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Trade shows were stalling, but recovery will be strong

by Martin Fullard

Phil Soar, chairman at CloserStill, has conducted research for EN suggesting a stall in trade shows was occurring before the pandemic struck, but that evidence points towards a positive recovery

The UK’s exhibitions industry is worth £11bn to the economy annually, or at least it was before the Covid-19 pandemic took hold in early 2020. However, this number on its own is useless without context, and is arguably a relatively blunt tool with which to truly measure the sector’s value.

It can be argued the exhibitions industry – as well as other areas of the events sphere – is not prone to analysis. That is certainly how it is described by Phil Soar, chairman of exhibitions organiser CloserStill, among other roles.

Exclusively for EN, Soar agreed to delve into what data does exist to paint a picture of where the exhibitions industry was heading before the virus took hold, and what history suggests the future may look like.

Soar’s analysis may be uncomfortable reading for some. As EN’s guest editor Ruth Carter pointed out, we believe that the industry is – or was – heathy and growing. The evidence suggests otherwise: that there was a general stalling across the board since 2017, irrelevant of whichever metric one may decide to use.

Soar suggests that this is, at least in part, a result of the UK’s decision to leave the European Union.  But Brexit is now done, and after nearly five years of tedium and uncertainty, there should now be a solid – or at least understood – platform from which to build. Businesses can now “just get on with it,” as he puts it.

Phil Soar

Lack of analysis

Soar says the absence of an official body for data collection has left the industry behind. “We are not an industry prone to analysis,” he says. “This has, I think, proved a disadvantage in the past 10 months as we have tried to put our case to the Department for Culture, Media and Sport (DCMS). Clear, meaningful statistics are not our strongest suit.

“Unlike other media forms, such as TV, radio, magazines, and newspapers, we do not have an official body which collects statistics from all our products, or which has the ability to sanction members who do not co-operate or who are not honest.”

He adds that before 2009, Association of Event Organisers (AEO) members were obliged to audit their events, but that the rule fell by the wayside after the 2008 recession, triggered by the collapse of Lehman Brothers.

“So, we do our best with what we have,” says Soar. “For the last five years the AEV, AEO and ESSA have produced the SASiE report. It is not comprehensive: for example, you cannot find within it the size, visitor numbers or turnover of any particular event (which you can when media sell on a cost per thousand basis).

“But it is now very thorough and, critically, allows us to make reliable year-on-year comparisons.”

Soar says the 2020 report, which focuses on 2019, is important because it will be a long time before we will see another one. He believe that it will be 2023 at the earliest before we can again create useful year-on-year figures.

Headlines from 2019

Soar’s analysis reveals that there were 1,060 exhibitions (events over 1,000sqm and lasting more than one day) in the UK in 2019. “The trend is slightly downward: in 2016 there were over 1,100,” he says. “The biggest fall is in consumer events: 10% fewer in that period. In the 1990s, AEO research usually identified circa 950 relevant events. Given that the available gross square metres at venues has risen from 217,000sqm in 1992 to circa 330,000sqm today, one would expect there to be more events.”

He adds: “The average indoor event (92% of the total) covered 8,800 gross square metres and 4,500 net square metres. These numbers are comparable to both 2010 and 2015 but show a steady fall from the exceptional peak year of 2016.”

Soar says that work by the Oxford Research Group suggests that the UK exhibitions industry generates £11bn in spending annually in a non-Covid year, a figure we know well, as well as £5.4bn in added value and employs 114,000 people. “The £11bn figure depends on the assumptions made of course (how is travel allocated etc) and there are other reports which have figures varying from £8bn to £20bn,” he adds.

Intriguingly, Soar says that the most notable finding was that the number of companies exhibiting at UK events has declined by 9% between 2015 and 2019. “With localised hiccups this decline has been consistent in the period,” he says.

However, as is the case when it comes to numbers, there is may be more than meets the eye. “The information we have to work with is limited because of the usual restraints,” he says.

One bone of contention is transparency over numbers. “We cannot publish real figures show by show, and there is always a tendency for organisers to give out ‘good’ numbers and keep quiet about ‘bad’ numbers,” he says.

“We try very hard to ensure that all stats are like-for-like, that is to say comparing the same shows year-on-year. But it is hard over a period of time to eliminate ‘survivor bias’: in other words, the tendency to forget events which ceased to exist.

“As an example, the year following the last Motor Show (2010) the total number of visitors to UK events fell by 7%, but this was totally misleading as it was simply Motor Show visitors no longer being in the figures. Like-for-like tries to eliminate this.”

Soar adds that large shows skew the numbers dramatically. The industry follows the 80/20 rule, meaning that when a big show hurts, the industry hurts.

“The largest 50 events (out of 1,060) in the UK are estimated to represent 80% of the industry’s turnover. So, a large event disappearing has a dramatic effect on the numbers. As an example, the 12 largest indoor events in 2007 attracted 1,296,000 visitors. By 2015 they attracted just 601,000 as two had ceased to exist,” he says.

Visualisation

Soar translated his analysis of key metrics into graphs which broadly illustrate similar trends.

The data suggests that trade shows tend to trail economic trends by at least 12 months because of the slow cycle of the rebooking. One may say that bodes badly for 2021 but, if all indications of a strong bounce back in the UK economy in 2021 are to be believed, then it is possible the industry is on track for a decent 2022 and 2023.

Graph A shows the trend in the average size of all UK exhibitions. The figures SASiE uses are gross but as the net/gross ratio stays broadly the same it should also apply to net square metres sold. “We see a gradual recovery from the 2008-2010 economic recession, with a large jump in 2016 (this may be exaggerated by the fact that this was only SASiE’s second year),” observes Soar. “There is then a clear but steady decline back to the levels of 2015. 2015 is taken as the base line 100%.”

Graph B shows the annual change in visitors to trade shows (and only trade shows) from 1999 to 2019.

“Graph B is more comprehensive and therefore valuable,” he says. “The patterns are clear and the two deep media recessions of 2001/2002 and 2008/2009 stand out. 2012 was a strong rebound year and then there was a general increase in visitors through to 2018; this tallies quite well with exhibition space peaking in 2016. Visitor numbers are likely to follow event size.

“2019 is obviously striking: like-for-like trade show visitors appear to be down 6% while consumer show visitors were down 3.5%. The total number of visitors at all 1,060 events is judged to be just under nine million.”

Graph C shows the trend in the total number of exhibiting companies in the period 2015 to 2019. Soar observes: “2015 is taken as the base line at 100%. Unfortunately, there is no data prior to 2015 but I would expect that the number of companies would have risen from say 90% in 2011 to 100% in 2015, before dropping back again in 2019 to around that 2015 number.

“In 2019 Trade Events averaged 167 exhibitors and Consumer Events 156.”

Impact on confidence

Soar says that we could generate a lot more graphs and figures, and notes that consumer events seem to have held on to exhibitors better in recent years yet have lost a higher proportion of visitors.

“But the thrust of the numbers points to a broad single hypothesis. Recovering from the massive shock of 2008-2010 (net square metres sold between 2007 and 2011 fell by an estimated 18%), the industry grew well through to 2016 or 2017,” he says. “This can be seen in the profit figures of the major groups, event launches, and the increasing prices paid for trade show assets. But from 2017 (and perhaps 2016) the growth stalled.

“This was entirely predictable. National GDP growth (the best estimate we have of total economic activity) grew fast from 2011 to 2015, reaching 3% annualised in 2014. But from 2017 it reversed fast and by 2018 had declined to 1.3% and 2019 to 1.2%. 2020, of course, is likely to be minus 11%. So, events and trade shows grew in rapidly expanding times and reacted predictably when the growth disappeared (because of population growth, a formal GDP of +1% actually means no growth at all per head). Trade shows tend to trail economic trends by at least 12 months because of the slow cycle of the rebooking.”

Soar, says we can debate why this might be the case, pointing towards Brexit as being one obvious reason. “There seems little doubt that Brexit had an effect. June 2016 looks to be broadly the peak of the national recovery and the trade show response to that,” he says. “June 2016 was the date of the EU Referendum. There was no dramatic collapse in business (apart from in Sterling), but since then there has been a clear slow drip in confidence and investment.

“A 1% loss of a major customer here, 1% from Europe which decides not to target the UK, it soon adds up. And the key is in the name. Brexit was about increasing trade barriers, and we are trade shows.”

He adds: “The other, essentially parallel, hypothesis is the economic cycle. We had seen five or six years of real recovery from the recession and these things have their trajectories. There was always going to be a slowdown, and it is credible that the two things coincided.”

Conclusion

“Perhaps surprisingly, I don’t conclude that the future is bleak,” Soar says. “There are two strong factors which give cause for optimism. The first is that Brexit is now over. Just as the anticipation of the dentist is worse than the actual drilling, so may be the aftermath of Brexit. Companies can now plan again.

“The second reason is all of the encouraging signs about the recovery from Covid. Vaccinations of course, the likelihood of events again in the second half of 2021. But more the reactions of exhibitors and visitors and delegates to our events. Many of our companies went into the crisis thinking that, like British Airways, they would have to hand back perhaps 50% of their advance bookings and deposits or more. But many have found that this has just not been the case – many have been able to rollover more than 90% of their exhibitors to the next event which runs.

“This says to me that trade shows really are a very valuable part of our customers’ sales and marketing efforts, and that they cannot easily replace what trade shows do (that if they could, they would have done). And that the rebound – as and when it comes – may well surprise us all.”

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