Phil Soar questions whether the exhibition industry pays attention to what’s going on in the world, the purpose of researching and asks if knowing the facts will make any difference at all.
During the many happy hours at the fantasy world which was Blenheim, our large US business was impervious to any financial or numerical analysis. When FD Crowcroft tried to point out that the net margin on Blenheim’s US shows had somehow declined from 55 to 45 per cent in 1993, he was met with the pained but heartfelt reply: “You are just trying to confuse us with the facts again”.
My sister was similar. She wanted to be a dancer and any time my father pointed out that there were at least 100 girls auditioning for a single role, and having some innate dancing talent might help, she would retreat into accusations of not having asked to be born and the like.
But, there are times when I wonder whether the exhibition industry pays any attention to anything else going on in the world. This month, three examples have invaded my peripheral vision – exchange rates, the latest AEV/EIA research and the attempts to raise US$1.1bn to expand the Javits Centre in New York.
And as a picture is worth a thousand words, here are some pictures.
PICTURE THIS
The first graph (Fig.1, see above) shows what has happened to the currencies of the BRICS members and other much touted ‘emerging’ countries in the last 30 months; the R in BRICS – the Russian Rouble – has lost 58 per cent of its value against the dollar in 30 months, and the S – South Africa – has lost 42 per cent. The Brazilian Real has lost exactly 50 per cent. The Indian Rupee has lost only 21 per cent.
But anyone reading EW for the last five or six years, and turning first to Steve Monnington’s Dealmaker columns, could not have failed to notice that most of our exalted large exhibition companies have spent that whole time seeking to hoover up assets in Russia, Turkey (down 40 per cent), Brazil, Mexico, China etc.
One cannot underestimate the commercial and political significance of this – for currencies as vital as Russia, Brazil, South Africa and Turkey to all have lost half their value in less than three years is probably unprecedented outside wartime. No doubt boards formed of great worthies have pontificated: “We must be in the emerging world, China, India, Brazil – go to it men”. And go to it the men did.
I won’t mention any particular acquisition or company – but if you had spent US$10m on a show in Russia or Brazil or Turkey or South Africa in 2012 or 2013 – and it was then making $1m profit – you would have paid 10 times profits.
All of those economies have struggled since – so it is quite likely your profits have declined in local currency anyway. But even if the profit stayed the same, then in dollar terms your profits in 2016 will have halved. Meaning that you didn’t pay 10 times for your 2016 profits – you paid 20 times. And almost all of our large groups are now sitting on more than a few exhibitions in most of these economies.
Did anyone see this coming? Did anyone ask? Has anyone been fired? And, yes, with these currencies having depreciated so much – 2016 probably is rather a good time to invest there. I haven’t mentioned China and, of course, the Yuan has not depreciated in the same way. But the single most interesting industry development in the last few months has been (and here I am relying on Monnington’s antennae again) the lack of interest in Chinese acquisitions.
This is not currency related but is surely a function of the competitive landscape and the apparent willingness of Chinese-owned venues to ignore traditional custom and practice. The seminal shock was the move of CIFF to compete head-to-head with UBM’s Furniture China. I don’t own any Chinese assets, but I would be very hard pressed to price any exhibition in China today.
MEANINGFUL INFORMATION
My second picture (Fig.2, see above) is even odder. It takes the information provided by the Facts (produced by the EIA, EVA and AEO over the years) since 2005 and the most recent research (not yet widely published) covering 750 events in 2014 by AEV.
There is nothing clever in the results – it is exactly what it says on the tin – the average and median attendances at all the events covered by the only large survey ever conducted over the years (or, more accurately, covering those events which were prepared to give information). Do I really believe that average attendance at UK exhibitions has fallen by half from over 21,000 in 2005 to 10,300 in 2014?
Answer, No. Do you? My best guess is that it is simply a function of the sample used. In 2014, EVA received information from 750 events.
In earlier years we sometimes had to work with as few as 450 events reporting (organisers are reluctant to reveal attendance numbers when they are falling – creating an automatic bias in the figures). It is probable that, the larger the event, the more likely it is to report and the more likely it is to be accurate. So the fewer events covered in a particular year, then the higher percentage of big events and the higher the ‘average attendance’ is going to be. Added to which, the information is statistically and mathematically incoherent.
AEV have not given the median attendance from their data in 2014 – but a quick look at the results suggests that the median is likely to be a far better guide to visitor trends than the average.
I make no claim for the real average figure being 10,300 rather than 21,246 – or any random number in-between. What I would argue is that the information is both genuine and essentially meaningless. I am not even sure there is any such thing as ‘meaningful information’. After all, when the Motor Show closed, the number of people who attended exhibitions in the UK fell by nine per cent overnight – but I don’t recall that having any effect on my businesses.
So what do we do with this knowledge? Does it make any real day-to-day difference to the business of anyone reading this article? (Please write and tell me if it does). And, if not, why not?
This is not just a piece of hyperbole – I am genuinely interested in whether facts make any difference to our business at all – what is the purpose of researching the exhibition industry?
MAKING A DIFFERENCE
And my third tidbit comes from the New York Times, which has been commenting on the plan to raise $1.1bn to extend the Javits Convention Center in New York.The Times points out that the total attendees at all trade shows in New York between 2006 and 2014 have declined from 966,730 to 629,500.
And the same numbers for the four biggest trade show venues in the USA – NY, Vegas, Atlanta and Chicago – have declined from 4.8 million to 3.8 million, a fall of 21 per cent, in the same period. The Times does accept that 2008 is not necessarily the best starting point for such discussion.
I offer no conclusions about this information – other than that, as an industry, we never seem to see it and we never seem to debate it. In a nutshell we should be asking: “What is going on here?” And, if we knew, would it make any difference?
Despite the information in these three examples, private equity companies and investors the world over continue to flock to the exhibition business. As Einstein used to say: “Go figure”. And, being Einstein, he would have had the exact answer – “Relativity”.
Since mass broadband arrived circa 2005 we have seen the value of almost all traditional media assets decline alarmingly – newspapers, magazines, radio, and much of TV. The only major asset which has been relatively unaffected by the Interweb (as my mother calls it) is exhibitions/events/experiential.
So, despite some decline in attendances, we have become relatively much more attractive. Any alternative answers to my 21st theory of relativity will be gratefully received.
Phil Soar is the chairman of multiple industry companies, including CloserStill Media, the Furniture Shows, 19 Events, Eaglemoss Publishing and Brand Events. In the past 25 years, he has invested in, developed and sold more than 20 exhibition and publishing businesses. Soar is also a former joint owner/chairman of Nottingham Forest football club and the official historian of both Arsenal and Tottenham Hotspur.
