"Meetings are a buyer's market"
Edgar Hirt, head of the International Congress Center München (ICM) and vice president of the International Association of Congress Centres (AIPC), on altered customer requirements, excess capacities and exotic destinations.
Have the demands customers make of congress centres changed in recent years?
Eight full years of operation have passed since the ICM opened in October 1998, and we've experienced very turbulent times. Initially demand was gigantic and the calendar was filled very quickly with external clients, 60 % corporate trade and 40 % association business. However, in the early years the ICM was also heavily frequented by Munich exhibition company itself.But we can hold up to 6,000 participants in the ICM and have up to 8,000 square metres of in-house exhibition space ourselves. That's simply too much for events accompanying exhibitions. At the beginning we had around 150 days occupancy from the exhibition company, now it's probably only about 50. Guest events have become more and more important. Munich is a big source market for this, 60 to 65 % of planners, particularly in corporate business, are located in and around Munich. April/May, for example, was the AGM season, when insurers Allianz and Munich Re, Hypo Vereinsbank or Siemens hold their annual general meetings. And when fairs like Bauma, Drinktec or IFAT are on, guest events also have problems in Munich because hotel prices are relatively expensive then. Basically, though, the initial euphoria is over. We hold up a mirror to business, and tough price negotiations are part of our daily round, even with regular clients, who are extremely price-conscious and go into detail on everything at the moment.What is more, clients expect far more intensive consultancy these days. They used to tend to handle the event concepting themselves, but that's all changed completely. In principle we could now do with another ten to fifteen small to medium-sized rooms. But then with events that need another 40 to 50 extra rooms we benefit from the fact that the convention centre belongs to Messe München exhibition company, and the next exhibition hall is no more than twenty metres away. There we have no difficulty integrating the additional conference rooms required.
When was the initial euphoria over?
Our best year was 2001. Up to the turn of the millennium we had very strong rates of increase, in terms of both the number of events and turnover. But when the New Economy market collapsed Munich was hard hit, being an IT location. The impact on corporate business was enormous. IT shooting stars cancelled their annual general meetings, and scientific medical and technical congresses have also suffered from financial constraints in the past few years. At the same time we're seeing a rapid increase in concentration, particularly in the corporate sector. A few years ago there were still Hewlett-Packard and Compaq, after the merger one customer's automatically gone straightaway. We are therefore trying to place ourselves on the broadest possible base, looking to attract lots of different corporate sectors as customers and also to maintain a healthy balance between corporate clients and association events.
Is the congress market becoming more and more of a buyer's market?
It's really been that way for twenty years. The cake's getting smaller and smaller and the number of meeting venues growing disproportionately fast relative to demand. This trend persists. In parallel to it, the number of small events is rising, the few big meetings are tending to get even bigger, and the middle bracket is eroding. But it's precisely this middle category that is so immensely important in terms of both occupancy and turnover.
What is the ICM's turnover calculation like?
Given around 80 guest events a year taking place in the ICM, a third of total turnover is generated by three to four events. The second third is down to medium-sized events, and the rest has to be earned by the smaller events with group sizes from 500 to 1,500 people. We have started offering more packages and individual elements, notably because more and more clients are bound by contract and bring along their own external technology.
What special services does the ICM offer organisers?
Primarily we rent out the ICM and its attractive technical features and also offer outstanding quality consultancy. And as brokers, we naturally also bring clients together with other service providers such as Destination Management Companies and agencies.
How high are the prices by international standards?
Internationally we're on the expensive side. You can probably book conference centres more cheaply in the Netherlands and the UK. The staff costs here are high, skilled sound or lighting engineers have their price. But if you include the hotel costs in the equation, for example, we occupy a middle position in the overall cost accounting.
What is your core target group?
We aren't looking to compete with the conference hotels in Munich, which are very good. We have six or seven hotels here that can hold up to 1,000 people with no difficulty at all and have their market justification. The ICM must therefore try to attract events with more than 1,000 participants as customers.
What sectors do the most important clients come from?
From the field of medicine, information technology, banking and insurance and, on a slightly lower level, the pharmaceutical industry.
The Pharmaceutical Codex has had repercussions for congress centres?
Yes, although as a relatively matter-of-fact information communication tool, we still hope to benefit from a certain renaissance in classical trade congresses moving forward. It doesn't always have to be exotic destinations and golden taps.
What purpose does your membership of ‘Seven Centers serve?
We engage in word of mouth marketing. And work together in international competition. Interview: Dirk Mewis
m+a report Nr.6 / 2006 vom 22.09.2006
m+a report vom 22. September 2006