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This survey examines the growth rates, financials, and environmental practices of congress and convention centres worldwide. It covers new buildings, technology, client trends, and revenue sources.
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Tomorrow’s Congress & Convention Centres July 5th 2010 Liverpool, United Kingdom Michael Hughes Managing Director, Research & Consulting
Objectives • About the Survey & Respondents • Growth Rates & Outlook • Financials & Revenues • New Buildings & Expansions • Design & Technology • Green & Environmental • Client Trends • Conclusion and Q&A
About the Survey • In May and June 2010 AIPC conducted an executive-level survey covering congress and convention centre trends. • The survey was sent to all AIPC members and about 150 non-members around the world. • 88% of the survey respondents are AIPC members. • The AIPC member response rate is significant: 71%. • Survey was conducted by Red 7 Media, LLC, which owns EXPO and Event Marketer magazines.
Key Themes • 2010 expected industry growth trends – 4% global revenue growth from 1% to 2% event and attendance growth. • Pricing – published rates are holding or increasing, but top clients are negotiating more or asking for incentives. • Focus on new revenue and services. • Management role changing.
Key Themes • Continued building boom – 59% of venues have a new build or expansion project underway or opened in the past three years. • Primary technology and service interest is in wireless internet access; higher quality, high-tech meeting rooms; and environment conditions (HVAC, lighting, etc.). • Primary client trends and requirements are increased negotiations; shorter booking window; and higher-quality F&B.
Ownership Structure Survey Question 3. What is the ownership structure of your venue?
Management Structure Tomorrow’s Congress Centres: More ownership combinations and continued trend to private management. Survey Question 4. What is your management structure?
Facility Location and Size • Average and Median Size of the Survey Respondents: • Total function space m²: 45,808 (median: 18,000) • Exhibition space m²: 31,800 (median: 10,700) • Largest non-exhibit space: 4,409 (median: 2,020) • Theatre-Auditorium seats: 3,128 (median: 2,150) • Total meeting rooms: 32 (median: 23) Survey Question 5. Where is your facility located?
Expected Revenue, Event Bookings and Attendance Change 2010 vs. 2009 – All Respondents Revenue is expected to grow faster than bookings and attendance. Survey Question 7. By what percentage do you expect your facility's total gross revenues in 2010 to change compared to 2009 (or your current fiscal year compared to last fiscal)? AND, Q8 and Q9.
Expected Gross Revenue Change 2010 vs. 2009 Survey Question 7. By what percentage do you expect your facility's total gross revenues in 2010 to change compared to 2009 (or your current fiscal year compared to last fiscal)?
Expected Change in Number of Events 2010 vs. 2009 Survey Question 8. By what percentage do you expect your facility's total number of events in 2010 to change compared to 2009 (or your current fiscal year compared to last fiscal)?
Expected Change in Total Attendance in 2010 vs. 2009 Survey Question 9. By what percentage do you expect your facility's total number of event attendees and delegates in 2010 to change compared to 2009 (or your current fiscal year compared to last fiscal)?
New Revenue Sources Tomorrow’s Congress Centres: Continued search for new revenue sources; the secondary sources will become more common. • Primary Sources • Expansions, more space • Technology, wireless, internet and AV • F&B including more catering, concessions, food courts • Event services • Secondary • Booking more entertainment-related events • Launching own events usually entertainment-based • Signage and advertising • Package offers • Registration • Parking • Event management Survey Question 15. Have you added any new revenue sources (facilities, services or events) in the past five years? (And) #16. If you have added new revenue sources, what are they?
Primary Responses to the Global Financial Crisis and Recession • “Other” responses include: • Cost control, froze salaries, reassessed capital expenditures, energy expenses • More concerts/cultural events; less corporate events • Communicated more with all staff • Value added, rate flexibility and discounting Survey Question 10. What were your primary responses to the recent global recession and financial crisis? (Please check all that are applicable.)
Facilities with a Gross Profit (excluding debt service or loan payments) Survey Question 11. Does your facility business turn a gross profit, net of any debt service or loan payments related to past or current construction or development?
Governmental Payments or Subsidies Survey Question 13. Does your venue receive any governmental payments or subsidies to fund operations or pay debt service or loans?
Overall Success Measurement • Primary Metrics • 1.) Venue operational profit/loss 91% of respondents • 2.) Total number of events 73% • 3.) Total economic impact 63% • 4.) Total number of visitors 57% • 5.) Public Relations – press coverage 36% • Secondary • Performance of proprietary event business 20% • Total number of booked hotel rooms 19% • Hotel community occupancy levels 10% • Visitor-related tax revenues 9% • Hotel community gross sales or profit 3% • Other 14% Survey Question 14. How do you and your senior management team measure overall success? (Please check all that apply.)
Convention and Exhibition Space Pricing Trends Tomorrow’s Congress Centres: On-going analysis of where to increase and reduce rates for all services. Survey Question 12. In general, is your convention and exhibition space / hall pricing increasing or eroding?
Venues Engaging in More Client Incentive Activities Tomorrow’s Congress Centres: More incentives for the largest 20% to 30% of events and group meetings. Survey Question 18. Are you engaging in more incentive activities (i.e., rent reductions, added value services, cash incentives, hosted functions) than previously?
Most Recent New Building or Expansion Project Tomorrow’s Congress Centres: Possibly a slowing of the building and expansion boom, but still continual facility growth. Survey Question 19. When was the last new building, expansion or major refurbishment project completed at your venue?
New Building and Expansion Projects Underway Primary Reasons for New Building Projects 1.) Demand from events that need larger space: 39% 2.) Add new technology features and services: 17% 3.) Update aging facilities: 16% Survey Question 20. Are you planning a new build, expansion or renovation currently, or is one underway?
Project Financing Sources 38% of new development projects have a P3 component. • “Other” responses include: • Combination of sources • Bank loans • Internal funds Survey Question 22. How will the new building project be financed?
Factors Limiting Ability to Expand or Renovate Tomorrow’s Congress Centres: The limiting factors are manageable, but which one of these factors (or more than one) could increase significantly? Survey Question 24. What factors are most limiting your ability to carry out required facility expansion / renovations?
Most Important Facility Design and Functionality Themes and Amenities Over the Next 5 Years 1.) Wireless internet access 71% 2.) Higher quality, high-tech meeting rooms 67% 3.) Environment conditions (A/C, lighting, etc.) 60% 4.) Multi-function space for various event types 57% 5.) Unique overall ambience, aesthetics 55% 6.) Better signage and way-finding 54% 7.) High quality exhibit space 50% Secondary Higher-quality food 49% High-tech, divisible lecture halls 49% Efficient transportation options (to the venue) 49% Tomorrow’s Congress Centres: Many design, amenity and technology projects ahead. Most focused on improving attendee/delegate experience. Survey Question 25. Which of the following convention and congress venue center design and functionality trends, themes and amenities will be more important over the next five years to venue management, venue clients and attendees? (Check all that apply.)
Ideal New Facilities and Programs to Increase Profitability • Primary Responses • Additional exhibition space • Additional meeting space, multi-functional space • Auditoriums • Ballroom(s) • Technology, wireless • New kitchen and F&B space • Secondary Responses • Hotel capacity and connections to hotels • Transportation elements and connections • Retail, other ancillary services • Smaller, more “sociable” areas • Green and environmental impact issues • Broadcasting services • More parking facilities • Creating own events Tomorrow’s Congress Centres: Continued search for new programs and services – the secondary sources will become more important. More creativity and entrepreneurial approach required. Survey Question 27. What kinds of new facilities and programming (regardless of whether or not you can actually create them) do you think would be of greatest benefit in increasing your profitability over the next 3 years?
Current Facility Limitations Tomorrow’s Congress Centres: These perceived limitations will drive more development and expansions. When the global economy recovers will the industry experience another development wave? 1.) Lack of exhibition space 52% 2.) Lack of meeting / breakout room space 41% 3.) Need more F&B areas, restaurants, concessions 17% 4.) Lack of theatre 16% 5.) Need for more kitchen space 10% 6.) Need more parking 14% 7.) Out-dated telecom and internet technology 9% Survey Question 28. What limitations in your current facilities are most restricting your ability to earn more revenue?
What Does Venue “Flexibility” Mean? • “Flexibility” has many different meanings… • Primary Responses • Faster event turnaround • Meeting and ballroom turnarounds • Serving a diverse mix of business • Quick and inexpensive, less labor intensive • Creativity, having no limitations • Higher level of client service • Secondary Responses • Handle last minutes changes and bookings • Problem solving • Retractable seating • Ability to host multiple events • Multi-functionality • Lighting, rigging, A/V and communications capabilities • Removable walls and large pre-function spaces • Flexibility in services and financial / business matters Survey Question 30. "Flexibility" is identified as one of the most important features a centre needs today. What would this mean in the context of your own facilities?
Technology Services and Issues of Most Importance Over Next Five Years • Primary • Meeting room technology 65% • AV technology and services 65% • Wireless 62% • Web site 51% • Internet 40% • Secondary • Telecommunications 36% • Technology staffing 32% • Security technology 31% • Paying for IT investments/upgrades 27% • Technology vendor relationships 14% Survey Question 38. Which of the following technology-related services and issues will be the most important to your venue business over the next five years? (Please check the top three.)
Venues with Green/Sustainability Programs Survey Question 31. Does your facility have Green / sustainability program policies and initiatives in place?
Venues with Recognized Sustainability Design Certification • Certification Programs • Green Globe 28% • LEED 11% • BREAMM 0% • GMIC 0% • Other 42% • Not Applicable 32% Survey Question 32. Do you have a recognized sustainability design (i.e. LEED, BREAMM) or operating (i.e., Green Globe, GMIC) certification?
Factors in Decision to Pursue Green Programs • “Other” responses: • Combination of factors • Corporate responsibility • Cost effectiveness • Customer demands • Marketing strategy • Social responsibility • Staff interest Important Green Issues to Clients and Owners Primary Responses: Active and visible; Carbon off setting; Clients interested in reducing costs; Waste separation and recycling; Reduction of energy consumption; Energy efficiency, saving; Facilities efficiency rate; Paper recycling Water recycling Secondary Responses: Measuring client green impact; Government policy; Locally-grown food; Food donations; Composting; Reduction of use of plastic materials; Extraction of energy through our operations; Photovoltaic roof Survey Question 34. What factors were the most important in your decision to pursue green facilities / programming? AND, Survey Question 37. What Green, environmental and/or sustainability issues are of most importance to your clients and owners?
Venues that have Gained Business from Green Initiatives Only 3% say they have lost business because they lacked Green elements. Survey Question 35. Have you gained business because of your green initiatives?
How Event and Group Clients are Changing • Increased negotiations 77% • Shorter booking windows 74% • Requiring higher-quality food and beverage 38% • More PR assistance, outreach to city leaders 30% • Focusing more on event design/ambiance 26% • Requiring attendance promotion assistance 22% Survey Question 39. Which of the following trends are you seeing from your key event and group clients?
Client Requirements Today Compared to a Few Years Ago • Primary Responses • More negotiating • Budget concerns, more price conscious • Internet, free or lower cost wireless requested/required • High-tech facilities in AV and telecom • Focus on meeting and breakout room space and quality • Higher food quality/creativity • Secondary Responses • Public transport information and assistance • More help in organizing their meeting and exhibition • Environmentally sustainable practices • PCO issues, such as “hiding clients” • Attendance building assistance Survey Question 41. What are the greatest differences in the kinds of facilities and services clients are asking for today as opposed to what they required three years ago?
Strongest Event and Group Client Segments • Primary • Association conferences and meetings 65% • Association conventions with exhibits 61% • National or International corporate meetings 49% • Local corporate meetings 45% • Governmental events and meetings 45% • Secondary • Entertainment events 28% • For-profit trade shows, trade fairs, exhibitions 25% • Training events 24% • Consumer and public shows 22% • “SMERF” events (societal, military, etc. 20% • Parties 15% • Sporting events 6% • Job fairs 6% Survey Question 40. In which of the following event and group segments are you seeing the best current growth or near-term growth prospects? (Please check all that apply.)
Centre Operation Trends Today and Tomorrow Today Tomorrow Periodic projects and enhancements Multiple projects and enhancements continually Recent and planned expansions To continue… Technology investment Increased client demand Focus on facility flexibility New programming, yielding more value from exhibiting space Meeting client requirements Increasing creativity required Focused on event organizers and exhibitors Attendee experience
Centre Business Trends Today and Tomorrow Today Tomorrow A few core revenue sources Wider range of revenue sources About 60% turn a profit May have to get to 65% to 70% Pricing, incentives, discounts Same % of key clients; larger funds Fast client-based change/trends Faster client-based change/trends Periodic project management role Primarily a project management role Venue management – either more quantitative or qualitative More quantitative AND qualitative focused…
How the Congress/Convention Centre CEO/GM Role Will Change Over Next Five Years • More in-depth management structure reviews • Continued focus on revenue and profits, or minimizing loss • More focused on sales and marketing • Managing expansions and hotel development projects Survey Question 17. What are the most significant management structural changes you anticipate, over the next 5 years, including in your own role as CEO / General Manager?
How the Congress/Convention Centre CEO/GM Role Will Change Over Next Five Years, continued • Watching industry trends more closely and changes impacting group and event clients • Working with new event types and categories – both client events and venue-produced events • More focus on adding services and improving quality; while working with leaner budgets and similar or smaller staff levels Survey Question 17. What are the most significant management structural changes you anticipate, over the next 5 years, including in your own role as CEO / General Manager?
Convention Center Evolution • Consider venues as marketplaces and add value for attendees/buyers and exhibitors/brand-builders. • Centers that help build these marketplaces will be the most successful.
