There’s no doubt venues and organisers face different commercial pressures and have distinct focuses. To debate relations between the two sides, Exhibition News compiled a special panel at our first Silverstone Race Day on 2 November with three organisers and three venues to discuss a key question: Are venues a partner or just a landlord?
According to a research report from market consultancy firm Vivid Interface, commissioned by EN and unveiled in our October edition, organiser perceptions of venues are generally positive. Most venues earn high scores for the range and quality of infrastructure and services on offer.Of course there is still a way to go before true partnership is achieved, so our panel set out to debate the way forward. Organiser panellists agreed a partnership model was essential to a show’s success, adding that transparency in how both sides operate is key.
“Where it falls down is around transparency, which can lead to suspicion between the two or a belief the other party has ulterior motives,” Diversified’s Carsten Holm told the audience. “The expectations of visitors and exhibitors are much higher than they used to be, and we have to deliver more as organisers. Venues have to deliver more to those exhibitors and visitors as well. “I’ve been in a situation where a venue said what we discussed wasn’t in the final contract and that ended up doubling my costs from one year to the next. I was appalled by it. Your whole business model is based on a different pricing structure. Thankfully most venues aren’t like that.”
“The challenge we have in this country is we approach this as two separate groups with somewhat different objectives, whereas if you look at other countries where you have organisers and venues operating within the same business, it’s easier to take that holistic view,” Holm added. “The more we talk to each other and work towards the same goals, the more successful our relationship will be, and the more success for all of us.”
Trades Exhibitions’ Mark Moloney saw the venue as the landlord, but said that doesn’t mean it can’t be supportive to its tenants. “Our most important venue is Excel and as it becomes more successful, it has to maximise revenue and I respect that,” he said. “In our case, if we fail to deliver to the marketplace, then the venue will be looking to other people in our sector. Likewise, if I’m looking to compete against an organiser that’s failing to deliver, you need fluidity.”
According to Clarion’s Duncan Reid, Excel’s emergence on the scene in 2000 lifted the standard of services delivered by venues. “The fact people like David [Pegler] came from an organiser background, and that Excel has led its approach by bringing on people with organiser experience, gives them the ability to understand what our unique challenges are,” he said.
The NEC’s Kathryn James said funding-based partnerships with organisers weren’t common because it’s not always in an organiser’s interest to be sharing the financial rewards from their events. The way forward is about coming up with a business model that works for each relationship and ultimately allows venues to serve their customers.
“The NEC is comfortable talking about partnership-type tenancy but equally we respect organisers who prefer a landlord-type structure,” she said.
Excel’s David Pegler wanted organisers to be as successful as they possibly can be because it is in both parties’ interests. “The market has changed from where we were 10 or even five years ago and we all now recognise success through partnership,” he added.
EventCity opened in April 2011, offering 28,000sqm of space alongside Manchester’s Trafford Park retail mall. MD Andy Orr said it is still establishing itself as a preferred venue and sees partnership as the way to do it. He admitted meeting with initial scepticism across the organiser community.
“There was a fear of working together and then being charged a big bill. I found that feeling was prevalent across the organiser community, particularly with shows that hadn’t been in Manchester before,” he explained. “As you get to know each other, you can build relationships and hopefully that scepticism disappears.
“Transparency has been one of the issues we’ve had to deal with. Being a completely new venue, at times we may have been naïve and people may have looked to take advantage of that. But as we grow, we want to work with organisers that genuinely want to partner.”Competitive pressure
A major influence on relations between organisers and venues is capacity versus availability of key dates.
“David mentioned in the bad old days of Earls Court knowing what people charge and using that – I think big venues know what you do and they want a percentage of that. They know what you charge and the footfall you bring and I don’t have a problem with that,” Moloney said. “What is encouraging is that there’s a long-term view on it. That’s as much as I can ask for as an organiser. But competition helps and knowing you can move across town or somewhere around the corner is bound to sharpen the market.”
Questions however remain around whether the UK has too much or too little space. According to an AEV survey, UK venues operate at up to 30 per cent occupancy on average. “By any stretch of normal infrastructure businesses such as train stations, airports, shopping centres, large theme parks, that is a really low rate of occupancy,” James stated. “Most infrastructure-based businesses need to punch above 50 per cent in order to be able to continue their investment model.
“That measure says we have excess supply in the market. But the devil is in the detail, and appreciating there are certain months that are really intensive, and others which will be really quiet, is the challenge.”
Both Pegler and James saw consumer shows breaking through traditional show datelines, helping to balance their diaries year-round. Pegler also believed buying cycles are changing depending on the sector and used fashion as an example of where shows could play around with dates. “If you can get the proposition right, there is less resistance to different timelines than there has been before,” he claimed.
Yet organisers argued trade show audiences remained fixed on specific timelines. Holm said one Diversified show last year plummeted 19 per cent after being forced into a different week due to Easter. When it returned to its usual dates, numbers bounced back. “You haven’t got a choice with timelines and that is the fundamental problem with the whole business model,” Holm said.
“There are four or five months where you can max out capacity. We can’t change the buying cycles so it’s either those dates or nothing.”
Reid said increased competition with global events only added to the need to retain specific dates. “Our customers are doing one show, then two weeks later they’re in another country. Sometimes there is no availability to change,” he said.
Where organisers did see the opportunity for stronger partnership is through additional support. Moloney suggested venues could do more with the transport companies, and used the inclusion of Travelcards with Olympics tickets as a great example of how to further entice visitors. “That cost a lot of money but it would be great to have meetings facilitated with the transport operating companies, so you could offer genuine reductions,” he said.
Holm referred to London Underground’s decision to close the Olympia Tube line as an instance where a venue could be working with relevant authorities to make sure communication is adequate. “I ran a show a few weeks ago at Olympia and people turning up were furious because they’d been standing at the platform for an hour, waiting for a train to turn up and nobody bothered to tell them there’s no train anymore,” he said. “It’s a simple thing to communicate by putting up a digital sign and it makes a difference.”
James said The NEC’s physical connection to the train station and airport gave it an advantage when it wanted to provide a specific transport service for customers, such as an airport welcome. “Some things are easy to facilitate because they don’t really cost any money and it’s colleague to colleague,” she said. “Transport discounts are more complicated and have a financial cost but you’re right, it’s something venues could look more into.”
Excel is working closely with Transport for London and spent the last three years lobbying government to ask that when big events come to London, free transportation to delegates is provided. While there are legal issues around doing that, it is starting to get traction, Pegler said. Excel is also happy to arrange tickets for delegates should an organiser want that arranged.“We recently did the same thing with Rotary International where everyone’s badge effectively gave them free access to transport,” James added. “Clearly we have models in the UK where for particular things, we can turn it on and make it work. The challenge to us collectively is how you make that status quo.”
Another area is show experience. Moloney suggested a venue’s role could extend to tips on best utilising space, something James said The NEC was already doing. “Those organisers we’ve worked with have avoided lots of pitfalls as a result of us feeding back what we’ve seen other organisers do, and what things haven’t worked as well in the past.”
In the same vein, Excel works collaboratively with both launch and more established partners such as Clarion when it is welcomed, discussing show strategy and long-term growth prospects.
“Once every six months we’ll sit down with Clarion for a show-and-tell on what’s happening in our business, their business, where we see opportunities and so on,” Pegler said. “Other organisers don’t want that, so you have to find the level. Tough economic circumstances mean it’s a big risk for an organiser to launch. What we don’t want is them to do something that fails because it’s not good for them or us and puts them off coming back.”
As well as sharing the risk with an organiser, Orr said EventCity was happy to provide additional marketing through partner companies in the Peel portfolio including its capital shopping group, which has exposure to up to 40 million people a week. Tenancy flexibility and pricing
Flexibility in tenancy arrangements can also be a bone of contention. Perhaps surprisingly, opinions on the panel were mixed about venues offering discounted rates on a launch show. Holm for example, saw it as an unsustainable advantage to start-ups against more established shows, but Reid ideally wanted a “bit of a deal” that allowed him to spend an extra £100,000 on marketing to guarantee that launch will work.
Moloney’s preference was not having to sign the contract until he reached a commercial tipping point. Low-commitment or take-up rates are other welcome features. Rather than discounts, audience member IMP Events’ Justin Opie asked venue panellists if they would introduce a zero commitment policy on launch shows during the initial stages of the deal. Pegler said no, pointing out venues can sell space once only, while others were more flexible.
“Hopefully by engaging more about the idea, we can help ensure you’re successful,” Pegler said. “At the same time, you have to take some of the risk. The other thing is there are certain times on the calendar when we’re really busy, and it depends on where you’ll sit with that.”
Perversely, the bigger your show gets, the harder it gets to negotiate tenancy, Moloney pointed out, raising concerns that the loss of Earls Court will reduce the number of venues able to house a 20,000sqm show. “It is easier for various reasons to move a smaller show and the fact you can’t move a show easily has to be in everybody’s mind. It’s a commercial world and we have to operate within that,” he said.
The loss of Earls Court was equally concerning for Holm, even if the facility needed a significant upgrade. “Excel coming online changed the dynamic and hopefully The NEC’s Resort World plans will up the game again,” he said. “We may find if something comes online at Heathrow, we can utilise space there. But losing Earls Court means the loss of 70,000sqm of space in central London and that’s a real issue.
“What would be great from an industry perspective is if we knocked down Earls Court and replaced it with a modern facility at the same quality as Excel and have two world-class facilities in London. If we’re all going to grow this industry, we need space and competition.”
Moloney agreed London deserved two world-class venues but as Pegler pointed out, running a venue is an expensive business. “There is too much capacity,” he claimed. “We all want a good environment for shows to run in, and we’re happy to reinvest our money to make sure facilities are up to scratch. But I’m not convinced that another venue is in our best interests.”
Of course the danger is becoming too London-centric and as James emphasised, the capital only represents 30 per cent of the UK population. With transport links improving dramatically and the High Speed 2 rail network coming online, cross-country mobility is rising. Profile exclusivity
As a final question, panellists were asked to comment on profile exclusivity and whether concerns remained around how venues manage and judge potentially competitive shows under their roof. For James and Pegler, the issue was about using common sense. “Having two events splitting the market doesn’t work in anyone’s best interest,” Pegler said. “The problem ends up being a net revenue loss for everyone.”
Moloney said he’d tried to launch a hotel show in London several years ago against Fresh RM’s Hotelympia at Earls Court and wasn’t allowed to even though he was proposing a six-month gap between them. “Even if you have a good idea and want to launch it, certain venues with five or six shows from one player will say sorry, we’re worried about our relationship with that customer who is a big part of our business and they won’t let you do it,” he said. “That’s life and if you are that determined, there are other ways and other venues to go to. It’s up to the venue to balance and that is where the relationship has changed – we’re all willing to sit down and talk it through.”
Reid believed venues are challenging the organiser more, helping to ensure sustainable shows. “They are pointing out areas to see if we’ve considered them or looked at growing into them. I find that more often than venues letting people in by the back door,” he said.
In conclusion, if organisers don’t have some sense of protection within the partnership, then where’s the value in our business, Holm asked. Organisers need to feel their investment into launching and nurturing events is respected. After all, isn’t respect the cornerstone of partnership?
The PanellistsDavid PeglerMD, Excel LondonDavid’s career in the exhibition industry includes working for Blenheim Group and UKIP. He became MD of Excel London in 2008. Kathryn JamesMD of The NEC, Chair of the AEVKathryn joined the venue as chief in 2007 after a stint as MD of London Luton Airport. She became chair of the AEV in 2012. Andy OrrMD, EventCityAndy became the MD of the recently launched EventCity venue by Trafford Park in Manchester in April 2011. He joined from management positions at Peel Group, the property firm that owns EventCity. Carsten HolmMD, Diversified Business CommunicationsCarsten has worked for a series of the UK’s leading organisers including Blenheim Group, Clarion, Quantum, and Emap. He joined Diversified as MD in 2005. Duncan ReidEvent director DSEI, Clarion EventsDuncan is the event director of DSEi at Clarion Events. He joined in 2010 after five years as event director on International Confex, and spent 14 years with UBM (formerly CMP). Mark MoloneyMD, Trades ExhibitionsMark is best known for his Professional Beauty brand, which he’s grown expanded, sold to Emap for £19m, purchased back and grown again over the past 18 years.
This was first published in the December edition of EN. Any comments? Email firstname.lastname@example.org