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