shortage of adequate venues and regulatory challenges. Solving these issues, and finding local associations or an established local organisers to team up with, are critical success factors in many emerging markets. In mature markets, on the other hand, the report said that managing the exhibition’s life cycle and maintaining good relations with key exhibitors is crucial.

Reed’s on top
With revenues in excess of $1.1 billion, Reed Exhibitions remains by far the world's largest exhibition organiser. Other leading players include French company GL Events and German giants Messe Frankfurt and Deutsche Messe Hannover.

As far as domestic exhibition organising revenues (excluding venue and service revenues) are concerned, Deutsche Messe is the world’s number one, followed by Messe Frankfurt. Deutsche Messe also boasts the world’s largest indoor venue capacity, at 495,000 square metres, followed by Fiera Milano (345,000) and the Pazhou Complex in Guangzhou, China (340,000).

Surprising results
“The industry is clearly suffering from the recession, and will continue to do so next year, as the industry typically lags the wider economy by at least 6 months. However, the picture varies by market,” said Rankine. “Emerging markets are still growing, and some mature western markets fare way better than others. This is certainly true for countries with a large number of strong and internationally recognised shows – Germany, for exmaple – which to some extent benefit from exhibitors' "flight to quality." The exhibition sector is suffering from a cyclical downturn, but it remains the star of old media as the value of face-to-face contact in a defined community remains very high."

Rankine expects to see expects the big players to keep buying. "In this fragmented industry we expect to see continuing acquisition activity across the globe as international players continue to expand, integrated media groups seek to strengthen their communities and private equity investors churn their portfolios," he concluded.

AMR’s report may make surprising reading for many who had written off exhibitions as a marketing medium, as it shows the sector’s strength in the face of other media. It also highlights the particularities of the individual markets featured, plus it profiles the main organisers, venues and individual events. There is also detailed information on barriers to entry for organisers and the different market entry options, as well as the critical success factors needed to operate in the market.

For more information visit www.amrinternational.com/whats_new/reports

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