Exhibitions make a significant contribution to many business sectors around the world. The more global a business sector, the more important the role of trade shows in introducing vendors to buyers and ensuring industry players maintain contact with industry developments. Trade shows tend to be a celebration of success with successful companies exhibiting and successful companies visiting.
These exhibitions do much more than introduce one person to another of course. We know the major exhibitions that we work with are global ‘meetings places’ providing a highly cost-efficient environment in which verysenior management can meet with other senior management to discuss partnerships and joint ventures, to maintain and deepen business relationships and to identify new business opportunities.
This catalytic/enabling impact of trade shows is core to providing the return on investment for exhibitors and visitors and in most cases provides the measurement criteria for determining success.
Exhibitions also make a valuable contribution to the economy by providing employment in event organising companies, venues, hotels, stand/booth design and build and so on.
Why do we want to know the economic impact of an event or the events industry in a region or nationally?
Economic impact generates influence. If an industry wants to exert influence and attract investment from local, regional or national government or from private investors, it has to compete with other industries for attention. An economic impact study provides a basis for comparison
of one industry to another in generating employment and contributing to the Gross Domestic Product of the economy. At times of challenging economic conditions a clear view of the economic impact of any industry becomes all the more important when there is competition for dwindling financial resources.
To develop an understanding of the economic impact it is important to first define what the industry is. Is it consumer exhibitions and trade shows of a certain size or visitor numbers? In the UK for example, there are thousands of small one-day antique fairs. Do we count them in the economic impact or are we looking at events of say 2,000 square metres?
Once we have defined the scope of the industry we are then examining two distinct elements in the analysis process. The first is primary data collection. This is market research that enables us to develop an understanding of the revenue earned and costs incurred in making exhibitions happen.
In the UK, we did this by conducting research surveys with exhibitors, organisers, venues and visitors to develop averages for revenues and costs.
The second component is econometric modelling where we are taking input and output models based on UK Government statistics covering business and consumer tourism, salaries and the multiplier effects of economic activity. In the UK the modelling was undertaken by Oxford Economics.
In essence there are three levels of economic impact that exhibitions have in the economy; direct impact, indirect impact and induced impact, outlined and expanded upon in the illustrations on the right.
The economic impact that these three components have is demonstrated in the diagram (Figure 1). It is important to recognise that in any study there are leakages such as investment outside of the economy being analysed, some taxes paid and the potential for some ‘double counting’, an error whereby a transaction is counted more than once.
Figure 1
Keeping it local
It is possible to examine impact on a more local level. For example, Madrid venue and organiser IFEMA was able to report that CPhI, UBM’s peripatetic pharmaceuticals trade show, generated revenues for Madrid’s service sector totalling more than €150m (US$203m).
In the UK, a study conducted by Vivid Interface that included both visitors and exhibitors, established that the five-day consumer peripatetic outdoor sports show CLA Game Fair was able to generate €31m in revenue for local shops, hotels, restaurants and other services.
The lack of a world-class convention centre, according to New South Wales Premier Barry O’Farrell, has cost Sydney AUS$150m (US$144m) in lost business and economic impact over the last four years. It’s a key factor in the redevelopment of the Sydney International Convention Exhibition and Entertainment Precinct.
Nationally, the exhibition industry in many countries will generate an economic impact of billions of euros. This can and should influence investment in supporting this important industry that provides an essential lubricant to the wheels of commerce and, importantly, jobs.
This was first published in Issue 1/2013 EW. Any comments? Email exhibitionworld@mashmedia.net
