Germany: Better days ahead

The latest statistics from the German exhibitions sector show international support rising and the decline in visitor numbers slowing, writes Claire Bond

With 15,000,000sqm of exhibition space and a market share of 57%, Europe has become preoccupied with maintaining its dominance of the exhibitions market.

As a result, 18 members of the European Major Exhibition Centres Association (EMECA) held discussions in May about whether increased hall capacity will ultimately lead to more demand for exhibitions.

During the debate Germany continues to defend its corner vigorously.

With EMECA describing its national market as 'saturated' or 'shrinking,' the assumption now is that the only way to achieve growth is through greater international participation or by eliminating the competition.

During the EMECA discussions, Messe Frankfurt chief executive Michael von Zitzewitz said: "The occupancy of our exhibiting areas is not a question of the square metres available but the demand. Exhibitions will tend to be smaller and change more rapidly in future, because the markets will change faster."

Since the gradual decline in Germany's exhibition business began in 2001, blame has largely been placed on the country's faltering economy, with the domestic market suffering the most.

Harald Kotter, spokesman for the Association of the German Trade Fair Industry (AUMA), says: "Since 2001 we have seen some decline in the industry with regard to key figures including exhibition space, visitors and exhibitors.

"In the past few years we've seen a substantial decline in domestic exhibitors because of the bad economic situation in Germany."

However, it looks as though Germany's fortunes are changing. The latest reports by AUMA indicate that in the past year, the international trade fairs in Germany have in large part shown a period of stabilisation.

For one thing, the decline in visitor figures has slowed, showing a 1.4% reduction in 2004 compared with a 3.7% decline the previous year.

Hans Werner Reinhard, head of communications at Messe Dusseldorf, says: "In the past year the German industry has had a period of consolidation.

The hard period may now be at an end. Everyone has been rationalising their shows but you can't keep rationalising forever. You must start to grow again."

In terms of turnover, last year Messe Dusseldorf became the largest trade fair organiser with its own venue. It hosts shows such as Interpack, the international fair for packaging machinery, and Intergeo, the trade fair for geoinformation and land management.

Although the number of domestic exhibitors again declined by 4% in 2004, international support continued to rise with a 2.5% increase in foreign exhibitors. Similarly, 2.2m foreign visitors - an all-time high - were registered across 154 events. It appears that this rise in international support is what currently gives the business its backbone.

Across its shows Messe Dusseldorf reports a 50% split between international and domestic exhibitors. However, at the industrial shows in which it specialises, international exhibitors account for nearly 70% of those taking part.

Reinhard adds: "We have a very good, diverse portfolio and are very strong in industrial shows.

"In the past few years our business was affected by company bankruptcies and takeovers as well as mergers and acquisitions. However, we have fewer German exhibitors than international exhibitors at our industrial shows. This means we were able to compensate when the past few years were hard."

International investment has become vital, with shows owned by UK organisers remaining regular fixtures on the German trade fair calendar.

UK-based Mack Brooks organises trade shows across the world. Its next, Inter Airport Europe, specialises in airport equipment, technology and services and will be held at Munich Airport from 11-14 October.

Managing director Stephen Brooks says: "We have not really noticed a real setback at the shows we organise in Germany as we operate in sectors that have not been greatly affected. Following unification in Germany 15 years ago there was a definite economic boom followed by a slump. There remains a huge number of unemployed in Germany but the car manufacturers, airlines and airports that we deal with seem to be doing as well as ever. I feel the corporate sector in Germany is better today than it has ever been and is still improving."

But Germany can be a tough environment in which to expand portfolios and launch products. "The market is very mature and it can be challenging as it is saturated with events. The market is also quite conservative and it can therefore be difficult to start new things," says Brooks.

The recovery of international trade fairs in Germany is expected to continue to the end of 2005. In the first quarter alone the number of exhibitors was on average 2% higher than their respective previous events.

Kotter says: "For the first half of 2005 we've seen substantial growth, with exhibitors growing by 2.5%. In the past few years we've seen a decline in domestic exhibitors because of the bad economic situation in Germany.

But this has picked up. The results suggest that we're now in a good way and on a path of growth for the coming year. We're not expecting an immediate 5% growth in the industry but instead we'd expect between 1-2% year on year."

The industry's tentative recovery has been attributed to corporates re-establishing their marketing budgets, which had previously been reduced or shelved. Companies are now recognising the need to commit to a minimum marketing spend each year.

Kotter adds: "Most companies have realised they can't employ a general trend to save every year. They've now stopped and realised that they need to invest in marketing to fight for market shares and present new products. Exhibitions are an effective instrument in doing this and competition is more fierce, both within Europe and worldwide."

A recent survey by TNS EMNID on behalf of AUMA revealed that around 10,000 companies that have so far not exhibited are seriously considering participating in trade fairs during the next two years. Future growth lies in converting these leads into exhibitor and visitor figures.

German organisers also seem to have a decent handle on trade fairs abroad.

At the close of 2004, 174 trade events were reportedly planned for the forthcoming year, with 81 of these in East Asia. In terms of numbers, this was followed by Central and Eastern Europe and the Middle East. China reportedly hosts the largest number of German-organised shows.

Another long-standing company signalling a positive start to 2005 is Messe Frankfurt. This year alone the venue is launching 13 new foreign trade fairs, including two in North America.

"So 2005 looks like it will be a good year," says chief executive von Zitzewitz, "although I would nevertheless like to guard against over-optimistic expectations."

During the 2004 financial year Messe Frankfurt achieved record sales in excess of EUR360m (£243m).

Elsewhere, German organisers continue to invest in worldwide networks of representatives to promote what the country has to offer. Kotter says: "I believe Germany has the most dense network, which is not a development of the past few years but decades. It is important to have direct personal contact in each country, able to provide information about specific trade fairs."

AUMA supports this marketing strategy by distributing information via booklets at each German office which are then formatted in nine languages.

In order to once again establish itself as an exhibition superpower, Germany must also keep an eye on the opposition. France, Italy and the UK have remained direct competitors and it is now glancing over its shoulder at Spain, which has one of the fastest growing exhibition markets in Europe.

Reinhard says: "We see everyone as competitors but both Milan and Barcelona are very active in the market at the moment and they are enlarging their space. They are actively acquiring new shows and investing money. These capacities could become a major problem for venues in Germany."

However, as the outcome of the EMECA debate in May suggests, quality is ultimately more effective than quantity, with the strength of the industry's offering outweighing its demand for more space.

As Nurnberg Messe chief executive Bernd A Diederichs concludes: "The quality of the exhibition concepts determines the success of an exhibition venue and has a positive effect on pricing and thus on the profitability of the respective venue. This is all the more important because Europe is not only the world's biggest exhibition venue, but also by far the cheapest."

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