Exhibitions make a significant contribution to many business sectors around the world. The more global a business sector the more important the role of trade shows in introducing vendors to buyers and ensuring that industry players maintain contact with industry developments. Trade shows tend to be a celebration of success with successful companies exhibiting and successful companies visiting.
These exhibitions do much more than introduce one person to another of course. We know that the major exhibitions that we work with are global ‘meetings places’ providing a highly cost efficient environment in which very senior management can meet with other senior management to discuss partnerships and joint ventures, to maintain and deepen business relationships and to identify new business opportunities.
This catalytic/enabling impact of trade shows is the core to providing the return on investment for exhibitors and visitors and in most cases provides the measurement criteria for determining success.
Exhibitions also make a valuable contribution to the economy by providing employment in events organising companies, venues, hotels, stand/booth design and build and so on.
Why do we want to know the economic impact of an event or the events industry in a region or nationally?
Economic impact generates influence. If an industry wants to exert influence and to attract investment from local, regional or national government or from private investors it has to compete with other industries for attention. An economic impact study provides a basis for comparison of one industry to another in generating employment and contributing to the Gross Domestic Product of the economy. At times of challenging economic conditions a clear view of the economic impact of any industry becomes all the more important when there is competition for dwindling financial resources.
To develop an understanding of the economic impact it is important to first of all define what the industry is. Is it consumer exhibitions and trade shows of a certain size or visitor numbers? In the UK for example, there are thousands of small one day antique fairs. Do we count them in the economic impact or are we looking at events of say 2,000 square metres?
Once we have defined the scope of the industry we are then examining two distinct elements in the analysis process. The first is primary data collection. This is market research that enables us to develop an understanding of the revenue earned and costs incurred in making exhibitions happen.
In the UK, we did this by conducting research surveys with exhibitors, organisers, venues and visitors to develop averages for revenues and costs.
The second component is econometric modelling where we are taking input and output models based on UK Government statistics covering business and consumer tourism, salaries and the multiplier effects of economic activity. In the UK the modelling was undertaken by Oxford Economics.
In essence there are three levels of economic impact that exhibitions have in the economy; direct impact, indirect impact and induced impact and the diagrammatics below clearly illustrate these.
The direct impact is the value-added contribution to the Gross Domestic Product and employment within the sector itself including organiser staff, venues staff and so on.
The indirect impact is this is activity and employment supported down the supply chain, by example, jobs created at a stand/booth builder’s factory.
The induced impact is employment and activity supported by those directly or indirectly employed by the sector spending their incomes on goods and services in the wider economy. This helps to support jobs in the industries that supply these purchases, and includes jobs in retail outlets, in companies producing consumer goods and in a range of service industries.
We can summarise the three components of economic impact in one diagrammatic. It is important to recognise that in any study there are leakages such as investment outside of the economy being analysed, some taxes paid and the potential for some double counting.
It is possible to examine impact on a more local level. For example IFEMA was able to report that CPhI, UBM’s Pharmaceuticals peripatetic trade show generated revenues for Madrid’s service sector totalling over €150 million.
In the UK, from a study conducted by Vivid with visitors and exhibitors, we were able to establish that the CLA Game Fair a 5 day consumer peripatetic outdoor sports show was able to generate €31m revenues for local shops, hotels, restaurants and other services.
Nationally the exhibitions industry in many countries will generate an economic impact of billions of Euros and this can and should influence investment in supporting this important industry that provides an essential lubricant to the wheels of commerce and importantly jobs.