AOCA Conference 2006
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Transcript of AOCA Conference 2006
1.11.2006 B1 GGK
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AOCA Conference 2006
Impact of events on a Destination - Venue.
The value chain
Benefits for Companies and the State.
Günther Kruse Messe Frankfurt Germany
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What business does Messe Frankfurt?
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Messe Frankfurt corporate group 2005: a global player in the trade fair sector
Messe Frankfurt Group
Organiser of 117 trade fairs worldwide
Shareholders: City of Frankfurt (60%), State of Hesse (40%)
14 subsidiaries outside Germany, 5 branch offices and 50 foreign representatives covering more than 151 countries
Turnover in 2006: over 400 million EUR
More than 60,000 exhibitors and some 3.9 million visitors
Third largest exhibition centre worldwide:Total exhibition space: 578,000 m2
(indoor: 322,000 m2, outdoor: 83,000 m2)
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We make markets. Worldwide.
Messe Frankfurt Group
São Paulo
Atlanta
MumbaiHong Kong
TokyoMilan
Seoul
Mexico City
Paris
Shanghai
Moscow
Istanbul
Buenos Aires
New Delhi
TaipeiDubai
Beijing
Singapore
14 Subsidiaries
50 Foreign representatives 5 Branch Offices
151 countries in the portfolio
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Messe Frankfurt Group
117 events worldwide with more than 60,000 exhibitors and 3.4 million visitors
38,663 2,394,604 1,432,000Trade fairs and exhibitions at the Frankfurt exhibition venue 41
18,850 914,733 412,926Events outside Germany 68
Net area in m²
Number of events
VisitorsExhibitors
(of which group events) (23,000) (832,000)(22)
Other trade fairs and exhibitions in Germany
8 2,648 84,120 72,163
Total 117 60,151 3,393,457 1,917,851
(960,000)
2005 business year
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International participation at the Frankfurt exhibition venue* in 2005: 14,415 exhibitors from 100 countries
1. Italy
2. China
3. India
4. Taiwan
5. UK
Exhibitors from all over the world
* own events
Konzern Messe Frankfurt
Top 10 exhibiting countries
1,663
1,526
838
788
737
6. Netherlands
7. France
8. Hong Kong
9. Spain
10. Turkey
701
662
620
572
524
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International participation at the Frankfurt exhibition venue* in 2005: 250,983 visitors from 180 countries
1. Italy
2. Netherlands
3. UK
4. France
5. USA
Trade visitors from all over the world
* own events
Konzern Messe Frankfurt
Top 10 visitor countries
21,109
15,802
15,495
15,466
12,964
6. Switzerland
7. Spain
8. Belgium
9. Austria
10. China
12,013
11,928
11,849
9,254
9,238
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Highlights in 2006
Ambiente with record visitor numbers and even more international orientation
Musikmesse/Prolight+Sound – record results in terms of exhibitors, visitors and net space
In September, the largest Automechanika ever is expected
“Fair trio” Paperworld, Christmasworld, Beautyworld with two-figure increase in visitors from Europe and significant increases from abroad
Successful relaunch of the Fine Art Fair Frankfurt
Light+Building with powerful boost in growth from German and abroad
Successful debut of Design Annual
Joint Venture in China: Guangzhou International Lighting Exhibition
Launch of Productpilot
Messe Frankfurt Group
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Economical Impact is a difficult topic
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Economic impact on the venue
Exhibition and convention centers earn money with:• renting out space, squaremeters and rooms• selling monopoly services (which cannot delivered by anybody
else then the landlord:– Electricity, water, heating
• selling other services like– Standconstruction– Personnel services like security, hostesses– Cleaning, waste disposal– Signing– Printing – Letting technical equipment– Catering
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What‘s important about economic impact?
• Economic impact calculation for venues and convention centers is a topic of great interest.
• Different approaches to calculationg and presenting such figures.
• Level of interest understandable: the venues have to demonstrate their value to the community and the shareholders, particularly when an operating deficit may need to be justified.
• intensifying competition increases this need in the future.
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• Many different models developed for measuring economic impact.
• Economic impact calculation has a „black box“ reputation.
• the calculations are a matter of common sense.
• Understanding the purpose and audience, actual delegate and planner surveys
• This presentation is rather an identification of the factors and how to approach the calculation
• and how the resulting information can be put to work
What‘s important about economic impact calculation?
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Why do an economic impact analysis?• It‘s a basic measure to estimate the benefits of a facility
• Comparing performance with other venues or business sectors.
• Governments deciding over investments look first at overall economic return.
• Useful for estimating return on investment (ROI) and get get the whole picture.
• justifying financial performances in an increasingly competitive environment.
• Discussion: overall net benefit
• Convention Centers typically operate as a „loss leader“ - justify the situation,.
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Before you begin the economic impact evaluation…
• One of the most important preparations is to ensure you have confidence in your own business figures and what they represent.
• Different types of facilities have different accounting and reporting requirements, this can impact the way you approach the calculations.
• Recognize that carrying out a proper economic impact analysis represents a real commitment of time and funding. To be done properly, an analysis must be based on accurate, original survey information collected over a period of time.
• „Cutting edges“ in this process will only weaken the value and credibility of the results and of the presenting persons.
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Economic impact evaluation simplified:
Four steps of an economic impact evaluation:
1. Designing appropriate surveys for all relevant data from organizers, delegates, exhibitors and other participants.
2. Gathering spending data by applying the survey over an appropriate period and to the right sample group.
3. Running the data through an appropriate input / output (I/O) model to calculate induced effects and spin-off benefits such as taxes
4. Using the resulting information effectively and adapting it to specific target groups.
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Clarifying the purpose
Define exactly who it is being done for and to what uses it will be put..• Who‘s the audience? local or national government, local or
national industry or the overall community.
• Adressing business or community interests?
• Depending on what level: including resident or non-resident delegates and visitors.
• It‘s not a feasibility study with projections about new business.
• Yes or no: joint approach with other partners:
• Other, existing studies may influence how own results are received.
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Different models for performing the calculation:
• Delegate day multiplier factor. Estimates of delegate days by a „standard“ figure for per diem expenditures by a typical delegate or visitor. Problem: actual expenditures vary considerably depending on the region. Example Frankfurt
• Delegate spending calculation with actual survey, how much they spend in a certain time and in what areas.
• Expanded spending surveys: delegate spending surveys enhanced by identifying various categories instead of lumping them together in a single figure. Input-Output model with exhibitors and organisers.
• Direct plus induced impacts: The most advanced economic impact model: Direct spendings by delegates and exhibitors and also those „induced“ effects that result as those expenditures move through the local economy.
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1994 2004
Delegates 2.201.989 3.393.395
Hotel nights 452.145 1.133.815
Number of conferences
44.177 57.966
Business turnover
153,6 399 Mio.
Big conventions and events
23 80
2014
5.000.000
2.200.00
75.000
800 Mio.
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Preview TCF
Delegate day multiplier factorIncrease and preview of convention businessSpending per Delegate:1994: 70 €, 2004: 117 €, 2014: 160 €
Source: Frankfurt Convention Office
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Components of the calculation
The key is to capture as many of the different areas of spending associated with conventions and exhibitions as possible. Some items to consider:
• Survey design: generating original spending information through surveys. Applied to the proportion of the numbers of delegates, visitors, organisers and exhibitors
• Production costs: those associated with actually staging the event. Site and off-site event, food and beverage or through suppliers not associated whith the venue.
• Indirect spending: associated with pre- and post-travel and by accompanying persons.
• Input/output calculation: accurate spending estimate can be run through an I/O-model for induced benefits with spin-offs and taxes.
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Accessíng and using an input/output (I/O) model
Two major factors in generating the most accurate and comprehensive picture possible of the economic benefits a venue creates:
1. Carrying out a comprehensive client survey to determine as accurately as possible the spending by delegates, visitors, organizers, exhibitors and accompaying persons
2. Performing an input/output calculation to get a broader picture of the overall effects resulting from that spending.
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I/O model
• Survey questions correspond to the „input“requirements of the model.
• Access an appropriate I/O model specializing on behalf of clients.
• Selecting the appropriate:The more general the model, the less accurate. Better use a specifically for your own area developed model.
• Price structure is a consideration.
• Additional benefit with using a local government model.
• Identify the necessary outputs for different audiences (i.e. tax revenues and employment calculations)
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Creating a framework for sampling: how much is enough?
Statistical requirement to ensure to have enough surveys
• Calculate the number of surveys (statistical principle known as „confidence limits“ that reflects the statistical validity and representativeness.)
• Capturing seasonality: Schedule the timing of survey process.
• Categorizing business types: reflecting the ratios of different business type (convention/exhibition/conference etc.)
• Categorizing respondents: Capability of being separated into resident and non-resident figures. The latter may be identified with „new“ money entering the local or regional or national economy from outside
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Categories of information required from surveys
To ensure surveys that they gather all possible information about spending
• Spending categories: (transportation, accomodation, food and beverage, retail, entertainment)
• Duration of the event to supply an appropriate „multiplier“ factor for daily expense figures.
• Accompanying persons spending
• Pre/post event spending
• Production costs on and off-site
• Additional exhibitor costs associated with client hospitality, booth construction and local production, goods handling, shipping costs.
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Example Messe Frankfurt – some years ago
1. 1989: Survey of different big exhibitions (Exhibitors and visitors)
a) How much money was spent to the venue, to booth constructor to hotels, food and beverage, entertainment,
b) How long did visitors stay in Frankfurtc) The result was about 800 US $ in 3 days per person Meanwhile the average spending grew, but the average
length of the stay decreased dramatically to 1,3 days.
2. 1993: Early ifo-analog-model: general „multiplier“ of 6,0 to the allover turnover of the fairground.
3. 1998: Survey of federal minister for economics and technology of the general economical impact of exhibitions in Germany, made by ifo-institute Munich. Delivered a general „multiplier“ of 10,5 to the turnover for squaremeters.
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Example Messe Frankfurt – primary effects 1999
General „Multiplier“ 10,5
Turnover of Messe Frankfurt with Squaremeters
200,3 million US $
Multiplier 10,5 2,04 billion US $
Minus „security-figure“ 15 % 1,8 billion US $
general national economic impact of fairs made in Frankfurt
1,7 billion US $
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Tax impact of exhibitions in Frankfurt 1998
Taxreason National-Federal
K US $
Regional-State
K US $
Communal-City
K US $
Sum
K US $Employment effect
3.040 3.040 1.075 7.155
Social economical effect
50.340 50.340 18.120 118.800
Fair business in Frankfurt
12.395 12.177 8.218 32.790
Sum 65.775 65.557 27.413 158.745
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In the End …
„Like most other management tools, economic impact figures are only as valuable as managers make them. The first step is getting good information – the second, and equally important step, is putting that information to good use.“
AIPC-guide
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Using economic impact data effectively
What to do with reliable, defensible figures representing the economic benefits your venue generates?
• Prepare an announcement: Media release• Make sure your local and regional governments are aware of the
information. Supply the important audience.• Include Ec. Imp. Calc. Information in community and corporate
information materials• Annual „year to year“ comparisons: Even a negative story can
have benefit: to point out issues of increasing competition or a need of new investments.
• Include in business statistics• Communicate with beneficiaries• Explain the breadth of spending and its impact. (I/O)• Think about timing
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It‘s not just about economic data!
Because there will always be those who will want to measure the benefits of a venue in other terms. So translate it into other contexts.
• The data should be interpreted in the sense to the local community. (i.e. the third largest industry in the region.
• Induced Employment benefits • Trade and investment impacts• Broader community benefits: educational opportunities, technological,
professional and cultural development, • Conferences, exhibitions and congresses promote international
cooperation • Be on the lookout for ways of linking your announcments to local
community issues• Finally this information can be the basis for a common set of
performance goals amongst facility managers and shareholders
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If you have the right message…
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…you just have to bring it over!
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Thank you
for your attention