The Global Trade Show Industry’s Struggle to Recover Without China

As most of the world’s largest economies have eased pandemic-related restrictions, the global events industry’s mantra is “business is back”, after two tough years.

But attendance at the Imex show in Frankfurt – which caters to the trade show and travel sectors themselves, with attendees including conference venues, event managers and hotel groups – is telling. The May event had about 9,500 attendees, down from 14,000 before the pandemic.

“Obviously the industry has suffered over the last few years, people have lost their jobs, but demand has exploded,” said Carina Bauer, chief executive of Imex, adding that recent events had a “range world of exhibitors”.

But she added: “We had very few participants from China this year.”

The 32% drop in attendance indicates a mixed picture for the industry as the world reopens. The critical Chinese market remains blocked by restrictive closings as Beijing pursues a zero covid policy. Meanwhile, convention centers and organizers elsewhere are still assessing whether demand for face-to-face meetings will return to pre-pandemic levels despite an initial surge.

Carina Bauer, Managing Director of Imex: “We had very few Chinese participants this year” © Imex

China offered the events industry a ray of hope two years ago when it became the first major country to cautiously reopen after the first phase of the pandemic.

Now the tables have turned. While many wealthy countries have signaled that businesses shouldn’t expect future restrictions on social contact, China has opted to impose travel restrictions, as well as city closures when local coronavirus outbreaks occur.

“We have no idea how to compensate China if the country does not come back,” said Wolfgang Marzin, managing director of Messe Frankfurt, a German event organizer jointly owned by the city of Frankfurt and the state. of Hesse which organizes trade fairs. the world.

“Everyone took advantage of the labor and production capacity in China – a lot still comes from there – and now we are as dependent on them as we are on oil for Mr. Putin,” said he added, nodding to the number of international companies manufacturing in the country. .

For now, Marzin said Chinese buyers and sellers have been largely absent from events in other parts of the world. “The zero Covid policy means that since January we no longer see Chinese companies,” he said. “For a textile show we would typically have around 400 exhibitors and now we have 25.”

Marzin would not disclose revenues and profits for the private company, but said revenue this year would likely be close to 2010 levels, adding that he expected the business is back on track in 2025 – assuming the global economy is not derailed by further crises.

People at Arab Health 2022
Informa’s Arab Health 2022 in Dubai. The company maintained its 2019 lounge prices to attract customers © Informa

Not only is China an indispensable part of many companies’ supply chains, but the world’s second-largest economy has also become a major buyer at trade shows.

In 2019, mainland China accounted for 16% of event revenue for Informa, the world’s largest trade show group. By 2021, the company had only recovered four-fifths of that level.

But the FTSE 100 company is more optimistic about the situation in China, arguing that the rebound in demand in the United States has made up for the delay.

Both Marzin and Bauer are optimistic about the eventual large-scale return to in-person meetings, as is Informa chief executive Lord Stephen Carter.

“The power of physical presence won’t go away,” Carter said. “Even though China is opening up at a slower pace than other countries, we know it will reopen.”

The group has put its money where it belongs, announcing last December that it would divest its intelligence arm and focus on events and academic publishing. He had disclosed an annual pre-tax loss of £1.1billion for 2020 linked to cancellations of lockdown-related exhibitions. But in 2021 it returned to a pre-tax profit of £137million as restrictions eased.

Informa said in July it would start paying dividends again after a pandemic pause, brushing aside a global economic slowdown that threatens many industries. The group expects its revenue and adjusted operating profit this year to hit the upper bound of previous forecasts of £2.15-2.25 billion and £470-490 million respectively.

“All of the event businesses I talk to are extremely optimistic,” said Citi analyst Thomas Singlehurst, who added that because exhibit businesses tend to have a low cost base, they could be the beneficiaries of soaring inflation by raising their own prices.

“The interesting thing about the events is that the re-emergence of inflation might be the best thing that ever happened,” he said, explaining that most of the industry’s growth came from price.

Carter said Informa had maintained 2019 prices for its exhibits to encourage as many customers as possible, but added that going forward “of course there will be natural price inflation as one can s ‘wait for it’.

Line chart of rebased stock prices showing Informa and Hyve lagging behind pre-pandemic levels

Nevertheless, the industry remains under pressure. Of the three largest publicly traded event providers – Informa, Hyve and Relx – only the latter’s share price has recovered to early 2020 levels and it is largely focused on subscription businesses such as l university edition.

But Hyve, which runs the annual Shoptalk and Groceryshop retail shows, has always struck an optimistic note, saying the 2022 editions did or should make more money than the year before Covid-19 hit.

“Post-pandemic. . . our customers are spending more with us than before,” said Managing Director Mark Shashoua.

The UK-based group reported revenue of £59 million in the first half of 2022, compared to £68 million for the same period in 2019. It blamed the delay on two major events in industries mining and paper in the second half of the year. reduction.

There are predictions of a shakeout. Shashoua said some smaller or more niche shows are unlikely to return at all, even online, post-pandemic, with larger groups such as Hyve that lead “must-haves” in various industries able to consolidate.

It has already started. In March, Hyve announced the acquisition of US fintech company Meetup for up to £42m, months after buying a mining-focused event organizer for a similar amount. Meanwhile, Informa bought business-focused publisher Industry Dive in July, a deal that will grant it a content arm to better engage customers beyond events.

For Informa’s Carter, future industry growth will come from an increase in the range of services that event companies can provide, with major shows becoming “much more digitally enhanced”.[with more]sophistication in registration and profiling [buyers and sellers]”.

“If you’re working with a top-tier product, the demand is extremely high,” he said.

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