The Turnaround

The year 2004 was anything but boring for the U.S. tradeshow industry. The business saw a flurry of activity - both good and bad.

On the one hand, companies reorganized their management teams, launched new shows, bought and sold existing shows and posted gains in revenue. On the other hand, show sponsors and organizers continued to part ways, associations consolidated, facility construction slowed and the exhibit design and build sector plunged further into economic crisis.
The overall performance of tradeshows across the board climbed slowly but steadily throughout the year. According to Tradeshow Week's Quarterly Report of Tradeshow Statistics, professional attendance grew 0.6 %, the number of exhibiting firms grew 0.3 % and the net square footage of paid exhibit space grew 1.2 % in the first quarter of 2004, compared with the first quarter of 2003. Second-quarter numbers were even more promising, with attendance up 6.4 %, exhibitors up 5 % and net square feet up 2.7 %. The third quarter continued the trend with increases of 1.4 % in attendance, 2.7 % in exhibitors and 0.1 % in net square feet.
Even more promising, 38 % of exhibitors responding to TSW's Survey of Corporate Exhibitors in November said they were happier with their tradeshow performance than in 2003 (up from 27 % in 2003), and 30 % said they planned to increase exhibit space in the coming year (up from 14 %).

Having trimmed the fat in 2003, many companies transitioned to new leadership in 2004:
• Joseph Loggia, formerly president, became CEO of Advanstar Communications, while the company's chairman and former CEO, Bob Krakoff, announced his retirement.
• Reed Exhibitions (finally) named a new president of its North American operations, Chet Burchett, former president and CEO of public relations firm Burson-Marsteller.
• After eight years in the position, Penton Media CEO Tom Kemp announced his resignation, with $ 2.4 million in severance pay. Penton later announced that insider David Nussbaum, executive vice president, would replace Kemp as CEO, but the chairman position would go to an investor. Just a few days after his appointment, which came with a $ 1.7 million signing bonus, Nussbaum shuffled the company's management team.
• The World Shoe Association, owner of two of the 20 largest U.S. tradeshows, announced the hire of a new COO, Diane Stone. For all practical purposes, Stone replaced Chris Aiken, who had managed the WSA show for more than a decade, following in the footsteps of his mother Anne.

Technology-focused firms continued to struggle. Both Penton and Comdex owner MediaLive (formerly Key3Media) kept cutting costs and streamlining management. In July MediaLive postponed Comdex '04, setting off a series of technology tradeshow cancellations.
IDG nixed Comnet Conference & Expo; CMP Media said October's Techxny (formerly PC Expo) would be its last; Hannover Fairs USA canned CeBIT America, launched just two years earlier; and Ziff Davis Events Group called off Business 4Site, meant to be a new breed of targeted tech conference, after just one staging. Not to be deterred, however, family show organizing firm H. A. Bruno announced it would launch a new tech show, C3 Expo, using CeBIT's dates at the Jacob K. Javits Convention Center in New York.

In other sectors, activity was mostly positive. More than 100 new show launches were planned for the year, compared with 40 in 2003 and 37 in 2002. Jordan Edmiston Group Inc. reported that 2004 yielded 23 conference and exhibition M&A deals worth $ 921 million, compared with 18 deals worth $ 108 million in 2003, and 33 deals worth $ 155 million in 2002.
The highest-dollar transaction was Bain Capital's purchase of M|C Communications, organizer of the Pri-Med Conference & Exhibition series, for $ 400 million, 12 times M|C's operating cash flow.

There were several other remarkable exchanges:
• Advanstar Communications sold all its art properties, including two tradeshows, to Pfingsten Publishing.
• Cygnus Expositions bought nine regional building and construction shows from Cornerstone Expositions.
• dmg World Media bought the Canadian International Farm Equipment Show, the country's fifth-largest exhibition, from Dawn Morris Productions.
• Hanley Wood Exhibitions acquired the National Roofing Contractors Association's annual 90,000 square feet tradeshow.

Among publicly traded companies, financial performance was mixed. Advanstar Communications, Primedia and Jupitermedia reported increases in revenue throughout the year, although net losses were still the norm. Penton Media saw revenue decline, but was still able to buy the Wireless Developer Conference from Wilson Publications - the company's first acquisition in years.
Viad's tradeshow division struggled to gain equilibrium. While its general contracting firm, GES Expositions, stabilized revenue and operating income over the course of the year, its exhibit design and build firm, Exhibitgroup/Guiltspur, saw business plunge as much as 25 % in some quarters.

In fact, 2004 was a bad year for most exhibit houses, the last to recover from the economic downturn. Exhibit Dynamics succumbed to a $ 30 million debt and filed for bankruptcy, as did Showtime Enterprises, with a debt of $ 5.3 million. On the bright side, Sparks Exhibits & Environments, owned by Marlton Technologies, raised revenue by one-third in the third quarter of the year, narrowing its net loss.
Reflecting the ups and downs of the industry's for-profit firms, tradeshows across the board experienced a variety of interesting changes.

Advanstar pulled its women's wear portion of MAGIC Marketplace out of the Sands Expo & Convention Center, but insisted on paying rent to hold the space empty, for fear one of the nine competing fashion-industry tradeshows in Las Vegas would use the nearby venue. The move set off a series of lawsuits between the two, raising the question whether show managers can pay to keep the competition away.
VNU Expositions threatened to move Outdoor Retailer out of Salt Lake City, where the show is venue-bound at the Salt Palace Convention Center. Salt Lake County managed to keep the show by making a generous bid to expand Salt Palace and offer new free services to participants in the semiannual show.
The hardware-industry shootout came to a close as Reed Exhibitions National Hardware Show in Las Vegas trounced the inaugural event of its former sponsor, the American Hardware Manufacturers Association in Chicago.

Following the hardware industry's lead, shows in the trucking and telecommunications sectors saw their organizers and sponsoring associations split to launch competing events. In other sectors - ranging from food, to gifts, to metal working - collocation was the word.
The Packaging Machinery Manufacturers Institute became the first show organizer to offer its own general contracting services at Pack Expo, using a system licensed by the Expo Group. Reviews of the introductory service were mixed.

Among facilities, construction activity continued to slow down in 2004. Only one significant new venue, the Boston Convention & Exhibition Center, opened last year. Important announcements of new projects were also rare:
• In November, the New York State Legislature approved funding for an expansion of the Jacob K. Javits Convention Center.
• The World Market Center, already under construction in Las Vegas, finalized plans to add 7.5 million square feet of temporary and permanent exhibition space by 2010 to the furniture and home furnishings industry.
• Gaylord Hotels will build a $ 500 million complex in Washington, D.C., to include a 200,000 square feet exhibit hall.
• Jackson, Miss., got approval to build a 90,000 square feet hall after years of lobbying for public financing.
Even more projects were called off altogether, further closing the gap between supply and demand for exhibit space.
And all this is to say nothing of the industry consolidation, labor strife and unusually destructive hurricanes that kept American tradeshow managers on their toes. With so much activity in 2004, the industry will certainly be looking forward to further stabilization in 2005. Heidi Genoist

m+a report Nr.3 / 2005 vom 27.04.2005
m+a report vom 27. April 2005