Annual Member Survey Sydney 2017 Innovation & Renewal Michael Hughes Managing Director Research & Consulting
Objectives - Growth & Revenue & Innovation - Event & Group Trends - Investment - Economic Development - Conclusion / Outlook 2
About the Study 8 th edition of the AIPC Member Survey. 119 member responses; 65%+ response rate. New this year: focus on innovation and economic development The full report will be on member site in July. Respondents by Region 70% 60% 50% 40% 30% 20% 10% 0% 62% 12% 10% Europe Asia North America 6% 5% 3% 2% Australia Africa Latin / South America Middle East 3
Quotes Growth, Revenue & Innovation 4
Strength of Economic Activity in Region 2015 to 2017 Moderate to strong economic growth is seen in most regions. 61% 51% 57% 21% 30% 26% 28% 13% 13% Strong growth/activity Moderate Weak, flat or recession 2015 2016 2017 5
Risks to Centre Business Growth Competition is increasing. And hotel occupancy and prices continue to rise 72% 68% 78% 51% 47% 43% 43% 44% 42% Growing competition from other centres / regions Hotel availability and pricing 2015 2016 2017 Overall economic strength 6
Economic or Political Issues Impacting Centre Business Airbnb and other hotel booking disrupters look to be having an impact on centres, DMOs and hotels. Currency value fluctuations and security are concerns as well. 93% 92% 78% 81% 80% 82% 63% 67% 44% 42% 40% 22% 20% 18% 10% 9% Business disrupters i.e., Airbnb Currency value fluctuations Increasing security risks US immigration travel restrictions News about Bank solvency Threats to trade agreements New US America 1st implications UK Brexit Currently Impacting Potential Future Impact 7
2016 Revenue Growth All Regions Strong growth worldwide with Asia the standout. 22,1% 7,1% 6,5% 4,1% 2,3% 3,3% Worldwide All Regions Europe North America Asia Australia Africa 8
Centre Revenue Growth Worldwide 2010 to 2016 Recovery Expansion / Stabilization Growth 6,8% 6,7% 8,0% 7,1% 5,7% 5,8% 5,2% 3,9% 3,1% 3,2% 3,0% 3,4% 3,1% 3,1% 2010 2011 2012 2013 2014 2015 2016 Source: AIPC, IMF Worldwide AIPC Worldwide GDP (IMF) 9
Europe Revenue Growth 2010 to 2016 Strong growth yet down a little from 2014-2015. 2017 Forecast: 2.7% 7,7% 7,9% 5,2% 6,5% 3,9% 3,0% 2,8% 2010 2011 2012 2013 2014 2015 2016 10
North America Revenue Growth 2010 to 2016 Steady, modest growth; U.S. economy is strong. 2017 Forecast: 2.6% 6,9% 5,3% 4,1% 2,2% 1,1% -0,3% 2010 2011 2012 2013 2014 2015 2016-1,2% 11
Asia Revenue Growth 2010 to 2016 Continued trend of erratic industry growth. 26,1% 2017 Forecast: 2.6% 22,1% 17,8% 9,0% 5,2% 2,4% 1,4% 2010 2011 2012 2013 2014 2015 2016 12
Australia Revenue Growth 2010 to 2016 Subdued growth following strong 2015. 2017 Forecast: 0.3% 11,3% 10,1% 9,3% 9,1% 3,3% 2,7% 2,3% 2010 2011 2012 2013 2014 2015 2016 13
Africa Revenue Growth 2011 to 2016 Growth has slowed after very strong first half of the decade. 36,7% 2017 Forecast: 3.4% 15,6% 16,1% 7,8% 9,2% 3,3% 2011 2012 2013 2014 2015 2016 14
Worldwide Attendance Growth 2010 to 2016 with Forecast for 2017 Strong attendance growth but concern about 2017. 5,4% 4,5% 4,9% 5,4% 2,7% 2,0% 1,0% 0,7% 2010 2011 2012 2013 2014 2015 2016 2017 Forecast 15
All Members Worldwide: Revenue Streams Expected to Grow in 2017 Good growth expected in key revenue areas. 65% 62% 57% 51% 33% F&B Exhibit hall and meeting room rent Event services including equipment rental and AV Telecom, internet and tech services Signage, advertising 16
Years Out Centre Business is Forecasted The industry is basically in thirds 30% forecast five years; 30% forecast three years; and 27% forecast only one to two years out. 30% 30% 15% 12% 5% 5% 3% One year Two years Three years Four years Five years Over five years Not Applicable 17
New Revenue Streams & Innovation 18
New Revenue Stream Added in Past Year New Revenue Streams 67% 33% Added New Revenue Stream No Signage, advertising AV services and equipment Vendor contracts/commissions Enhanced F&B Events produced by the centre % Members with New Revenue Streams 15-17 39% 40% 33% Sponsored, branded spaces Retail and office space rent Parking Other event services 2015 2016 2017 19
New Innovations Added in Past Year New Innovations - Multiple Responses CRM and booking systems implementation, upgrades 48% 52% Added New Innovation No Customer service management, procedure changes Operational structure changes Standardization and best practices Added IT and technology upgrades Wayfinding, signage Event equipment services 20
51% 51% 49% 40% Focus of Innovation and New Ideas Top Ten Still the Big Three areas: tech, client experience and F&B. 72% Top Innovation Challenges: Ideas, Budgets, Implementation, Measurement, Culture 64% 64% 60% 59% 34% 21
Quotes Areas of the Industry in Need of Innovation The way we conduct business. The management and operation of the venue and the form of events. Classic event business model leaves limited funding for new experiences and investments. 22
Innovation Challenges & Opportunities Providing even more customized solutions. Creative non-traditional use of space. Integration of all the areas, departments and services into a holistic kind of service/business. More focus on the delegate and her/his total experience. 23
Innovation Challenges & Opportunities, continued How attendees absorb content. How attendees use venues to socialize, network and collaborate. Our biggest challenge is being able to prioritize the ideas with the biggest impact. Securing decent return on investment, not enough profitability to take chances. 24
Quotes Event & Group Trends 25
Changes in Event Formats & Requirements Want improved Wi-Fi. F&B; more focus on dietary issues, and more casual. Enhanced security. More flexible spaces. Sponsors demanding experiences. Decrease of exhibition sizes; increasing demand for networking and hospitality space. Events are bigger and bigger, demand for variation of premises during the same day and same event. Larger breakout rooms to facilitate educational seminars different style layouts to enable the speaker to engage with the audience and/or to facilitate workshops. More Individualisation and personalization of customer journey. More space needed for informal meetings and networking. 26
Types of Clients and Groups with Best Growth Outlook Strong economy = strong corporate meetings business. 78% 63% 59% 55% 35% 35% 34% 24% 27
How Client Business Practices and Behavior is Changing Continuation of long-term trends: clients want more and better, faster, cheaper 86% 73% 70% 66% 48% 44% 43% 42% 23% 20% 28
Leading Event Producer Trends (from other studies) About 2/3rds of top event producers are optimistic about growth outlook More new event launch activity, risk taking Collecting data, but not sure how to use it Some sectors, such as IT, want more female engagement at events Using more video Want from Centres: enhanced technology and AV; help with attendance promotion; want to amplify live event experience via social media; more flexibility; larger growing shows want more space... 29
Investment 30
New Builds, Expansions & Renovations 2012 & 2017 Overall worldwide, new building activity is increasing along with expansions and especially renovations. 45% 36% 36% 16% 22% 20% 24% 28% New build Expansion Renovation No plans 2012 2017 31
Centre Spaces and Areas in Most Need of Investment Technology and telecommunications are still the main focus along with meeting rooms but F&B may need or more attention again 67% 54% 48% 58% 53% 42% 44% 41% 37% 36% 34% 35% 32% 27% 24% Tech infrastructure, services Meeting rooms Exhibit halls Signage Client-facing F&B areas 2015 2016 2017 32
Is Government More or Less Inclined to Invest in Centres Another sing of growth and confidence, governments seem positive to neutral to centre investment see significant sentiment increase since 2012. 51% 33% 30% 41% 41% 30% 38% 18% 19% More inclined to invest Less inclined to invest No change 2012 2016 2017 33
Quotes Economic Development 34
Is City Undergoing Large Government or Private Development, Infrastructure or Renewal Project There s significant development in most first and second tier cities worldwide. 48% 31% 38% Yes, large-scale government-supported project Yes, major private sector development No 35
Major City Projects Completed in the Last Year, Underway or in Planning Hotel and centre projects have been some of the largest projects around the world. 59% 44% 28% 27% 26% 22% 21% 19% 15% 13% 36
Does Your City Have a Formal Economic Development Strategy 69% 12% 19% Yes No Unsure Is Centre Part of Regional Economic Development Discussion & Process? 43% Yes 57% No Most centres have an important seat at the table if you don t, why not? 37
Centre Economic Development Trends Hardware & Software Hardware / Infrastructure New builds, expansions and renovations Convention hotels Retail and entertainment areas around the centre and convention district Transportation links Software Targeted event and group bookings, fit with regional economy Direct and in-direct influence on economic development issues Hosting meetings at centre; having a seat at the table Public relations, communications about value of events, conventions, centre 38
Conclusion 39
Centre Revenue Growth 2010 to 2016 with 2017 Forecast Recovery Expansion / Stabilization Growth slowing 6,8% 5,7% 6,7% 5,8% 8,0% 7,1% 5,2% 3,9% 3,1% 3,2% 3,0% 3,4% 3,1% 3,1% 3,8% 3,5% 2010 2011 2012 2013 2014 2015 2016 2017 Forecast Source: AIPC, IMF Worldwide AIPC Worldwide GDP (IMF) 40
Annual Gross Revenue Growth Forecast Over Next Three to Five Years There s confidence about revenue growth over the next few years. 9,1% 7,4% 6,9% Body Bullets 7,0% 6,6% 3,1% Worldwide Europe N. Amer. Asia Australia Africa 41
Conclusion Good growth good times continue But near top of the economic cycle Strong investment cycle Focus on internal innovation Ask for what you need now Watch out for internal complacency 42
Q&A