convention centres 2013 performance & prospects member outlook survey michael hughes managing...

Convention Centres 2013 Performance & Prospects

Member Outlook Survey

Michael HughesManaging Director Research &

Consulting

Cape Town 2013

About the Study & Objectives

Objectives

• Key Themes

• Growth & Revenue

• Investment & Development

• Marketing & Clients

• Q&A

• Fourth edition of the AIPC Member Outlook Survey.

• 112 member venue responses; 65% response rate.

• Response Breakout: Europe: 63%

North America: 13%

Asia: 9%

Australia: 8%

Africa: 3%

Middle East: 2%Latin America: 1%

• New this Year: Global Event Management Survey.

Key Themes

2012 Centre Gross Revenue Growth Worldwide Average6.7%

1.4% Expected 2013 Gross Revenue Growth Worldwide

Good 2012 Revenue Growth – Yet Centres are Cautious

Mix Messages – Many Opportunities & Challenges

Opportunities

Decent growth over past few years.

Recovery, but very slow, grinding.

Corporate meetings growing worldwide.

Lack of recent new centre space.

New, other revenue streams growing.

Hotel development increasing.

Content and technology explosion.

Event formats changing.

Challenges

Only 1% revenue growth expected in ‘13.

Increasing competition.

Conventions/tradeshows a little stagnant.

Still buyers market; negotiations.

Core revenue streams under pressure.

Airline capacity constrained.

More IT investment required.

Keeping up with rapid change.

Growth & Revenue

Worldwide Revenue Growth 2010-2012 with 2013 Forecast

Overall the industry has experienced good growth collectively worldwide. But there’s caution forecast.

2010 2011 2012 2013 Forecast0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

6.8%

5.7%

6.7%

1.4%

Worldwide Attendance Growth 2010-2012 w/2013 Forecast

2010 2011 2012 2013 Forecast0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

1.0%

5.4%

2.0%

2.7%

Strength of the Economic Recovery 2011 to 2013 Worldwide

Strong

reco

very

Mod

erat

e re

cove

ry

Wea

k re

cove

ry

Very

weak

reco

very

, fla

t to

no g

rowth

No re

cove

ry, s

till in

rece

ssio

n0%

10%

20%

30%

40%

50%

60%

17%

46%

27%

7%4%

7%

49%

28%

12%

5%

16%

36%

23%

14%11%

201120122013

Mixed message: more centres seeing “strong recovery” – but also more “weak” or in “recession”.

Europe – Revenue & Attendance Growth 2011 to 2013

Gross Revenue

Attendance

2011 Gross Revenue

2012 Gross Revenue

2013 Gross Revenue Forecast

2011 Total Attendance

2012 Total Attendance

2013 Total Attendance

Forecast

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

5.2%

3.0%

0.1%

5.2%

0.3%

2.0%

Strength of Recovery

Strong

Mod

erat

e

Wea

k

Very w

eak

Reces

sion

0%5%

10%15%20%25%30%

11%

27%23% 21%

18%

North America – Revenue & Attendance Growth 2011-2013

Gross Revenue

Attendance

2011 Gross Revenue

2012 Gross Revenue

2013 Gross Revenue Forecast

2011 Total Attendance

2012 Total Attendance

2013 Total Attendance

Forecast

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

5.3%

1.1%

3.3%

6.8%

0.1%

4.5%

Strength of Recovery

Strong

Mod

erat

e

Wea

k

Very w

eak

Reces

sion

0%

10%

20%

30%

40%

50%

20%

45%

30%

5%0%

Asia – Revenue & Attendance Growth 2011 to 2013

Gross Revenue

Attendance

2011 Gross Revenue

2012 Gross Revenue

2013 Gross Revenue Forecast

2011 Total Attendance

2012 Total Attendance

2013 Total Attendance

Forecast

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

2.4%

17.8%

-1.8%

2.8%

12.8%

4.4%

Strength of Recovery

0%

10%

20%

30%

40%39%

31% 30%

0% 0%

Australia – Revenue & Attendance Growth 2011 to 2013

Gross Revenue

Attendance

2011 Gross Revenue

2012 Gross Revenue

2013 Gross Revenue Forecast

2011 Total Attendance

2012 Total Attendance

2013 Total Attendance

Forecast

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

9.1%10.1%

4.2% 4.3%

-3.5%

1.7%

Strength of Recovery

Strong

Mod

erat

e

Wea

k

Very w

eak

Reces

sion

0%

20%

40%

60%

80%

17%

67%

8% 8%0%

Africa – Revenue & Attendance Growth 2012 & 2013 *

Gross Revenue

Attendance

2012

Gro

ss R

even

ue

2013

Gro

ss R

even

ue F

orec

ast

2012

Tot

al A

ttend

ance

2013

Tot

al A

ttend

ance

For

ecas

t0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0% 36.7%

23.3%

10.0%8.0%

Strength of Recovery

0%

20%

40%

60%

80%

0%

75%

25%

0% 0%

* Three centre responses.

Risks to Specific Centre Business Recovery Worldwide

Growin

g co

mpe

titio

n

Slow, w

eak

even

t gro

wth

Hotel

ava

ilabi

lity, p

ricin

g

Air tra

vel is

sues

Gov./c

orp.

mee

ting

rest

rictio

ns

0%

10%

20%

30%

40%

50%

60%

70%

80%68%

56%

32% 31% 31%

Key issues are competition and slow event and meeting client growth.

% of Centers with New Revenue Streams in the Last Year

Primary• New events owned by venue • Sponsorship and advertising • Signage • Enhanced F&B, new concessions

45%

55%

YesNo

Secondary• Exhibitor and event management services• Parking• Permanent space lease to top corporation • Office space lease rental

% of Centers that Added a New Revenue Source 2010 to 2013

2010 2011 2012 20130%

10%20%30%40%50%60%70%

61% *

27%

45% 45%

* Percentage of Venues that Added New Revenue Sources in the Past Five Years

Total Operating Revenue Breakout – Worldwide Average

Facility Rent Ex-hibition & Meeting

Space; 44.9%

Food & Beverage; 23.9%

Exhibitor & Event Services, Produc-

tion; 14.1%

Telecom & Internet; 4.1%

Parking; 2.5%

Retail-Office Space Rent; 2.2%

Other/Misc.; 8.3%

Facility Rental % Ave. Europe: 50%North America: 31%Asia: 61%Australia: 22%Africa: 32%

53% of centres realize a gross profit (net of debt service or loans).

Total Operating Revenue Breakout – Profitable Venues

Not Profitable Profitable Difference

Exhibit & Meeting Space Rent 43.2% 46.3% +3.1%

Food & Beverage 27.3% 20.9% -6.4%

Exhibitor Services 14.0% 13.9% -0.1%

Parking 1.7% 3.3% +1.6%

Telecom & Internet 5.1% 3.2% -1.9%

Retail-Office Rent 2.0% 2.3% +0.3%

Other 6.6% 10.1% +3.5%

Profitable and not profitable centres do not have a significantly different revenue stream profile. Still, profitable centres look to rent more space, have more parking revenue, and “other” revenue streams.

The survey question was: Does your facility business turn a gross profit, net of any debt service or loan payments related to past or current construction or development?

Core Revenue Stream Growth is Soft – “New / Other” Streams are Growing Faster

Revenue “Movement” 2012-2013: % of Venues Seeing Increasing Revenue

2012 Venues w/Increase

2013 Expecting Increase

% Change

Exhibit hall and meeting room rent 48% 50% 2%

Food/beverage sales or concessions 52% 47% -5%

Other vendor commissions/revenue share 33% 28% -5%

Event services include equipment rental, AV 56% 49% -7%

Telecom, internet and technology services 47% 39% -8%

Parking revenues 23% 30% 7%

Signage and/or advertising 27% 29% 2%

Events owned/produced by the venue 19% 28% 9%

Portion of hotel occupancy tax 5% 6% 1%

Direct government funding 4% 4% 0%

Naming rights 2% 3% 1%

Public/private partnership(s) 3% 9% 6%

Percentage of Centres that Have Partnered on Events & Activities with Shared Risk

Examples• Entertainment and cultural events.• Consumer shows.• Event marketing and promotion.• Shared ticket sales. • Event management services.

41%

59%

YesNo

Investment & Development

New Buildings & Expansions 2010 to 2013 Worldwide

New build Expansion Renovation No development plans currently

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

17%

32%

17%

35%

12%

25%23%

40%

16%

20%

36% 36%

15%

31%33%

38%

2010 2011 2012 2013

Expansion activity is picking up. One-third of members are renovating or refurbishing.

Venue Areas that Need the Most Investment

Meeting rooms Signage Exhibit halls Food service areas and restaurants

Ballrooms0%

10%

20%

30%

40%

50%

60%

49%

43% 42%40%

28%

The key areas in need of investment are attendee experience related.

Service & Tech Areas Requiring Investment • Wi-Fi• AV• Meeting room technology.• Digital signage and advertising. • More bandwidth infrastructure.• “Continuous technology investments.”

Marketing & Clients

How Centre Sales & Marketing Strategy has Changed

“Switched tactics” includes the shift to digital marketing.

Switched ta

ctics

Pursuin

g oth

er mark

ets

More

inve

stm

ent

Changed mess

aging

Pursued lo

cal a

lliance

s0%

10%

20%

30%

40%

50%

60%

70%

58% 57%

42%38%

32%

Types of Events with Best Current Growth or Outlook

% Centres

Association conventions with exhibits 67%

National or International corporate meetings 63%

Association conferences and meetings 61%

Local corporate meetings 44%

Consumer shows 35%

Entertainment events 32%

Tradeshows and exhibitions 31%

Government meetings 27%

Sporting events 14%

Other 5%

Associations are the core market. Good sign: corporate meetings are rebounding around the world.

% of Centres Offering More Discounting 2010 to 2013

2010 2011 2012 20130%

10%

20%

30%

40%

50%

60%

70%

80%

68%

47%

52%49%

% of Clients Asking for Incentives

• 37.6% average worldwide

How Event Management Business Practices are Changing, According to Centre & Event Managers

Source: AIPC; Red 7 Media Research & Consulting

Centres Events Difference

Increased negotiations 88% 75% +13%

Requiring more technology, telecom, bandwidth 81% 57% +24%

Requiring higher-quality food and beverage 40% 22% +18%

Asking for more Public Relations assistance and outreach to city, regional leaders

34% 44% -10%

Requiring attendance promotion assistance 29% 38% -9%

Focusing more on event design, ambiance 27% 44% -17%

The #1 event business practice change is to negotiate more, say both centres and event producers.

The New Business Event Model(s)

Attendee Focused

Content & education

focus

More lounge areas

Higher quality F&B

options

Higher quality AV

More networking

Bandwidth needs, mobile

More flexibility

Convention Centre

• More model diversity.

• Some continue to focus on exhibits, others don’t.

• Demos skewing either “younger” or “older”.

• Some growing; others in decline.

• Each is unique with specific issues and needs.

• Both an opportunity and challenge for centres.

How Attendees are Changing, Say Event Producers

• “A younger demographic and they want to get most of their information online or through social media."

• "Attendees are asking for more content, and are better informed."

• "They book much closer to the event. Bring fewer people, but more key personnel and they stay a shorter period of time."

• "Harder to capture. Very price sensitive. Required to justify attendance."

• “We are seeing fewer attendees, but higher quality in role in the purchasing decision."

• "Need to market differently to several separate age groups."

• "They are more focused on getting the most done in the least amount of time.”

Source: Red 7 Media Research & Consulting

Where Event Producers are Investing to Better Serve Attendees

Source: Red 7 Media Research & Consulting

A key more recent trend is the explosion of content and information being developed by events. This is driving need for more venue bandwidth, access points and electrical charging outlets/ and areas.

Attend

ance

pro

mot

ion

Event

info

rmat

ion

and

cont

ent

Educa

tiona

l ses

sions

Venue

tech

/tele

com

/ban

dwid

th

Networ

king

even

ts

Event

des

ign/

expe

rienc

e/am

bian

ce

0%

10%

20%

30%

40%

50%

60%

70%61%

52% 50% 48% 46% 46%

TIME

EN

GA

GE

ME

NT

Evolution of Events – A Few Years Ago…

Source: ActiveNetwork

TIME

EN

GA

GE

ME

NT

Source: ActiveNetwork; Red 7 Media Research & Consulting

Events Today – Content Development Throughout Event Cycle

Event Management = Event Content Development

• Event management has become about managing more content and information. There are over 35 different areas and types of event content, including:

– Archived event information – Award events– Social media, digital communities– Educational sessions– E-newsletters– Entertainment– Exhibits, environments and displays – Keynotes– Mobile apps– Networking events– Publications– User-generated content– Video– Virtual events, webinars/webcasts– Post-event survey and evaluations

Source: Red 7 Media Research & Consulting

How Event Management Convention Centre Needs are Changing

Enhan

ced

tech

/tele

com

ban

dwid

th

Attend

ance

pro

mot

ion

assis

tanc

e

Mul

ti-fu

nctio

n ca

pabi

lities

, flex

ibilit

y

Impr

oved

exp

erie

nce

ambi

ence

aes

thet

ics

Mor

e ex

hibi

t spa

ce

Enhan

ced

AV

Impr

oved

sign

age,

way

-find

ing

Mor

e m

eetin

g ro

om sp

ace

Impr

oved

acc

ess t

o tra

nspo

rtatio

n

Highe

r qua

lity m

eetin

g ro

oms

0%

10%

20%

30%

40%

50%

60% 56%50%

44%38%

35% 35% 35% 33% 33%27%

SecondaryPrimary

Recommendations to Venues from Event Producers

• Better understand each event audience.

• Offer suggestions, share ideas on what worked well with other client. Cross fertilize ideas from other sectors. Develop case studies and success manual.

• Help promote events to stakeholders in the region.

• Provide more IT bandwidth, and access points.

• Offer more package plans.

Most Important Centre Management Issues & Trends

• Competitor expansions, new build projects and discounting.

• Client requirements and negotiations.

• Government austerity measures impacting clients.

• Search for new revenue and business models.

• Sales and marketing focus on new markets and event types.

• Flexibility and increased value added services and enhancement.

• On-going facility investment, expansions, renovations and new technology.

Innovation Waves – Events, Then Centers, Now Attendees…

1980s to Early 1990s

New Event Formats, Rapid Growth

1990s to 2000s

Convention Centres & Hotels Facilities Boom

Today

Digital; Attendee Experience; Content

Focus

Next Innovation Wave – More Specialized, More Services

• Attendee-driven.

• Events more specialized and unique.

• Enhanced services.

• More bandwidth required.

• More event management and centre collaboration.

Q&A