AIPC 2009 AIPC 2009 Industry Outlook Industry Outlook SurveySurvey

Presentation to AIPC Annual Presentation to AIPC Annual Conference A Coruna, July Conference A Coruna, July 20092009

Today’s Presentation:Today’s Presentation:

Results of the 2009 surveyResults of the 2009 survey Comparison with other recent Comparison with other recent

industry researchindustry research Some major issues to watch going Some major issues to watch going

forward forward

Number of AIPC memberNumber of AIPC membercentres participating in the surveycentres participating in the survey

64.12% 35.78%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Has your business increased Has your business increased or decreased over the past year ?or decreased over the past year ?

16%

52%

84%

48%

0% 20% 40% 60% 80% 100%

2008

2009

Increase Decreased

More or less confident of business More or less confident of business prospects in 2009 than 2008 at this time?prospects in 2009 than 2008 at this time?

12.00%

46.00%

42.00%

58.00%

7.00%

35.00%

0% 20% 40% 60% 80%

Less

More

Same

2008 2009

Reasons for Reduced Confidence:Reasons for Reduced Confidence:

Bookings downBookings down Attendance offAttendance off Reduced spending, space, F&BReduced spending, space, F&B Further anticipated impacts of Further anticipated impacts of

recessionrecession Clients using alternativesClients using alternatives Multiple impediments to travelMultiple impediments to travel

Changes in business attributed to the global economic crisis?

18.90%

19.20%

16.80%

16.10%

15.20%

13.80%

0% 5% 10% 15% 20% 25%

Delays in booking / contracting

Tougher negotiations with clients

Reduced spending by clients

Changes in food and beveragerevenues

Reduced attendance

Event cancellations

Challenges over the next three years: Challenges over the next three years: owner’s perspectiveowner’s perspective

20,8%

18,9%

16,9%

16,6%

22,7%24,50%

26,20%

18,70%

15,50%

15,10%

0% 10% 20% 30%

Reviewing management of the centre

Reviewing governance of the centre

Reviewing financing of the center

Changing revenue expectations

Higher expectations for increasedprofitability

2008 2009

Challenges over the next three years: Challenges over the next three years: market perspectivemarket perspective

20,0%

17,0%

17,0%

16,2%

14,4%

13,3%12,60%

9,70%

13,50%

13,60%

11,60%

13,90%

0% 10% 20% 30%

Reduced attendance at events

Greater influence by PCO's andassociation management companies

Client reluctance to pay for extra services

Downward pressure on rental rates

Greater concern about substainability /environmental issues

More competition from other centers

Challenges over the next three years: Challenges over the next three years: internal perspectiveinternal perspective

24,9%

13,1%

17%

20,1%

22,2%

25,20%

14,70%

17,20%

26,30%

16,60%

0% 5% 10% 15% 20% 25% 30%

Need for training

Labour disruptions

Labour shortages

Increasing government regulation

Increasing operating costs

2008 2009

Types of business expected to Types of business expected to increase / decrease:increase / decrease:

17%

27%

8%

15%

20%

9%

31%

49%

36%

29%

12%

43%

39%

26%

27%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Entertainment / sports

Consumer events

Trade exhibitions

Associationconventions

Corporate meetings

Increase Decrease Same

Where do you see the best Where do you see the best opportunities for revenue growth?opportunities for revenue growth?

27,2%

24,7%

6,6%

13,3%

24,7%

8,20%

9,80%

18,30%

19,90%

23,10%

0% 5% 10% 15% 20% 25% 30%

Retail (if applicable)

Parking (if applicable)

Space rental

F&B

Event services

2008 2009

Initiated significant new developments in Initiated significant new developments in operations / marketing over past year?operations / marketing over past year?

20,0%

17,6%

15,2%

14,8%

13,1%

10,3%

8,3%9,13%

9,89%

12,17%

14,07%

14,83%

18,25%

19,77%

0% 10% 20%

Obtained any form of operating certification

Obtained a substainability / environmentalcertification

Developed new or enhanced community /government rel initiatives

Lauched major new market initiatives

Developed quality standards program / taskforce

Created new staff training / professionaldevelopment initiatives

Developed / enhanced substainability /environmental policies / programs

2008 2009

Planned Actions to Address Planned Actions to Address Challenges?Challenges?

Greater client interaction / servicingGreater client interaction / servicing More intense marketing effortsMore intense marketing efforts Price / service flexibilityPrice / service flexibility Packaging / discountsPackaging / discounts Diversify marketsDiversify markets Expense control (including staffing)Expense control (including staffing) Produce own eventsProduce own events

Analysis:Analysis:

Business impacts finally apparentBusiness impacts finally apparent Confidence has dropped significantlyConfidence has dropped significantly Worst is likely yet to comeWorst is likely yet to come Corporate business impacts are greatestCorporate business impacts are greatest Revenue, client management bigger Revenue, client management bigger

issues than outright cancellationsissues than outright cancellations Training need greatest single challengeTraining need greatest single challenge No specific growth opportunities No specific growth opportunities

Analysis (cont’d):Analysis (cont’d):

Significant variation (some actually Significant variation (some actually increased business), based onincreased business), based on– Different countriesDifferent countries– Business mix / diversificationBusiness mix / diversification– Local business conditionsLocal business conditions

Innovation, diversification key, but…Innovation, diversification key, but… Centre initiatives largely unchanged Centre initiatives largely unchanged

(sustainability still highest) (sustainability still highest)

Other Industry Surveys are Other Industry Surveys are Showing….Showing….

Combination of impacts from economic Combination of impacts from economic conditions, image concernsconditions, image concerns

Corporate, incentive hit hardest (about Corporate, incentive hit hardest (about half expect decreases in activity)half expect decreases in activity)

Associations are struggling, but Associations are struggling, but outright cancellations less frequentoutright cancellations less frequent

Attendance, event spending reducedAttendance, event spending reduced

Other Industry Surveys are Other Industry Surveys are Showing….Showing….

Exhibitors have cut events, space, Exhibitors have cut events, space, participationparticipation

Renegotiation of contracts anticipated Renegotiation of contracts anticipated Increasing use of meeting alternatives Increasing use of meeting alternatives

(webinars, teleconferencing)(webinars, teleconferencing) Competition continues to grow but at Competition continues to grow but at

reduced levelsreduced levels

Government Reactions Government Reactions Typically Typically Counterproductive:Counterproductive: ““Politics of fear” trump logicPolitics of fear” trump logic Don’t understand the economic Don’t understand the economic

development / recovery connectiondevelopment / recovery connection Meetings cancellations, travel Meetings cancellations, travel

restrictions imposed in many areasrestrictions imposed in many areas Promotional budgets cut at worst timePromotional budgets cut at worst time Capital projects cancelled even Capital projects cancelled even

though time right for constructionthough time right for construction

Looking Ahead:Looking Ahead:

Four issues to keep an eye on:Four issues to keep an eye on: The attendance factorThe attendance factor The client relations imperative The client relations imperative Evolving destination rolesEvolving destination roles Our new “image problem”Our new “image problem”

The Attendance Factor:The Attendance Factor:

Attendance threatened by economic, time, Attendance threatened by economic, time, sustainability factorssustainability factors

Obscures the Obscures the realreal impact of downturn impact of downturn A shared concern / opportunity with clientsA shared concern / opportunity with clients Demands action, including:Demands action, including:

– Attendance buildingAttendance building– More pre / post promo / packagingMore pre / post promo / packaging– Enhanced content and perceived valueEnhanced content and perceived value– Measurability of meeting outcomes Measurability of meeting outcomes

The Client Relations The Client Relations Imperative:Imperative:

Clients are challenged by attendance, Clients are challenged by attendance, financial, resource issuesfinancial, resource issues

Tougher negotiations, renegotiations Tougher negotiations, renegotiations Price, contract, payment issues at stakePrice, contract, payment issues at stake A new “partnership attitude” neededA new “partnership attitude” needed Opportunity to demonstrate shared Opportunity to demonstrate shared

interest; build stronger relationships for interest; build stronger relationships for the futurethe future

PCO interface may need greater focusPCO interface may need greater focus

Destination Relations Destination Relations Evolving:Evolving:

Hotel equation has shiftedHotel equation has shifted Owner expectations need Owner expectations need

adjustmentadjustment Need to emphasize broad Need to emphasize broad

economic impacts, role in recoveryeconomic impacts, role in recovery CVB relations need re-examinationCVB relations need re-examination May have to distance centres from May have to distance centres from

leisure messagingleisure messaging

The Image Issue:The Image Issue:

Pharma-codes started the processPharma-codes started the process Bailout funding accelerated itBailout funding accelerated it Negative image resonated with publicNegative image resonated with public We contributed with leisure messagingWe contributed with leisure messaging 50% of US corporations now see “non-50% of US corporations now see “non-

financial risks” to holding events financial risks” to holding events Need to “re-image” meetingsNeed to “re-image” meetings Also requires enhanced content, better Also requires enhanced content, better

value , measurable outcomesvalue , measurable outcomes

AIPC 2009 AIPC 2009 Industry Outlook SurveyIndustry Outlook Survey

Presentation to AIPC Annual Presentation to AIPC Annual Conference A Coruna 2009Conference A Coruna 2009