Destination & Facility Marketing & Incentive Fund Survey ACME 2008 Conference Washington, DC Michael Hughes Associate Publisher & Director of Research Services

Introduction Key ThemesKey Themes Respondent ProfileRespondent Profile Incentive FundsIncentive Funds Optimal Booking Formulas & HotelsOptimal Booking Formulas & Hotels Outlook Outlook Presentation Outline In January 2008, ACME and Tradeshow Week Research teamed to develop a destination and facility marketing and incentive fund benchmark study. The goal was to provide data and information on destination and convention marketing and incentive best practices. Survey invitations were sent via to 492 convention marketing executives and 120 responded for a 24.3% response rate.

Key Themes Incentive funds are growing. There's a lack of visibility on who's doing what. There's disagreement on what to call these: "Incentive fund" "Subsidy" "Opportunity fund" "Marketing" "Discount" "Rental Offset" etc.

It once was my convention center is bigger than yours.It once was my convention center is bigger than yours. Then… my hotel package is larger.Then… my hotel package is larger. Now its… Now its… Our opportunity fund is bigger and better. Key Themes

About the Respondents

ACME Member: Source: Tradeshow Week & ACME survey Survey Respondents Organization type: 1. Convention Center / Venue59% 2. CVB / Destination Marketing Org; & Other41%

Source: Tradeshow Week & ACME survey City Tiers That Best Describe Participants Destination

Incentive Funds

Why The Rise of Incentive Funds? Growing supply – venues, hotels, etc. Constrained demand; very few new large association events are launched annually. Fragmented market – cities and venues don't merge. Lack of information makes the "incentive fund market" inefficient. The funds are raised and deployed based on partial competitive information. Your fund is likely too large or too small.

Facts On Discount Funds Average incentive fund: $414,000 Source: Tradeshow Week & ACME survey 55% of destinations maintain a separate fund to cover discounts and incentives for qualified conventions, exhibitions or other groups: (In 2007, the percentage was 53%.) Percentage of clients offered incentives, rebates, etc. (Average): 27.4% 72% of destinations that DO NOT maintain a separate discount fund offer discounts off of published facility or other services rates. Range in sample: $10,000 to $3,000,000

Fund Size Ranges Source: Tradeshow Week & ACME survey

Criteria Used To Qualify Groups For Funding or Discounts Source: Tradeshow Week & ACME survey

Source of Incentive Funds Source: Tradeshow Week & ACME survey

Use of Incentive funds Source: Tradeshow Week & ACME survey

Organization Responsible for Managing Incentive Fund / Voice in How Fund is Raised, Managed, Deployed Source: Tradeshow Week & ACME survey

Incentive Funds Today On average, incentive funds have been in place for 7 years.

Fund Years in Existence Range Source: Tradeshow Week & ACME survey

Importance of Incentive Funds Importance of discounts, rebates or incentive funds to book major conventions, exhibitions and events:

Source: Tradeshow Week & ACME survey Future of Incentive Funds

Subsidized Events 75% of the convention marketers offered totally subsidized (i.e., at no cost to the client) exhibition and/or meeting space to at least one event in the last year. Source: Tradeshow Week & ACME survey

Rebates and Discount Rates Convention center discounts: Source: Tradeshow Week & ACME survey RangeResponse Rate Not applicable, we do not discount11% 1% to 4%2% 5% to 10% 15% 11% to 20% 24% 21% to 30%17% More than 30%31% Typical hotel room rebates to offset convention center rent: RangeResponse Rate Not applicable11% $1 to $4 10% $5 to $10 67% $11 to $15 9% More than $153%

Optimal Booking Formulas & Hotels

Ideal Event Bookings: Size and Scope Source: Tradeshow Week & ACME survey Metric (Average) Total peak night hotel rooms1,776 Total hotel room nights, entire event period7,187 Total attendance6,893 Gross square feet of exhibit space required174,834 Estimated economic impact$3,726,655 Venue gross revenue$574,947 Time of the year (month)January (Most commonly mentioned)

Ideal Event Booking Scenarios Preferred Event Bookings: one event with 3,000 attendees or three events with 1,000 attendees each (but held throughout the year)? Source: Tradeshow Week & ACME survey

Hotel Rates and Discounts Which of the following have you or another organization done (or plan to do) differently related to working with hotels in your market? Response Rate Communicate the competitive issues related to convention, tradeshow and major event bookings 80% Worked with owners/ managers/ investors to make the case for the need for more hotel properties or rooms 51% Asked for hotel room rate decreases44% Asked for contributions or participation in incentive funds 43% Asked for more information related to their pricing formulas and decisions 35% Asked for hotel facility to reduce their hall or meeting space rent or services pricing 23% Other19%

Risks Competing just by buying business may reduce organizational culture, strength and innovation. Event producers need to realize they will increasingly lose power to marketers and buyers (exhibitors and attendees) - incentives inflate their sense of power. The exhibit and meeting space race is slowing, will incentive funds be the next wave of competition? Local press may start to follow this trend.

Growth & Outlook

Slowdown 1 – 2 Years Expansion 3 – 4 Years Peak Recovery 2 – 3 Years Where is industry in the cycle today? Exhibition Industry Growth Cycle Recovery: Attendance grows faster than net square footage Slow merger and acquisitions market Negative national and local press Expansion: First attendance grows faster than net square footage, then at about the same rate Strong corporate travel and meeting spending Hotel rates rise More business-to-business events launched Positive press – events are back Peak: Net square footage grows increasingly faster than attendance Strong exhibition and event mergers and acquisitions Strong corporate travel and meeting spending Harder to launch business-to-business events Strong convention hotel development Slowdown: Net square footage demand increases faster than slowing attendance growth Marginal new shows cancelled or postponed Source: Tradeshow Week Research

Key Economic Indicators Corporate Profits Consumer Spending Unemployment Hotel Occupancy and RevPar Corporate Meetings Public Companies in Your Industries; Public Companies in the Exhibition/Events Industry

Todays Positive Economic Factors International Growth and Weak Dollar Slowing M&A Environment, Reduces Consolidation Show Management Pricing Power Still-buoyant lodging sector (Financial Times, November 29 th ) Marketers are in Turmoil; Hard to Reach Buyers Significant Change Driving Attendance, Education Needs

Q&A

About Michael Hughes Associate Publisher & Director of Research Services, Tradeshow Week As head of Tradeshow Weeks Custom Research, Michael produces proprietary research, consulting and marketing projects for leading exhibition industry organizations around the world. He works closely with exhibition industry leaders, corporate exhibitors, entrepreneurs, investors and real estate developers to provide high-value strategic information, analysis and recommendations. His clients include nearly all industry leaders in every segment of the industry as well as leaders in the investment and consulting community. Michael is frequently quoted by major newspapers and national magazines such as The Chicago Tribune; The Los Angeles Times; Newsweek; The New York Times; and The Wall Street Journal. In January of 2003, he was selected as a Person to Watch by mins btob newsletter. Since 1999, Michael has been a presenter at over 70 industry conferences. He is also the research director and editor of Tradeshow Weeks syndicated Executive Outlook research surveys. Tel: (480)