EN editor Saul Leese talks to former M&A principal at UBM and now Events Intelligence, MD, Mark Parsons, whose clients include; Informa, Hyve and Clarion, about the trends emerging out of the outbreak and a vision for events to come.
The last month of the coronavirus emergency has been the most traumatic period that the global exhibition industry has ever faced. Hundreds of organisers had to postpone or cancel thousands of events, clearing most if not all the exhibition calendar for the next 3-4 months. Those who have upcoming shows are experiencing a cliff in sales as exhibitors enter “survival” mode. The ‘lucky ones’ – those who have just held their shows – have massive uncertainty over the next edition and an uneasy guilt that they may have accelerated the current crisis.
Before I lay out my perspective, I’d like to share a guilty pleasure of mine: an early morning coffee and brioche from Pavé, a small Italian café on a side-street near my flat in central Milan. It has friendly staff, pastry like nothing else, and an atmosphere which will always be“my Milan”. Like all cafés they’ve been closed for the last month but last week they posted on Facebook something which made a difference.
They reflected on the new reality of their situation, they shared a message of hope; they weren’t dead or gone, just closed. They had accepted that the current situation was anything but normal, and this acceptance helped them. The crisis had put everyone in the same boat, creating a time of togetherness where the normal day to day filters had been removed. They described how the closure had created opportunities to work out how to improve their production cycle, communicate better between kitchen and front of house, design new croissants and cakes, and think about how to build again – it was their chance to reboot. Only afterwards did they share the unimaginable financial impact on their business, and how the anxiety made them want to cry some days. Similar to my friends at Pave, this is a time to reboot the events industry.
I’m not talking about a new bit of technology or marketing, but the acceptance the opportunities of a time when the industry just “stopped” and then started up again in a radically different environment. While cost cutting is inevitable, the opportunities which exist now are those which will shape the future of organisers for the next 10-15 years.
It’s helpful to step back and remember where we’ve come from. Last year, when I co-authored WWX, a report on the tradeshow industry, we identified that across 15 major markets exhibitor numbers were increasing at 2.9% CAGR, and sqm growth had been of 1.5% CAGR over the last 3-5 years. Some markets were hotter than others, but overall, the industry was in rude health. Deal multiples were strong, and new launches – by both large organisers and entrepreneurs – were innovative and disruptive.
Rolling forward to today, we’re in a different world. Our analysis indicates that over 1,000 tradeshows have been postponed in the last month as coronavirus transmission accelerated in Europe. While 54 per cent of organisers have already chosen to reschedule in 2020, 46 per cent have either decided to cancel 2020 and double down on 2021 or have yet to form a view on when to hold their next show. It is highly likely that 20-30 per cent of the 2020 show calendar globally does not occur. For those who have announced a new date in 2020 (on average rescheduled with a delay of 119 days) questions remain over whether some of these events will have to reschedule again. At the beginning of March we saw the first postponement of a previously rescheduled show in Italy. It’s too soon to draw any real lessons from the decisions being taken, but it very likely that the environment in which future shows are held will be radically different.
We predict that the following trends will have a significant impact on the tradeshow industry over the next 18 months:
- Public health restrictions on tradeshows will remain in place far longer than stated as countries battle local transmission and try to limit importing new cases. Some venues may be used to provide temporary healthcare facilities adding further delay in their return to service.
- When restrictions are lifted there is going to be a significant shortage of both buyers and sellers due to the economic environment – small companies closed, larger companies focused on cost cutting. The harsh reality of selling space in a recession will be very real for almost all organisers.
- In counties heavily impacted by coronavirus, economic nationalism will very likely increase significantly. Companies will seek to shorten, diversify and localise supply chains with the intent of building greater resilience against future supply shocks – while supporting their nation.
- There will be many M&A opportunities and a sparser tradeshow calendar due to the severe financial strain on smaller organisers who will struggle with the combined impact of a slowing economy and absorbing cost increases due to a postponed show.
- It’s easy to be downbeat, but I think of my friends dreaming up new croissants. The tradeshow business model is not fundamentally broke, we’re just closed for a while. With time, restrictions will gradually ease, shows will start again and we’ll reboot. This is time for organisers to work out where the opportunity exists and capitalise upon it.
Our recommendations are to:
The rescheduling of many tradeshows to the autumn opens an opportunity to build greater flexibility going forward. Those organisers who operate shows every six months (at either the same or a different cities) can roll over exhibitors to their next edition with a lower cost impact. For an annual show moved from March 2020 to October 2020, do they take the opportunity to increase frequency in 2021 to seize market share and provide exhibitors with more options if there is a need to postpone again?
When Buyers for exhibitors’ products are in short supply, effective matchmaking and bringing the community together matters more than ever. In a world of social distancing, a busy show floor is significantly less attractive than meeting the right people. How can we improve the matchmaking experience?
Expand the local universe.
To capitalise on economic nationalism and changing buying patterns organisers need to understand their local markets in depth – are you sure you know the universe of potential exhibitors? In our data projects, it is common we identify over 500 highly relevant prospects for a certain show – exhibitors which are not in our clients’ CRM systems and are not even contacted.
Invest like a leader.
Extensive research shows that whatever position a company has before a recession, those that emerge as the leaders afterwards are those that have invested more heavily (both organically and inorganically) during the recession. It takes nerve and balance sheet to do this, but good talent and cheap deals are going to be in high supply for the bold and prepared investor over the next 18 months.