The very nature of the exhibition industry makes its impact hard to measure. While most industry stakeholders assume it will sustain further damage from the recession and is simply lagging behind the curve, there are some who claim the exhibition industry is so good for business that it may actually have helped drag the global economy back from the brink.
The largest exhibition power in continental Europe is Germany, where the government-run Messes act as venue as well as organiser of a number of large international trade shows.
Lagging indicators
According to the chairman of Messe Frankfurt, the largest of the German Messes, Wolfgang Marzin, it will never be easily determined whether the industry has helped pull the global economy out of recession, or whether it’s been hit hard and simply not yet shown the delayed symptoms.
“Right now, economic indicators are looking up in numerous sectors and industries, but we believe it is still too early to say that the crisis is past,” he says. “Whether, and to what degree, trade fairs can help combat the recession is difficult to judge. On the one hand, trade fairs are a lagging indicator of economic activity, yet they are also reflective of the economy, which always, after a certain delay, has an impact on trade fairs.”
However, Marzin casts a vote of confidence in the resilience of the exhibition industry and the role it will play in helping the global economy recover.
“Particularly in times such as these, however, trade fairs and conventions can play a decisive role in overcoming particular economic challenges. They are greenhouses for optimism, places where businesses, new ideas and new partnerships can grow and thrive.”
The Messe system in particular affords a certain stability that private organisers and venues may lack.
“With the state as an owner, you are in a good position to survive hard times as you do not depend on bank credits,” says owner and manager of exhibition consulting and service provider Fair Relations, Wolfgang Schellkes.
International rivals
In terms of international competition, France and Italy are the country’s biggest European rivals, while the US is their strongest global competitor.
“Paris is one of the biggest players in the exhibition business, but it has not improved its position in competition substantially in recent years,” says the MD of the Association of the German Trade Fair Industry (AUMA), Dr Peter Neven.
“Barcelona has had a long period of growth, but Spain has been strongly affected by the recession. France, and especially Paris, is a very strong competitor for Germany,” he says.
“The international competition is growing quickly, particularly in rapidly expanding markets, with significant increases in the number of new events and in hall capacities, as well as in the quality of exhibition venues and infrastructure.”
Neven explains that the German Messes recognised the demand for experienced exhibition organisers in emerging markets, namely China, India, the UAE, Brazil and Russia.
“Sometimes they had small shows for different sectors,” he says “but a lot of international exhibitors said the quality wasn’t good enough, so they were interested in cooperating with German organisers who have a lot more experience marketing worldwide in certain sectors.
“The German Messes said, ‘if we do international business, let’s not do it in France, Spain or the UK, but in Asia, India and Latin America. They thought the European locations were too close to the German markets,” he adds.
Data reliance
Neven says German exhibitors are cautiously optimistic about their trade fair plans for the next two years. According to a survey of 500 German companies, who exhibit at fairs mainly targeting trade visitors, one fifth of companies intend to take part in more trade fairs in 2010/11 than in 2008/09, while another fifth aim to take part in fewer.
“Exhibitors clearly recognise that if they want to encourage business growth there is no point in reducing face-to-face communication,” he says.
In 2010/11, companies plan on attending an average of 5.5 domestic trade fairs, only marginally fewer than in 2008/09, when they attended 5.7. In contrast, German exhibitors plan to take part in fewer trade fairs abroad. Over the next two years, 14 per cent of companies polled intend to take part in more trade fairs, 18 per cent in fewer.
During the same period, the average number of trade fairs businesses aim to take part in will fall from 3.2 to 2.8. Only a year ago they had planned to take part in more trade fairs.
“The decline in exports has clearly left its mark,” says Neven.
Over the next two years, companies plan to spend a total of €345,000 (US$423,000) on participating in trade fairs, the same amount that was actually spent in 2008/09. However, the amount they planned to spend fell considerably within the space of a year.
In the last survey, companies had planned to spend €386,000 in 2009/10, and when the financial crisis turned into an economic crisis these budgets were promptly reduced.
“Obviously, the worst of the recession is over and we are now looking towards the future,” says Neven.
Twenty-seven per cent of the exhibitors polled intend to spend more on trade fairs and only 19 per cent less. Smaller companies in particular aim to invest more in trade fairs.
Exhibitions continue to be a highly-rated communication instrument. Of the polled exhibitors, 83 per cent considered trade fairs to be important or very important compared with last year’s 81 per cent. The only more effective communication tool was rated to be the companies’ own websites. ‘Sales force activities’ ranked next with 76 per cent, followed by direct ‘mail shots’ with 57 per cent.
Based on the survey results, AUMA predicted that exhibitor numbers from abroad would drop by about five per cent, with stand bookings also likely to decline marginally.
“Due to the unstable economic situation it is difficult to predict visitor trends in 2010,” says Neven. “Following a significant decline in certain areas in 2009, figures are now forecast to be stable on a lower level. A return to positive trade fair statistics is to be expected not earlier than 2011.”
According to the MD of German exhibition auditing association FKM, Harald Kötter, 60 per cent of exhibitions that take place in Germany are investment goods fairs, 30 per cent are consumer goods shows for trade visitors, and 10 per cent are public consumer shows. About half of Germany’s exhibition business is domestic.
What lies ahead
“The main challenge is to keep all the world-leading exhibitions in Germany, although most of the products presented are not manufactured in Germany or in Europe at least,” says Kötter. “Additionally, there is a strong growing demand in countries outside Europe, so it is more important to convince exhibitors and visitors worldwide that German exhibition companies are excellent organisers and excellent hosts.
“Sometimes the communication could be clearer and stronger regarding the advantages of German exhibitions and German exhibition centres,” he adds.
Marzin says the German exhibition industry must not only continue to develop its existing markets for its customers, but also identify new markets worldwide.
While still prominent in both the European and global exhibition markets, the German Messes have come out the other side of a drawn-out recession and the brief, inescapable impact of the ash cloud. However, competition is gearing up in the emerging markets, meaning the Messes may have to fight to identify new markets and keep its events coming back.
