Business in Australia: Wanted: More Exhibit Space

With miles of wide-open country, you'd think a lack of space would be the last problem Australia had. But that's precisely what the exhibition industry there is facing: a lack of exhibit space in the country's two largest cities, which host the lion's share of its tradeshows.

Space in Sydney and Melbourne is heavily booked years in advance. Expansion plans in Sydney are on hold.

Melbourne, which is building a new convention center, will still have space issues when it's done.

The lack of space isn't the only problem, either. Australia's exhibition industry also faces rising hall rental rates and occupational safety requirements, in addition to issues common to other countries, such as increasing demand for ROI measurement methods.

But space is the real conundrum, particularly in Sydney.

The Tourism and Transport Forum of Australia (a lobbying group representing the tourism industry) and the Property Council of Australia commissioned U.S. firm HVS Intl. to study the status of Sydney's convention and exhibition industry. The resulting report, Revitalizing the Convention and Exhibition Industry in Sydney, found that Australia's largest city is second to Melbourne in venue capacity, and that although Sydney's state, New South Wales, still hosts the most exhibitions in Australia, it is losing exhibition market share to, and will be overtaken by, Melbourne's state of Victoria.

The report added that the Sydney facility was operating at capacity and would lose its status as the country's premier convention venue to the new facility being built in Melbourne.

When completed in 2009, that building will offer primarily meeting space: 32 meeting rooms of various sizes, a 5,000-seat plenary hall and a grand ballroom. It will be adjacent to, and fully integrated with, the existing Melbourne Exhibition and Convention Centre.

The New South Wales government is assessing HVS' findings, and an outcome is expected in the next few months. Meanwhile, Sydney's at a standstill.

Its only significant facility, the Sydney Convention & Exhibition Centre, which opened in 1988 with 25,000 square meters (269,000 square feet) of exhibit space, currently has 27,200 sq. m. (292,780 sq. ft.). There's also the Sydney Showgrounds, but it's not a purpose-built exhibition facility.

Australia's business events industry has grown significantly and demand is simply exceeding supply, said Helen Mantellato, SCEC director of sales, exhibitions and special events.

She said clients wanted "more of what we have ... good quality, integrated convention and exhibition facilities, availability and flexibility of dates and space ... central location adjacent to a leisure precinct and tourism infrastructure, and where you feel the heart and pulse of Sydney."

The basic problem in Sydney is a lack of adequate investment in business events infrastructure by the N.S.W. government, Mantellato added. And, according to SCEC client Gary Fitz-Roy, CEO of Expertise Events, there's a lack of vision from state governments — N.S.W. in particular — which don't acknowledge exhibitions' financial impact.

Fitz-Roy said, "There was an arrogance that the Olympics would provide Sydney with long-term exposure and bookings, but the legacy is lack of space and hotels that change rates dramatically, and Sydney is also outpricing itself."

Homebush, the Olympic site, is a possibility for another facility, he added, but it lacks the city atmosphere and infrastructure.

In Sydney, getting dates and space required to run events at the preferred time is a major issue, Fitz-Roy said. Many shows cannot grow because of lack of availability, costs for rental increasing disproportionately with exhibitor rate increases and costs such as advertising annually increasing between 5 and 7 percent. New risk management rules are also adding costs and making it difficult for exhibitors to take part, he added.

Australia faces unique challenges because mounting an exhibit can be expensive for offshore participants. "Our market is very state-based, unlike the U.S. and Europe, where it is common to jump on a plane and visit an exhibition," Fitz-Roy said. "In Australia, trade events consistently deliver 65 to 80 percent of their visitors from within the state holding the exhibition."

Matthew Pearce, Diversified Exhibitions Australia managing director, said there's no upgrade in the cards for Sydney because the government doesn't have money for a new center, which means organizers are faced with the prospect of no facility for new shows in N.S.W.

Melbourne's existing facility offers 30,000 sq. m. (322,900 sq. ft.) of exhibition space, but Pearce said the new Melbourne convention center wouldn't really help with the current lack of space. International tradeshows and conventions that draw overseas participants will continue to use the already limited space, constricting regional shows.

For now in Melbourne, there are no alternatives to the MECC, which, like the SCEC, is in a city with adequate parking and good public transport.

Unlike N.S.W., the Victorian state government is studying ways to use available funds to expand the current exhibition center. However, available exhibition space in Melbourne will remain tight for at least two to three years, Pearce said.

On the other hand, Sydney must address its long-term capacity issues now, said Jon Hutchison, managing director of the Sydney CVB. The bureau is able to place big events in the SCEC because many of them have long lead times and the facility gives international events priority. But more investment is needed to brand Sydney globally, secure events and provide more exhibition capacity. All this needs to be contained in a public-private sector growth strategy, he added.

Hutchison applauded the N.S.W. state government investigating Sydney's future exhibition needs, such as expansion options and development sites. He said that and pressure from industry organizations, such as the Property Council of Australia and the Tourism and Transport Forum, provided encouraging signs.

But the responsibility for the suspension of expansion plans, or refusal of funding support from the government, primarily falls on the shoulders of the exhibition industry itself, said Jo-Anne Kelleway, CEO of Info Salons, a registration company. "Our industry association (the EEAA) was only set up in the mid-1990s, and since then we have not successfully lobbied the government or made any inroads to educate them on the scope or importance of our industry," she added.

More economic impact studies and research need to be provided to the government before consideration of support for the industry will be granted, Kelleway said.