Viad Expects Higher Returns From Shows
By Margo McCall -- Tradeshow Week, 2/9/2004
Viad has its fingers crossed that convention and event services revenue will pick up this year. But despite the optimism, don't look for an industry re-bound just yet.
Viad CEO Robert Bohannon said there are signs the business climate is improving. "Overall, 2004 will be a better year for all of our companies," he said, but the convention and event services businesses remain "a wild card." As one of the few tradeshow-related companies that are publicly traded, Viad serves as something of an industry bellwether.
Service contractor GES Expositions Services and exhibit-design house Exhibitgroup/Giltspur, both Viad subsidiaries, together finished 2003 with $717.3 million in revenue, down 8.8 percent from their combined 2002 revenue of $786.2 million. But due to restructuring efforts, the businesses, which comprise Viad's convention and events services division, still managed to generate $44.9 million in operating income, up 19.3 percent from the previous year's $37.6 million.
Bohannon told analysts during a recent conference call that 2004 looks more promising than 2003. "In '03, given all the uncertainty there, we saw a lot of companies yank things out of their marketing budgets. In '04, what we believe is going to happen is certain things have gotten back in the budget. We believe there will be less of a chance for them to do a lot of yanking."
The spending urge is forecast to be particularly acute for new booth orders. RFP activity and marketing budgets are edging higher, said Kimbra Fracalossi, president and CEO of Exhibitgroup/ Giltspur. "You can feel that pent-up demand. The question for us is, when is that going to release?"
The forecast for higher corporate earnings in late 2004 and early 2005 is a positive sign, said Paul Dykstra, president and CEO of GES. For instance, the Consumer Electronics Assn.'s record-breaking Intl. CES show last month, which GES services, bodes well. "We hope that is a precursor for a stronger show season," Dykstra said.
But no one predicts a huge resurgence of business just yet. "For 2004, we expect the convention industry will remain a bit soft," Dykstra said. He added that sectors such as automotive, construction, medical and some areas of technology will remain strong. Manufacturing and other technology areas, however, will remain challenged.
Although Viad anticipates lower convention and event services revenue in the first quarter, for the entire year revenue and profits are forecast to rise. During the first quarter, negative show rotation is expected to cause a rate of decline in the "mid-to-high single digits." Revenue is projected to increase "slightly" for the entire year, while operating income should register a "high-single-digit to low-double-digit" rate gain.
