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April 5, 2008

UK exhibition industry dines out on thinner slices

EVENTS:review interviews with AEO (Association of Event Organisers) members and more recently with Michael Hirst, chair of the Business Tourism Partnership, have confirmed that the private ownership of venues coupled with a lack of integrated regional or central government support leaves ‘Destination UK’ internationally impotent.

The resultant lack of inbound exhibitions and association events, and their associated tax revenue is a sad reflection of government’s inability to cash in on key opportunities presented by the continued growth of business tourism, and, worse still, leaves the UK exhibitions and conference industry in an unnecessarily unfulfilled state as it feeds off a maturing local market.


Paul Thandi

The NEC's Paul Thandi: maturing into the chief executive role


The effects of uncompetitive UK venue prices on the international playground are very real and very here. For starters, expect some M&A activity this summer as contractors and venues carry the local squeeze into their bottom lines and watch, in particular, the NEC Group take its destiny into its own hands with new chief executive, Paul Thandi, leading a very creditable charge up the value chain. If the GL/NEC partnership bears fruit under David Harding’s tenure, this will surely catch on at other venues, which will take closer control of the venue customer experience while absorbing any space rate pressure from exhibition organisers through their elevation up the same value chain.

The good, the bad and the venues
This may be good news for UK exhibition organisers, but the value of nothing, but it’s not so good for the independent exhibition contractors, which will be forced into their own flurry of M&A’s in an effort to survive.

The exhibition organisers will be back for more, for less, so long as over-supply falls in their favour. Consequently, the venue search for new markets by event type (such as hosted-buyer, corporate and association events) will gather pace, by business-to-business and business-to-consumer communities alike, and will most likely see venues taking equity stakes in ‘eventures’ with digital broadcasters and online community owners, further equity stakes with trade community owners, as well as continued house delivery of contracting, catering, media, data, and other value-added services.

For Thandi, his corporate social responsibility (CSR) activities within inner-Birmingham are also quietly securing the Group’s access to, and loyalty of, the 4.5 million audience to be found within and immediately beyond the City of Birmingham. What’s more, if his plans for a high-speed link from a casino-equipped venue to Birmingham City Centre come to fruition, he will have the infrastructure necessary to support ‘Destination NEC’ and the vision created by him and his predecessor, Andrew Morris. And he will not be slow to draw upon his enriched access to a community from which he can spin a series of his own events.

Thandi is also likely to broker the Group’s partial equity in new and launch events, with new partners, as well as their online and broadcast hybrids. The aim of this will be to ensure an exponential growth in the Group’s asset value, trading revenues, and ‘safer’ tenancies.

The shadow of the 2012

Meanwhile, his competitors back at ExCeL London and EC&O venues, as well as the NEC Group themselves, have deadlines to meet to enable them to achieve landmark investments in infrastructure if they are to fully play their Olympic roles in 2012. A commercial détente, therefore, between the incumbent exhibition organiser community and the venues should be a very real ‘must’, with forward order books to prove it, if private equity or institutional investors are to be persuaded to risk in the development of exhibition space capable of supporting inbound international exhibitions – an unlikely happening. It is difficult to see any domestic growth in a weakening and fragmenting domestic exhibitions sector, nor government understanding of the need to compete for an international one being forthcoming and, therefore, the UK exhibitions industry may well have reached this generation’s summit and, at worst, may be facing a potential recession.

Exhibitions are not helped by the corporates, which increasingly want more intimate events of their own delivered by a far superior agency-led supply chain. If there is to be investment in the traditional exhibition and conference venues, such as at the NEC and ExCeL, then it should be in facilities that support the corporate, experiential and association-led meetings industry rather than flea markets for vertical markets, however sophisticated the latter exhibitions may claim themselves to be.

The pheromones emanating from IMEX, the MPI and Eventia memberships as a whole, tell you where the growth in live marketing spend is being deployed – back to brand, community, intimacy and value.

Back at ExCeL, deputy chief executive and new chair of the AEV (Association of Event Venues), Kevin Murphy, has already done the rounds for the venue’s Phase Two support to complete its world class status, and it will be telling to see if the established UK media groups commit to exhibition tenancies in time for the Olympic venue to be fully developed in time for 2012. Murphy claims that work must commence within 18 months if their own corporate playground, inclusive of casino, is to be realised and that puts the emphasis back on central government to very swiftly unravel its mismanagement of the casino debacle, and equally swiftly for Newham Council to display the necessary joined-up-thinking on the locating of its casino on to the ExCeL campus.

Murphy will be working closely with Vanessa Cotton to establish whether the growth in corporate and association meetings outpaces any exhibition sector shrinkage that ExCeL might have to bear.

Rules of engagement
Ironically, the UK exhibition venues may well find white knights in the form of Anthony Lyons and Simon Conway, the St James’s Capital proprietors of Earls Court and Olympia and ‘the home of exhibitions’. If a property play were to be forthcoming, and if it involved the displacement of 100,000 metres, or a sizeable proportion thereof, of exhibition and conference space from the current supply chain in favour of a retail or sporting emporium, it could serve its current competitors a healthy shot in the arm and ease the organiser fixation on cost versus value on the venues and whatever remains of non-global UK exhibition contractors.

The UK tragedy rests in the fact that in this new information society there has never been such an explosion in global information exchange, yielding unprecedented thirst for human contact among international business and social communities and individuals alike. Yet without international competitiveness on the exhibitions front and with negative market forces in evidence at home, Thandi could be better off investing in the corporate playground, building relationships and e-ventures with digital and other community owners near to home, particularly in the meetings space, and reducing his expectations of the incumbent UK exhibition organisers.

It will be a painful transition.

Related Articles
RAISING BILLIONS: The growing power of business tourism (Michael Hirst Interview)
Heart of the matter: the truth behind the changes at the NEC (Paul Thandi interview)
PLAYING POLITICS: Events industry calls for Joined-Up-Thinking at HoC

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