The exhibition industry, like many others, is having trouble predicting the future. Unlike other industries, however, we've never had to deal with this problem before: For the last 40 years the question has never been “Are we growing?” but has always been “How much did we grow?” Even during the last four recessions the exhibition industry boasted growth in the traditional industry metrics of net square feet, number of exhibiting companies, and professional attendance. But that record has been broken and we are grasping for information to give us some indication of the future.
Despite dire reports from various sectors, our analysis of a variety of exhibitions held during the first quarter of 2002 suggests that exhibitions performed at about the same level as the first quarter of 2001: Attendance was down, with 5 to 10 percent being the most frequently mentioned figure. Exhibition space sales held steady in most cases, but some shows say bookings for the next edition of the show are “soft.” Organizers reported a relaxation of deposits and other requirements to confirm bookings, and revised payment plans to accommodate slower cash flows of many exhibiting companies.Here are some other important trends to take note of:
No shows: Some shows reported that companies had paid for exhibition space but failed to show. With today's emphasis on quarterly performance, some CEOs are saying “the exhibit space money is gone but we aren't going to pay another cent.” Organizers need to stay in touch with exhibitors right up to the event.
Space sales: Organizers are beginning to report slower exhibit space sales. Given the lag in attendance growth over the last two years, this was to be expected. The quality-versus-quantity argument is more successful if you back it up with CEIR research (see report SM17). Organizers are reporting late space sales. It is not uncommon to learn that 10 to 20 percent of the exhibit space was sold in the last six weeks before the event. The new custom-looking rental units offered by contractors are making it possible for exhibitors to wait longer to commit and still have a handsome exhibit. And they know, in this buyer's market, space will be available and organizers delighted to sell it.
Attrition Clauses: The late commitments coupled with new emphasis on online air and hotel bookings create a real problem between show organizers/meeting planners and their hotel partners. The hotel community wants to continue to enforce attrition clauses and cancellation fees, yet they are encouraging delegates to go around the group booking process and secure the same room for less money online. The airlines have won the battle with travel agents and now hotels are following suit. The Convention Industry Council's initiative on best practices for convention housing may be the best chance to resolve this problem in the short term.
Industry Performance: Finally, it is unrealistic to talk about the exhibition industry and not acknowledge that it is comprised of events that serve different industries, which are in various states of flux. For example, exhibitions serving the construction and health care sectors generally did well in 2001, while the information technology and telecommunications industries are in disarray. Until things sort themselves out in these sectors, it will remain very difficult to mount hugely successful events.
Douglas L. Ducate is president and CEO of the Chicago-based Center for Exhibition Industry Research. To contact him or to get information about CEIR research and publications, call (312) 808-2347; or visit www.ceir.org.