Organisers up the pace
The trade fair industry is on the move worldwide. The Germans are working very hard to maintain their global pole position.
We are now well into 2005 but it was only recently that German trade fair companies finally went public with their results for last year. The figures show that 2004 was a good year. Here are just a few examples: Messe Frankfurt saw a growth in turnover with a considerable improvement in its result, Messe München produced the second best result in its history. The company turnover of NürnbergMesse was up seven percent last year to over 108 million, earnings before interest, tax, and depreciation and amortisation (EBITDA) increased over the previous year by around 50 % to 25.9 million, Messe Stuttgart achieved a marked increase in turnover.
But there's no time to relax: the organisers are investing. In concepts and - as is apparent to everybody - in their premises. From Hamburg to Freiburg, buildings are going up or being refurbished. In Cologne a new site is in the making - unfortunately against a background of bad press and suspected corruption - which, according to exhibition boss Jochen Witt, will be the "most coveted exhibition site in Europe". Nuremberg is building a new pavilion, Halle 4A, next to the new CCN Ost, and Stuttgart's new exhibition site is expanding. The long awaited structure right next to Stuttgart's airport will provide around 100 000 m2 of exhibition space and an ultra-modern convention centre, all ready for business in spring 2007.
German trade fairs in crisis? That's yesterday's talk. Now it is clear that a lot has changed over the last five years. But one thing has remained: Germany's lead. The German exhibition industry was and is the global number one. Good concepts, promising services, exhibition facilities that can be flexibly geared to the needs of a wide range of sectors and efficient logistics - all add up to excellent conditions for a successful industry.
What is new is the competition between German organisers. Is the world's most important exhibition location chalking up yet another record - this time for toughness? The situation is aggravated - often harming the profitability of the exhibition companies - by the fact that this aggressive canvassing does not always make good business sense. "Competition between locations allows the industry associations to play off one exhibition company against another", München Messe boss Manfred Wutzlhofer complained two years ago and warns: "we must not create a situation where the trade fairs can no longer meet their costs." His colleague Bernd A. Diederichs from NürnbergMesse also has criticisms: "What I don't like is this merciless poaching, where price is the only thing that counts. Success by poaching is only a Pyrrhic victory because it jeopardizes the economic viability of the poached trade fairs." So what is the answer? After all, high cost-coverage contributions cannot be expected from new events. And the improved services that exhibition companies offer cost money.
Prices should keep pace with the growing expectations of the exhibiting companies. Something everybody knows (but not everybody practises): "We cannot respond to fiercer competition with price cuts. That isn't the answer", proclaimed Manfred Wutzlhofer, CEO of Messe München, at the press briefing on financial results in July. Thomas H. Hagen, sole director of Weidmüller Gruppe and president of the Association of the German Trade Fair Industry (AUMA) thinks that "exhibitors should be prepared to pay reasonable prices for participating in trade fairs." Even though prices here are amongst the lowest, making Germany one of the best-value exhibition locations in the world: it is currently almost impossible to achieve price increases. He is only too aware of that. But at exhibition company press briefings on financial results up and down the country these past weeks the demand for fair (market) prices has grown louder.
Even if the domestic market is stagnant and pavilion capacity is increasing - "overcapacity" is still a very unfashionable word. Problem number 1: The pavilions are the production capacity of the exhibition companies. These capacities must be maintained if you are going to have any chance at all of luring any (lucrative) trade fairs to your location and keep them in the region. Problem number 2: it costs time and money to develop new formats. Third challenge: Pavilion space (see above) is crying out to be filled. Because new concepts rarely make use of an entire site, but only require a small area, the merciless poaching starts. And this is primarily achieved through the price. Buying just happens to be cheaper than developing ideas.
The wooing is done quite openly. According to industry sources, both the Cologne and Berlin exhibition companies tried extremely hard to entice the Games Convention, Europe's first comprehensive adventure fair for interactive entertainment, infotainment and edutainment to their own locations. Four years ago, this new event hosted by Leipziger Messe was belittled, virtually nobody gave it a chance. Today it is the Mecca for game freaks: more than 134,000 visitors made the trip to Leipzig between 17 and 21 August this year. Other expo companies, too, are showing an aggressive streak. Messe Düsseldorf and the Igedo Company are not only wrangling with Messe Berlin for fashion, Düsseldorf is attempting to lure leather away from Messe Offenbach. By staging the Great Leather Show they hope to start a new fair and attract business away from sector's location, Offenbach. Koelnmesse has successfully snatched the motorbike fair Intermot from its Munich counterpart. In return, crm expo has moved from Cologne to Nuremberg.
The private exhibition organiser Schall is currently proving that nothing except the pavilions themselves are set in concrete. From 2007 the company is moving its events, which include Motek and Control, from the small exhibition venue at Sinsheim to the new exhibition location in Stuttgart. Other moves are bound to follow; talks are already in progress with industry associations, the supporting organisations behind every trade fair. After all, the Stuttgart region wields huge economic power: the land of Baden-Württemberg is Germany's leading exporter. At the moment it is anybody's guess who will finally end up in Stuttgart.
To face up to this fierce competition, the exhibition companies will never tire of seeking out new topics and concepts. Even old ideas are being resuscitated in the search for the ultimate event idea. German organisers are going flat out to achieve their aims. But there must be no slackening if Germany is to remain ahead and keep its trendsetting role. That is the challenge for the exhibition companies teams.
Michael Peters, CEO of Messe Frankfurt who, amongst other events, launched Collectione this year, a new summertime consumer goods fair for large-scale retailers and distributors, and who will be introducing "The Design Annual" to the market next year, is clear on one point: "In the future we will see more trade fairs than in the past."
m+a report Nr.6 / 2005 vom 23.09.2005
m+a report vom 23. September 2005