Presentation on theme: "1.11.2006 B1 GGK 1 AOCA Conference 2006 Impact of events on a Destination - Venue. The value chain Benefits for Companies and the State. Günther Kruse."— Presentation transcript:
1.11.2006 B1 GGK 1 AOCA Conference 2006 Impact of events on a Destination - Venue. The value chain Benefits for Companies and the State. Günther Kruse Messe Frankfurt Germany
3 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 m 2 (indoor: 322,000 m 2, outdoor: 83,000 m 2 )
4 We make markets. Worldwide. Messe Frankfurt Group São Paulo Atlanta Mumbai Hong Kong Tokyo Milan Seoul Mexico City Paris Shanghai Moscow Istanbul Buenos Aires New Delhi Taipei Dubai Beijing Singapore 14 Subsidiaries 50 Foreign representatives 5 Branch Offices 151 countries in the portfolio
5 Messe Frankfurt Group 117 events worldwide with more than 60,000 exhibitors and 3.4 million visitors 38,663 2,394,604 1,432,000 Trade fairs and exhibitions at the Frankfurt exhibition venue 41 18,850914,733 412,926 Events outside Germany 68 Net area in m² Number of events Visitors Exhibitors (of which group events) (23,000) (832,000) (22) Other trade fairs and exhibitions in Germany 82,64884,12072,163 Total11760,1513,393,4571,917,851 (960,000) 2005 business year
6 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
7 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
8 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
10 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
11 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.
12 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?
13 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,.
14 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.
15 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.
16 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.
17 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.
18 19942004 Delegates2.201.9893.393.395 Hotel nights452.1451.133.815 Number of conferences 44.17757.966 Business turnover 153,6399 Mio. Big conventions and events 2380 2014 5.000.000 2.200.00 75.000 800 Mio. 120 Preview TCF Delegate day multiplier factor Increase and preview of convention business Spending per Delegate: 1994: 70 €, 2004: 117 €, 2014: 160 € Source: Frankfurt Convention Office
19 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.
20 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.
21 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)
22 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
23 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.
24 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 Frankfurt c)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.
25 Example Messe Frankfurt – primary effects 1999 General „Multiplier“ 10,5 Turnover of Messe Frankfurt with Squaremeters 200,3 million US $ Multiplier 10,52,04 billion US $ Minus „security-figure“ 15 %1,8 billion US $ general national economic impact of fairs made in Frankfurt 1,7 billion US $
26 Tax impact of exhibitions in Frankfurt 1998 TaxreasonNational- Federal K US $ Regional- State K US $ Communal- City K US $ Sum K US $ Employment effect 3.040 1.0757.155 Social economical effect 50.340 18.120118.800 Fair business in Frankfurt 12.39512.1778.21832.790 Sum65.77565.55727.413158.745
27 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
28 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
29 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