Convention

1
Convention Tradeshow Industry Outlook
Presented by
Association for Convention Marketing
Executives February 24-25, 2004 Washington
Convention Center Washington, DC
2
Objectives

• One North American Exhibition Industry Growth
  Trends Exhibition Management Profile
• Industry Growth Outlook
• Convention Tradeshow Management Trends
• Event Planner Site-Selection Drivers
• Two Convention Center Trends
• Convention Center Expansions
• Convention Center Market Size Growth Analysis
• Las Vegas and Orlando How Strong are They?
• Three Focus on Corporate Exhibitors
• Four Convention Center CVB Marketing Best
  Practices
• Convention Center CVB Marketing Best Practices
  and Recommendaions
• Five Conclusion with QA

3
One North American Exhibition Industry Growth
Trends and Exhibition Management Profile
4
Convention Tradeshow Management

• Continuing Recovery Helps B2B Show Producers
• Exhibition industry continues to recover slowly.
• Business-to-business exposition producers are
  forecasting total gross revenue to grow by over
  8 in 2004.
• Most bottom line increases in 2004 will come from
  space rate hikes and cost cutting.
• Buyers market Event producers are able to
  squeeze suppliers and have the upper hand with
  venues.
• Question remains Are B2B shows a lagging
  indicator? A mature industry?

5
Growth of Exhibitions in Net Sq. Ft. 1972-2003

• 2003 Year-to-Date Growth Rates
• Net Square Feet -0.4
• Exhibiting Companies 0.5
• Attendees 4.2

• Red Line Net Square Feet Annual Growth
• Blue Line U.S. GDP Annual Growth

Source Tradeshow Week U.S. Commerce Department
6
Attendance Growth vs. GDP 1991 to 1995
7
Attendance Growth vs. GDP 2000 to 2003
8
Convention Tradeshow Attendance Growth 2003 (By
Quarter) vs. U.S. GDP

• Red Line U.S. GDP Annual Growth
• Blue Line Attendance Growth

Source Tradeshow Week
9
Exhibition Management Growth Strategies

• Attendees
• Attendees are coming back to tradeshows and
  conventions. But they are still asking
  themselves two key questions.
• 1.) How will this event help me in my job
  function and career?
• 2.) Is attending this event worth the time away
  from the office, family, friends, interests, etc.
  
• Show producers are spending more on attendee
  marketing key changes include...

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How Show Producers Have Changed How they Present
Value to Attendees

• Show Producers We have not changed the way we
  present value -- 20
• 1.) Enhanced the focus on educational
  opportunities 59
• 2.) Networking opportunities 47
• 3.) More focus on the business value of
  attending 46
• 4.) Promoted new products and/or technologies at
  show 43
• 5.) Promoted the host city and amenities
  more 26
• 6.) Career enhancement value 22
• 7.) Support the industry by attending 21
• 8.) Fun and entertainment value 17
• 9.) Lowered cost of attending 11
• 10.) Other 3

Source TSW 2003
11
Common Show Management Added Value Strategies

• Hold more events/activities on the floor
  (floor-centric)
• Catering to VIPs
• Coupon books of exhibitor offers - must be at
  show to use
• More detailed sponsorship levels with year-long
  value options
• Package deals booth, sponsorship, magazine ads,
  etc.
• Looking at lowering costs, drayage in particular
• Increased pricing visibility and flexibility
• Appointment and matching services
• Reduced fee hall area for first time exhibitors
• Online ordering

Source TSW 2003
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How Exhibition Marketing is Changing - New
Attendance Marketing Strategies
Source Tradeshow Week Executive Outlook
13
How Exhibition Marketing is Changing - New
Attendance Marketing Strategies - CONTINUED
Source Tradeshow Week Executive Outlook
14
Exhibition Management Growth Strategies

• 1.) Increased exhibit space revenue 65
• 2.) Increasing sponsor revenue 54
• 3.) Increased attendance conference revenue 43
• 4.) Cost cutting 41
• 5.) Web site revenue 18
• 6.) Co-location with other event 16

Source Tradeshow Week Executive Outlook
15
Two Convention Center Trends
16
Event Management Site-Selection Drivers - City

• 1. Hotel room prices/Quality 63
• 2. Finding open dates 49
• 3. Labor costs and service issues 46
• 4. Number of hotel rooms, capacity 44
• 5. Hotel block attrition clauses and issues 41
• Regional professional demographics 33
• Quality of area near the venue/HQ hotel 33
• CVB/City government marketing efforts/support 28
  
• Airport capacity 25
• Parking capacity 23
• Restaurants - quality, reputation, etc. 22
• Safety issues/Low crime, etc 19
• Road and highway access 19
• Cultural amenities, "nightlife" 19

Source Tradeshow Week Executive Outlook, 2003
17
Event Management Site-Selection Drivers - Venue

• 1. Hotel room prices/Quality 74
• 2. Labor costs and service issues 64
• 3. Finding open dates 59
• 4. Hotel block attrition clauses and issues 57
• 5. Number of hotel rooms, capacity 54
• Regional professional demographics 41
• Quality of area near the venue/ HQ hotel 38
• CVB/City government marketing efforts/
  support 35
• Airport capacity 35
• Restaurants quality, reputation, etc. 29
• Safety issues/Low crime, etc 26
• Cultural amenities, "nightlife" 24
• Technology service costs and/ or service
  issues 21
• Public transportation access 19

Source Tradeshow Week Executive Outlook, 2003
18
Convention Center Statistics
U.S. Canadian Venues 1.2 10-Year CAGR
Source Tradeshow Week Major Exhibit Hall
Directory, 2003
19
Convention Center Expansions
5.0 5-Year CAGR 6.6 1-Year Growth
Source Tradeshow Week Major Exhibit Hall
Directory, 2003
20
Convention Center Expansions
2.2 Projected Annual Growth to 2008 9 million
square feet in total
Source Tradeshow Week Major Exhibit Hall
Directory, 2002
21
Convention Center Statistics

• Average U.S. Canadian Convention Center
  Exhibit Hall
• Total Exhibit Space 186,523
• Prime Exhibit Space 157,038
• Meeting Space 52,940
• Meeting Rooms 26

Source Tradeshow Week Major Exhibit Hall
Directory, 2003
22
Convention Center Size Breakout
Source Tradeshow Week Major Exhibit Hall
Directory, 2003
23
Convention Center Expansions

• 22 new venues in-process
• 46 expansions
• 9.4 million square feet of exhibit space

Source Tradeshow Week Major Exhibit Hall
Directory, 2003
24
Challenges

• Global economic downturn hasnt impacted the
  venue boom very much at all.
• Increased competition has in turn continued to
  fuel the expansion and new building boom.
• Main response to competitive event booking issues
  remains to build a new venue or add more space.
• Most venue developments, whether a new building
  or an expansion are sold by promising to increase
  event bookings, but realistically the focus is on
  holding market share or slowing the rate of
  decline.
• Today most new venue projects are defensive moves.

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Challenges

• Over one-quarter of show producers, the largest
  shows with the greatest economic impact, have
  been offered free exhibit space by at least one
  venue in the last two years.
• And a recent survey of CVB and convention center
  executives found that 41 have been offering more
  exhibit hall rate discounts since 2001.
• How many industries offer their products and
  services for free to over a quarter of their
  client base or discount so heavily?
• Convention centers provide a significant positive
  economic and cultural impact on their cities and
  regions. But going forward the average new
  venues return on investment is going to take
  longer than originally planned.
• If the original feasibility study on a recently
  built venue projects a return in 15 years, it is
  safer to expect the return in 25 to 30 years.

26
Las Vegas Orlando How Strong are They?

• Should win market share for at least five years
  or more
• But theres likely a limit to growth, there only
  so many shows and show producers need to
  replenish attendee base
• The only problem with Las Vegas (in show
  producers minds) is the opportunity for parasite
  shows to be launched simultaneously in another
  venue down the strip

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Three Focus on Corporate Exhibitors
28
Exhibitors

• Exhibitors
• Exhibitors are not as confident about the
  continued recovery as show producers.
  Collectively, they expect total event marketing
  spending to decrease by 3.6 in 2003.
• In a recent Tradeshow Week survey, 36 of
  corporate exhibitors said that their 2004 event
  marketing budgets are significantly or
  moderately vulnerable to a cut of 10 or more.
  
• A continued weak U.S. economy and its potential
  impact on sales performance are the greatest
  risks.
• It may take a few quarters of solid corporate
  profit growth before exhibitors start to take
  event marketing risks again.

29
How Well Informed are Attendees Before Entering
Your Booth?
Well informed 16 Moderately well
informed 70 Poorly informed 11 Completel
y unaware 3 Dont know 3
Informed by sales force, direct mail, advertising
and Internet
Source Tradeshow Week Exhibitors Survey May 2002
30
ROI Improvement Confidence Level 2003
Source TSW Executive Outlook Corporate Exhibitor
2003
31
In 2003, Has any of the Event Marketing Budget
been Shifted to Other Marketing Mediums?
32
Which Marketing Mediums Show Producers Believe
Received Shifted Marketing Funds
Show Producers Actual Exhibitors
Web 34 58 Direct Mail 32 35 Marketing
Partnerships 28 11 Sales
Force 27 24 Email 24 41 Trade
Magazines 21 31 Retail In-Store 9
6 Public Relations 8 18
33
Vulnerability of 2004 Event Marketing Budget to a
Cut of More Than 10
34
Areas of 2004 Event Marketing Budget that May be
At Risk to a Cut of More Than 10

• Exhibit Design/Production/Refurbishment 49
• Exhibit Space 48
• TE 44
• Sponsorships 44
• Promotion 41
• On-Site Show Services 13
• Shipping 13
• Other 5

35
Exhibitors Suggest Ways to Improve Exhibitions

• More Promotion
• Give attendees incentives to attend
• Shorten show days
• Ensure quality attendees
• Improve labor union issues
• Fewer shows in one industry
• Offer more packages
• Better customer service

36
FourConvention Center CVB Marketing Best
Practices
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Convention Center CVB Marketing Best Practices
- Targets

• Best convention center sales teams focus on
• Particular types of events
• Industry sectors
• 200 to 300 key targets
• 200 to 300 secondary targets
• Know where these 400 to 600 shows/events are held
  every year
• Clear about strengths and weaknesses

38
Convention Center CVB Marketing Convention
Center Local and Regional Outreach Marketing
Strategies (Short Term Bookings)

• Local and regional leaders database
• Event invites
• Locally focused public relations
• Charity events
• Consumer shows
• Direct sales to local and regional corporate
  meeting planner base
• TV and film production
• Weddings
• Food Beverage Events and Banquets

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Convention Center CVB Marketing Best Practices
- Demographics

• Learn as much about your city, state and regional
  demographics as you can
• Present a case to event managers that your venue
  can draw high quality attendees
• Think in terms of a media organization that
  aggregates an audience

40
Convention Center CVB Marketing Best Practices
- Creative Recommendations

• Print ads - Good
• Clear pictures
• Make city and venue names and logos larger
• Many venues (the buildings) look the same still
• Play up distinctiveness of the city/region
• Play up new hotels and hotel capacity
• Clean, easy-to-read
• Dramatic, (remember its about capturing
  attention)
• People, customer service
• Power of regional demographics
• Testimonials
• How does your venue and hotel package stand-out?

41
Convention Center CVB Marketing - Creative
Recommendations

• Print ads - Bad
• Too much copy
• Pictures of venue too small
• Dull colors
• High tech is not much of a competitive advantage
  anymore
• Insecure about past image please take another
  look (yet humor can work)
• Highlighting architectural components - dont
  make the key focus of ad
• Too many ads use dark colors -- this suggests a
  dark venue

42
Convention Center CVB Marketing Recent
Questions/Requests/Trends

• Hotel owners dont understand what is happening?
• Very large hotel company Need to know leading
  cities over next few years, site-selection
  drivers, where event managers are located
  (besides DC area)
• Size and deployment of incentive funds
• Size of medical meetings market
• Convention hotels taking convention center
  marketing into own hands
• New CVB head How does the tradeshow industry
  work - which types of firms do what?

43
Convention Center CVB Marketing
Geographic-Related Critical Success Factors

• Venue location, i.e., integrated within a city
  center rather than stranded
• Proximate cultural, entertainment and restaurant
  amenities
• Appropriate hotel(s) proximate/attached to venue
• Airport capacity and distance from venue
• Distance from regional feeder markets/population
  centers
• Access to major area highways and public
  transportation hubs
• Political and community support (for municipal
  venues)

44
Convention Center CVB Marketing Market-Related
Critical Success Factors

• Regional professional and economic demographics
  including population, average household income
  higher than or similar to competitive markets,
  etc.
• Regional industry concentration(s), e.g.,
  technology concentration, banking, etc.
• Adequate inventory of available hotel rooms
• Lodging market seasonality and occupancy patterns
• Strengths or weaknesses of competitive set
• Additions to supply
• Overall meetings industry growth
• Exhibited demand for facility (lost business
  reports, etc.)
• Management/marketing expertise
• Ability to hold several eventsincluding various
  large tradeshowsat the same time

45
Convention Center CVB Marketing Improving
Financial Performance

• Currently, there is a trend toward municipal
  convention centers working to improve their
  financial performance and lower operational
  loses.. Historically, leading municipal
  convention centers have been able to grow
  revenues and become profitable by
• Increasing parking rates
• Providing exclusive services such as electricity,
  security and telecommunications
• Increasing food and beverage services such as
  catering and individual outlet operations
• Targeting local events, especially catered events

46
Convention Center CVB Marketing Improving
Financial Performance

• Improving financial municipal centers is often
  based on the following critical factors
• City size and attractiveness as a meetings
  destination.
• Political structure of operating entity (i.e.,
  private or authority management preferable over
  municipality).
• Quality of venue management and Convention
  Visitors Bureau management
• Pro-active limitation of seasonal and
  weekday/weekend fluctuations and associated dark
  days (i.e., when the facility is not occupied).
• Marketing support from city regarding specific
  venue and overall tourism.
• Facility infrastructure including size (can
  accommodate simultaneous shows and meetings), and
  appropriate ratio of meeting to exhibit space.
• Level of services provided by venue such as event
  and food beverage services.
• Maximizing rental rates for move-in and move-out
  days.
• Maximizing average event length and size.
• Adequate hotel inventory and strength/coordination
  of the citys hospitality community.
• Sustaining performance at or above fair market
  share with respect to occupancy.

47
Part FiveConclusion Outlook with QA
48
Key Trends, Events Issues to Impact the
Exhibition Industry in 2004 2005

• Viad spin-off of money by wire business --
  keeping GES and Exhibitgroup/Giltspur The first
  pure-play exhibition services company will be
  publicly traded by the middle of 2004. Clearly
  more investor attention will be paid to the
  exhibition services industry.
• How long will exhibition and event marketing
  spending lag the rebounding U.S. economy?
  Budgets are likely to hold steady or increase
  slightly in 2004, but a significant rebound will
  probably not happen this year.

49
Conclusion

• Exhibition owners and producers will continue to
  benefit from the oversupply of exhibit space.
  Lower venue costs help show producers maintain
  high profitability.
• Exhibition producers and their housing providers
  will work with Internet-based hotel room
  discounters to alleviate the attrition issue.
  Look for new companies to connect the Internet
  discounters with show producers and their
  attendees.
• Event contractors will continue to make the case
  for the industry moving away form the current
  revenue model that pads drayage fees in order to
  pay for other free services. The case will be
  made quietly during contract negotiations.
• Exhibition management MA activity should
  pick-up, although another transaction boom is not
  expected in 2004.

50
Conclusion

• Attendees are coming back to tradeshows and
  conventions. But they are still asking
  themselves two key questions before making the
  attendance decision. 1.) How will this event help
  me in my job function and career? 2.) Is
  attending this event worth the time away from the
  office, family, friends, interests, etc.
• Exhibition organizers will continue to improve
  their attendee marketing systems and strategies
  although more improvement is needed
  industry-wide.
• Electronic marketing, especially Web and email
  marketing, will become the key medium competing
  with event marketing. Most shifted event
  marketing funds have been moved to electronic
  marketing. Industry leaders need to be aware of
  these shifts and market the value of events in
  contrast to Web marketing.

51
Conclusion

• In 2004 and 2005 the exhibition and event
  marketing industry will not collectively
  institute an effective industry promotion
  campaign. Leading firms will be on their own to
  promote the value of face-to-face marketing.
• Attendees will continue to visit events to assess
  the people behind the brand, i.e., booth staff.
  Event marketers need to develop strategies that
  highlight the strength of their people.
• Over the past few years business-to-business
  exhibitions that service industries producing
  products and services for consumer consumption
  have performed better than many pure-enterprise
  shows. As the U.S. consumer sector takes on more
  debt and the housing boom slows, look for
  industries and events that serve corporations
  such as IT to begin to outpace consumer-focused
  product and service events.

52
Conclusion

• Besides pricing issues, key exhibitor complaints
  and suggestions for event owners will continue to
  be
• More effective attendance promotion to ensure
  quality attendees
• Shorten show days
• Run fewer shows in certain industries
• Improve labor union issues
• Offer more package options (added value)
• Provide better customer service
• Prove (and Improve) ROI metrics
• Return on Investment and audits will also remain
  issues and concerns discussed by industry leaders
  although little real action will be taken to help
  exhibitors track ROI and few shows will move to
  audit their event attendance.

53
Conclusion

• For exhibition service companies, a key
  competitive advantage going forward will continue
  to be genuine industry-sector specific experience
  and knowledge. That is, knowledge of industry
  structure and competitive issues within vertical
  segments.
• Exhibit management will continue to migrate from
  a logistical and tactical role to one that sets
  strategies to support corporate objectives,
  develops fully integrated communications plans
  and manages strategic supplier partners.
• Venue boom continues If exhibit supply continues
  to grow much faster than demand it is not out of
  the question that a second- or third-tier city
  may opt out of the national convention and
  tradeshow market altogether.

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About Michael Hughes

• Associate Publisher Director of Research
  Services, Tradeshow Week
• As head of Tradeshow Weeks Custom Research,
  Michael produces proprietary research, consulting
  and marketing projects for leading exhibition
  industry organizations around the world. He
  works closely with exhibition industry leaders,
  corporate exhibitors, entrepreneurs, investors
  and real estate developers to provide high-value
  strategic information, analysis and
  recommendations. His clients include nearly all
  industry leaders in every segment of the industry
  as well as leaders in the investment and
  consulting community. Michael is frequently
  quoted by major newspapers and national magazines
  such as The Chicago Tribune The Los Angeles
  Times Newsweek The New York Times and The Wall
  Street Journal. In January of 2003, he was
  selected as a Person to Watch by mins btob
  newsletter. Since 1999, Michael has been a
  presenter at 30 industry conferences. He is also
  the research director and editor of Tradeshow
  Weeks syndicated Executive Outlook research
  surveys.
• Tel [phone]
• Email mhughes_at_reedbusiness.com