Shows Beat Forecasts
Industry growth more than double the 2.4% projected by VSS report
By Margo McCall -- Tradeshow Week, 8/22/2005
Actual growth in U.S. tradeshow spending last year came in at more than double expectations, due to higher corporate travel budgets and price hikes by leading shows.
Tradeshow spending grew by 5.8 percent to nearly $9.2 billion in 2004, according to Veronis Suhler Stevenson's annual communications industry forecast. That compares to initial forecasts of 2.4-percent annual growth, and makes tradeshows the second-fastest growing communications segment, behind e-media.
Furthermore, it represents a dramatic improvement over 2003's 1.5-percent growth rate and 2002's 1.2-percent decline. And with VSS forecasting a 6.1-percent increase in tradeshow spending this year, the growth spurt doesn't appear to be over yet.
"Generally the tradeshow industry is healthy," said Tom Kemp, a VSS managing director. "I think there's been a good recovery from the recession and the post-9/11 travel environment."
Kemp added that the overall figures mask the fact that some shows, such as Intl. CES and the Natl. Assn. of Home Builders' annual event, are experiencing phenomenal growth, while others are lagging, particularly those in the technology and manufacturing sectors.
While Kemp, former CEO of Penton Media, foresees an eventual recovery for technology events, manufacturing shows may not recover because of fundamental changes in that industry.
Meanwhile, the business-to-business industry itself is also changing. VSS this year included an e-media category in its annual forecast in recognition of the growing significance of online revenues. E-media spending is projected to increase at an 18.7-percent compound annual growth rate between 2004 and 2009.
According to the forecast, exhibitors rented 371.5 million square feet of space last year, up 1.5 percent from 2003, and the first increase after two years of declines. The average price per sq. ft. of $19.15 was up 4 percent, a sign that organizers were able to increase space rates without resistance. Total exhibit space spending increased 5.6 percent to $7.1 billion.
The trend of companies wanting more brand exposure led to spending on fees, sponsorships and advertising rising 6.5 percent to slightly above $2 billion, the report said. Organizers hosting invitation-only events and higher-quality conference sessions were credited with boosting attendance to 40.9 million, up 2.7 percent.
The growing popularity of continuing medical education made health care shows the most profitable, according to VSS.
The $10.3 billion business-to-business magazine market represents the largest of the communications industry sectors tracked by the VSS forecast. Although the market has rebounded from its severe dips of recent years, its 2004 growth rate of 2.7 percent isn't forecast to change markedly over the next five years.
In contrast, tradeshow spending is projected to rise by more than 5 percent in each of the next five years, earning a compound annual growth rate of 5.8 percent. By 2009, tradeshow spending will exceed $12.1 billion, VSS forecasts. By then, the average price per square foot will be $22.11, with 419.1 million sq. ft. of exhibit space sold.
VSS cautions that spending on exhibit space will remain strong through 2009, although prices will decelerate as the market recovery levels off and vendors become less willing to absorb price hikes.
Furthermore, VSS expects strength in the tradeshow segment to help drive growth in the overall business-to-business media segment this year.
