AOCA Conference 2006

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AOCA Conference 2006

• Impact of events on a Destination - Venue.
• The value chain
• Benefits for Companies and the State.
• Günther Kruse Messe Frankfurt Germany

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What business does Messe Frankfurt?
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Messe Frankfurt corporate group 2005 a global
player in the trade fair sector

• Organiser of 117 trade fairs worldwide
• Shareholders City of Frankfurt (60), State of
  Hesse (40)
• 14 subsidiaries outside Germany, 5 branch offices
  and 50 foreign representatives covering more
  than 151 countries
• Turnover in 2006 over 400 million EUR
• More than 60,000 exhibitors and some 3.9 million
  visitors
• Third largest exhibition centre worldwideTotal
  exhibition space 578,000 m2(indoor 322,000
  m2, outdoor 83,000 m2)

Messe Frankfurt Group
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We make markets. Worldwide.
Moscow
Beijing
Paris
Seoul
Istanbul
Tokyo
Atlanta
Milan
New Delhi
Shanghai
Taipei
Dubai
Mexico City
Hong Kong
Mumbai
Singapore
São Paulo
Buenos Aires
Messe Frankfurt Group
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117 events worldwide with more than 60,000
exhibitors and 3.4 million visitors
Messe Frankfurt Group
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Exhibitors from all over the world

• International participation at the Frankfurt
  exhibition venue in 2005 14,415 exhibitors
  from 100 countries

Top 10 exhibiting countries
1. Italy 2. China 3. India 4. Taiwan 5. UK

1,663 1,526 838 788 737
own events
Konzern Messe Frankfurt
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Trade visitors from all over the world

• International participation at the Frankfurt
  exhibition venue in 2005 250,983 visitors from
  180 countries

Top 10 visitor countries
1. Italy 2. Netherlands 3. UK 4. France 5.
USA
21,109 15,802 15,495 15,466 12,964
6. Switzerland 7.
Spain 8. Belgium 9.
Austria 10. China
12,01311,928 11,849 9,2549,238
own events
Konzern Messe Frankfurt
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Highlights in 2006

• Ambiente with record visitor numbers and even
  more international orientation
• Musikmesse/ProlightSound record results in
  terms of exhibitors, visitors and net space
• In September, the largest Automechanika ever is
  expected
• Fair trio Paperworld, Christmasworld,
  Beautyworld with two-figure increase in visitors
  from Europe and significant increases from abroad
• Successful relaunch of the Fine Art Fair
  Frankfurt
• LightBuilding with powerful boost in growth from
  German and abroad
• Successful debut of Design Annual
• Joint Venture in China Guangzhou International
  Lighting Exhibition
• Launch of Productpilot

Messe Frankfurt Group
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Economical Impact is a difficult topic
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Economic impact on the venue

• Exhibition and convention centers earn money
  with
• renting out space, squaremeters and rooms
• selling monopoly services (which cannot delivered
  by anybody else then the landlord
• Electricity, water, heating
• selling other services like
• Standconstruction
• Personnel services like security, hostesses
• Cleaning, waste disposal
• Signing
• Printing
• Letting technical equipment
• Catering

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Whats important about economic impact?

• Economic impact calculation for venues and
  convention centers is a topic of great interest.
• Different approaches to calculationg and
  presenting such figures.
• Level of interest understandable the venues have
  to demonstrate their value to the community and
  the shareholders, particularly when an operating
  deficit may need to be justified.
• intensifying competition increases this need in
  the future.

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Whats important about economic impact
calculation?

• Many different models developed for measuring
  economic impact.
• Economic impact calculation has a black box
  reputation.
• the calculations are a matter of common sense.
• Understanding the purpose and audience, actual
  delegate and planner surveys
• This presentation is rather an identification of
  the factors and how to approach the calculation
• and how the resulting information can be put to
  work

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Why do an economic impact analysis?

• Its a basic measure to estimate the benefits of
  a facility
• Comparing performance with other venues or
  business sectors.
• Governments deciding over investments look first
  at overall economic return.
• Useful for estimating return on investment (ROI)
  and get get the whole picture.
• justifying financial performances in an
  increasingly competitive environment.
• Discussion overall net benefit
• Convention Centers typically operate as a loss
  leader - justify the situation,.

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Before you begin the economic impact evaluation

• One of the most important preparations is to
  ensure you have confidence in your own business
  figures and what they represent.
• Different types of facilities have different
  accounting and reporting requirements, this can
  impact the way you approach the calculations.
• Recognize that carrying out a proper economic
  impact analysis represents a real commitment of
  time and funding. To be done properly, an
  analysis must be based on accurate, original
  survey information collected over a period of
  time.
• Cutting edges in this process will only weaken
  the value and credibility of the results and of
  the presenting persons.

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Economic impact evaluation simplified

• Four steps of an economic impact evaluation
• Designing appropriate surveys for all relevant
  data from organizers, delegates, exhibitors and
  other participants.
• Gathering spending data by applying the survey
  over an appropriate period and to the right
  sample group.
• Running the data through an appropriate input /
  output (I/O) model to calculate induced effects
  and spin-off benefits such as taxes
• Using the resulting information effectively and
  adapting it to specific target groups.

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Clarifying the purpose

• Define exactly who it is being done for and to
  what uses it will be put.
• .
• Whos the audience? local or national government,
  local or national industry or the overall
  community.
• Adressing business or community interests?
• Depending on what level including resident or
  non-resident delegates and visitors.
• Its not a feasibility study with projections
  about new business.
• Yes or no joint approach with other partners
• Other, existing studies may influence how own
  results are received.

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Different models for performing the calculation

• Delegate day multiplier factor. Estimates of
  delegate days by a standard figure for per diem
  expenditures by a typical delegate or visitor. ?
  Problem actual expenditures vary considerably
  depending on the region. ? Example Frankfurt
• Delegate spending calculation with actual survey,
  how much they spend in a certain time and in what
  areas.
• Expanded spending surveys delegate spending
  surveys enhanced by identifying various
  categories instead of lumping them together in a
  single figure. ? Input-Output model with
  exhibitors and organisers.
• Direct plus induced impacts The most advanced
  economic impact model Direct spendings by
  delegates and exhibitors and also those induced
  effects that result as those expenditures move
  through the local economy.

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Delegate day multiplier factor Increase and
preview of convention business Spending per
Delegate 1994 70 , 2004 117 , 2014
160
Preview
? TCF ?
Source Frankfurt Convention Office
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Components of the calculation

• The key is to capture as many of the different
  areas of spending associated with conventions and
  exhibitions as possible. Some items to consider
• Survey design generating original spending
  information through surveys. Applied to the
  proportion of the numbers of delegates, visitors,
  organisers and exhibitors
• Production costs those associated with actually
  staging the event. Site and off-site event, food
  and beverage or through suppliers not associated
  whith the venue.
• Indirect spending associated with pre- and
  post-travel and by accompanying persons.
• Input/output calculation accurate spending
  estimate can be run through an I/O-model for
  induced benefits with spin-offs and taxes.

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Accessíng and using an input/output (I/O) model

• Two major factors in generating the most accurate
  and comprehensive picture possible of the
  economic benefits a venue creates
• Carrying out a comprehensive client survey to
  determine as accurately as possible the spending
  by delegates, visitors, organizers, exhibitors
  and accompaying persons
• Performing an input/output calculation to get a
  broader picture of the overall effects resulting
  from that spending.

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I/O model

• Survey questions correspond to the
  inputrequirements of the model.
• Access an appropriate I/O model specializing on
  behalf of clients.
• Selecting the appropriateThe more general the
  model, the less accurate. Better use a
  specifically for your own area developed model.
• Price structure is a consideration.
• Additional benefit with using a local government
  model.
• Identify the necessary outputs for different
  audiences (i.e. tax revenues and employment
  calculations)

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Creating a framework for sampling how much is
enough?

• Statistical requirement to ensure to have enough
  surveys
• Calculate the number of surveys (statistical
  principle known as confidence limits that
  reflects the statistical validity and
  representativeness.)
• Capturing seasonality Schedule the timing of
  survey process.
• Categorizing business types reflecting the
  ratios of different business type
  (convention/exhibition/conference etc.)
• Categorizing respondents Capability of being
  separated into resident and non-resident figures.
  The latter may be identified with new money
  entering the local or regional or national
  economy from outside

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Categories of information required from surveys

• To ensure surveys that they gather all possible
  information about spending
• Spending categories (transportation,
  accomodation, food and beverage, retail,
  entertainment)
• Duration of the event to supply an appropriate
  multiplier factor for daily expense figures.
• Accompanying persons spending
• Pre/post event spending
• Production costs on and off-site
• Additional exhibitor costs associated with client
  hospitality, booth construction and local
  production, goods handling, shipping costs.

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Example Messe Frankfurt some years ago

• 1989 Survey of different big exhibitions
  (Exhibitors and visitors)
• How much money was spent to the venue, to booth
  constructor to hotels, food and beverage,
  entertainment,
• How long did visitors stay in Frankfurt
• The result was about 800 US in 3 days per
  person
• Meanwhile the average spending grew, but the
  average length of the stay decreased dramatically
  to 1,3 days.
• 1993 Early ifo-analog-model general
  multiplier of 6,0 to the allover turnover of
  the fairground.
• 1998 Survey of federal minister for economics
  and technology of the general economical impact
  of exhibitions in Germany, made by ifo-institute
  Munich. Delivered a general multiplier of 10,5
  to the turnover for squaremeters.

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Example Messe Frankfurt primary effects
1999General Multiplier 10,5
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Tax impact of exhibitions in Frankfurt 1998
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In the End

• Like most other management tools, economic
  impact figures are only as valuable as managers
  make them. The first step is getting good
  information the second, and equally important
  step, is putting that information to good use.
• AIPC-guide

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Using economic impact data effectively

• What to do with reliable, defensible figures
  representing the economic benefits your venue
  generates?
• Prepare an announcement Media release
• Make sure your local and regional governments are
  aware of the information. Supply the important
  audience.
• Include Ec. Imp. Calc. Information in community
  and corporate information materials
• Annual year to year comparisons Even a
  negative story can have benefit to point out
  issues of increasing competition or a need of new
  investments.
• Include in business statistics
• Communicate with beneficiaries
• Explain the breadth of spending and its impact.
  (I/O)
• Think about timing

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Its not just about economic data!

• Because there will always be those who will want
  to measure the benefits of a venue in other
  terms. So translate it into other contexts.
• The data should be interpreted in the sense to
  the local community. (i.e. the third largest
  industry in the region.
• Induced Employment benefits
• Trade and investment impacts
• Broader community benefits educational
  opportunities, technological, professional and
  cultural development,
• Conferences, exhibitions and congresses promote
  international cooperation
• Be on the lookout for ways of linking your
  announcments to local community issues
• Finally this information can be the basis for a
  common set of performance goals amongst facility
  managers and shareholders

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If you have the right message
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you just have to bring it over!
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Thank you for your attention