Phil Soar: How close are we to normal? - EN

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Well it depends what you mean by normal. But how close might we now be to 2019?

Let’s look at some broader statistics, courtesy of The Economist. Sports attendances are back to 2019 levels and in middle income countries above 2019. Flights are getting there more slowly – with travel in high income countries now at 82% of 2019.

Public transport is less robust in G7 countries – running at around 79% of 2019 and with London and New York subway traffic only at around 65% of pre-pandemic levels. This matches office use statistics, where the US, EU and UK are seemingly at no more than 66% of pre-pandemic levels and with no signs of this changing anytime soon. Overall retail sales are now judged to be back at 98% of 2019 in higher income countries, and at 112% in what The Economist calls middle income countries.

Overall, The Economist argues that the World has recovered to around 87% of its 2019 activity. Of the larger countries Germany is closest to normal (92%) and China furthest away (75%) – no surprise given continuing lockdowns. The US rates at 78%.

So how might the trade show world be doing? All of the above, and our own anecdotal evidence, suggests that “80-85% of 2019” could be around average. JEGI’s recent report (of which more later) suggests that our industry worldwide is running overall at 73% of 2019, and will rise to 87% by the end of 2023. All of those numbers seem broadly to coincide.

I must stress that anecdotal evidence is always problematic. The information tends to be somewhat self-selecting. Shows doing well will report, those doing less well don’t say a word.

And I have written before about the problems of “analyses” of our industry appearing in general media – and how simplistic headlines can affect perceptions of what we do and where we are heading.

Andrea Doyle wrote in Skiftin August that recent Freeman research suggested that attendances were still no better than 65% of 2019 (this was purely about the US). They did stress, though, that the changes to datelines across the industry were obviously a negative factor.

But soon afterwards there was a report by Knowland, a data and hospitality technology company that tracks meetings and events volume, arguing that they were optimistic that the industry will be back to 100% by the end of 2023. (JEGI argues for 97%). This would be a result of pent-up demand as well as the lifting of corporate travel restrictions. Knowland research suggests that attendances were only 48% in the first three months of 2022 but had risen to 79.9% by July. Hence their confidence for 2023.

So what do we really see here at the moment?

My two main companies run some 70 events in six countries. We are obviously not all the way through 2022 yet, but on average we are running at over 85% attendances since we restarted almost a year ago and this average is increasing quickly as time goes on. I am not currently arguing for 100%+ and I have said here that my prediction for the whole exhibition industry in the UK for 2024 remains at around 85% of 2019 – both for revenues and attendances (I would be delighted to hear alternative views on this really rather important issue). I stress again that this does not mean every show will have 85% of its 2019 attendance – many, perhaps most, will be back where they were. These are not stable times and my projections try to take account of the pandemic, the upcoming recession, a government lead by Liz Truss and what happened in the 1990-92, 2000-02 and 2008-2011 recessions.

It also seems to be the case that exhibitor numbers and spend have come back rather more quickly than visitor numbers.

So what do we make of all these predictions?

So what do we make of all this? I am tempted to repeat William Goldman’s famous line about Hollywood: “No one knows anything.” But it also confirms that there are a large number of bloggers, twitterati, online journalists, “media sites” and the like who/which will grab hold of small morsels of information and extrapolate from them without the rigour that is necessary for a valid interpretation. And there is a great danger here that such morsels get picked up by mainstream media which, nowadays, simply copy and paste and do not have the staff to look deeper into such stories.

Knowland suggests that US attendances will probably be back to 100% of 2019 levels by the end of 2023 and this seems, to me at least, credible and worth using in our assumptions. The US is not the UK, of course, and will surely be far less affected by recession, interest rates and the general gloom than will be the UK.

Where attendances go is surely is fast becoming one of the most important (if not the most important) issues of the moment. I was very disappointed not to see the AEO Conference addressing it – and I will report on it regularly in the coming months.

So what do the intermediaries say?

JEGI are the largest intermediary (broker) in the USA and last week they made some private projections about the industry through to the end 2024.

One should always be careful about broker reports. This does not mean they are dishonest or inaccurate, but it is in the interest of brokers (like estate agents) to try to put a positive spin on data so to encourage deals and business.

JEGI are probably more positive than I would be. It would be wrong to quote their report in any great detail (although it is the best report I have seen in the past year)  but their core estimate is that the whole worldwide market for events in 2023 will be worth circa $27 billion, compared with $29 billion in 2019. In other words, operating at 95% of 2019 numbers.

Their region by region estimates are rather more interesting. They suggest the US will have recovered to 97% of 2019 by 2023.

The EU they think will be at 96% of 2019 turnover by 2023.

But Asia/Pacific they see running at no more than 79% in 2023, and at 65% in 2022. If anything this seems to me optimistic. China and Hong Kong are still a long way from completely giving up lockdowns and, given that we are a slow cycle industry, it is hard not to see many companies not committing to Chinese events until the situation is much clearer. The mood music coming out of Germany, where the Messen are heavily invested in China, is also interesting. Some of the Messen have borrowed large sums to tide them over, but their deepest concerns are not about their domestic events but rather China – where they invested heavily to diversify from their home base.

But the real outlier in the JEGI projections is the UK. They think the UK is currently performing at 89% of 2019 (which is not too far from my own anecdotal research), but they think that UK shows will boom in 2023 to the tune of 106% of 2019. They quote Hyve (perhaps our biggest UK player now) “We are seeing pretty much a full recovery in domestic bookings”). Their report was pre-Truss’s budget – but really?

Let us hope that JEGI’s projections are more robust than mine.

Although they know the numbers from most large companies, they are somewhat restricted in having to use numbers only from publicly quoted groups.

Their estimates (no doubt based on official statements) suggest that in 2022 RX is running at 66% and Informa 69% of 2019 event revenues. By 2024, they project that Informa should be back to 99% of 2019, with RX running rather below that at 91%. Hyve they project to reach 83% of 2019 by 2024 – though the loss of Russia for Hyve is critical.

Conclusions – what is attractive for buyers

JEGI’s conclusions on what trade show buyers will be looking for is not far removed from the consensus. To quote: “[Buyers] will focus on large, growing, resilient…sectors such as healthcare and technolog …[Strong] verticals will be critical to the pace of recovery with businesses serving resilient, global and growing end user verticals (e.g. pharma and technology) will be best served.”

“Strong and demonstrable revenue growth with 2022 revenue firmly ahead of 2019”

The latter point would seem self evident.

This last comment reflects the recent spate of 1-2-1 acquisitions in the industry and is clearly a current trend. There is a slightly converse argument, which is that the appeal of these assets (which are not new) is in part because of the lack of available quality trade shows on the market.

On the negative side, JEGI simply point out that China represents a very large part of the Asia Pacific region and M&A activity “remains subdued”. Apart from suggesting that Asia Pacific activity will still be at below 80% at the end of 2023 (unlike the rest of the World) they resist making any predictions for performance beyond that.

A simplified summary for the next two years

There is no simple answer for every show in every vertical in every geography. But, short of the Ukraine war spilling over, or some massive economic shock in the USA, the consensus is now that our industry, worldwide and excluding China, will largely be back to 2019 levels by the beginning of 2024. China is the large question mark. De-globalisation, on-shoring, politics, the decline of the appeal of Hong Kong, the Taiwan question – all of these suggest that China may not regain the significance it had for the world of trade shows in the decade after 2011.

My own view is that JEGI are too optimistic on the UK (the only geography where they think 2023 revenues will exceed 2019) and probably too optimistic on China, where the events of the past 3 years have been seismic. I don’t argue that (for instance) Frankfurt Messe will stop running Automechanika in Shanghai, but I cannot see significant new investment in exhibition assets there.

The real takeaway from all these numbers

The real takeaway from all this is the following.

In 2020 and 2021 the questions were: “Can trade shows recover from this pandemic? Will the internet and ‘pivot to digital’ be their death knell?”

Whereas now I think we can convincingly say: “The trade show business is staggeringly resilient. If we can bounce right back from this terrible pandemic and 18 months of closed doors, then we can bounce back from anything.”