Convention Centres 2013 Performance & Prospects Member Outlook Survey Michael Hughes Managing Director Research & Consulting Cape Town 2013

About the Study & Objectives Objectives Key Themes Growth & Revenue Investment & Development Marketing & Clients Q&A Fourth edition of the AIPC Member Outlook Survey. 112 member venue responses; 65% response rate. Response Breakout: Europe: 63% North America: 13% Asia: 9% Australia: 8% Africa: 3% Middle East: 2% Latin America: 1% New this Year: Global Event Management Survey.

Key Themes

2012 Centre Gross Revenue Growth Worldwide Average 6.7% 1.4% Expected 2013 Gross Revenue Growth Worldwide Good 2012 Revenue Growth – Yet Centres are Cautious

Mix Messages – Many Opportunities & Challenges Opportunities Decent growth over past few years. Recovery, but very slow, grinding. Corporate meetings growing worldwide. Lack of recent new centre space. New, other revenue streams growing. Hotel development increasing. Content and technology explosion. Event formats changing. Challenges Only 1% revenue growth expected in ‘13. Increasing competition. Conventions/tradeshows a little stagnant. Still buyers market; negotiations. Core revenue streams under pressure. Airline capacity constrained. More IT investment required. Keeping up with rapid change.

Growth & Revenue

Worldwide Revenue Growth with 2013 Forecast Overall the industry has experienced good growth collectively worldwide. But there’s caution forecast.

Worldwide Attendance Growth w/2013 Forecast

Strength of the Economic Recovery 2011 to 2013 Worldwide Mixed message: more centres seeing “strong recovery” – but also more “weak” or in “recession”.

Europe – Revenue & Attendance Growth 2011 to 2013 Gross Revenue Attendance Strength of Recovery

North America – Revenue & Attendance Growth Gross Revenue Attendance Strength of Recovery

Asia – Revenue & Attendance Growth 2011 to 2013 Gross Revenue Attendance Strength of Recovery

Australia – Revenue & Attendance Growth 2011 to 2013 Gross Revenue Attendance Strength of Recovery

Africa – Revenue & Attendance Growth 2012 & 2013 * Gross Revenue Attendance Strength of Recovery * Three centre responses.

Risks to Specific Centre Business Recovery Worldwide Key issues are competition and slow event and meeting client growth.

% of Centers with New Revenue Streams in the Last Year Primary New events owned by venue Sponsorship and advertising Signage Enhanced F&B, new concessions Secondary Exhibitor and event management services Parking Permanent space lease to top corporation Office space lease rental % of Centers that Added a New Revenue Source 2010 to 2013 * Percentage of Venues that Added New Revenue Sources in the Past Five Years

Total Operating Revenue Breakout – Worldwide Average Facility Rental % Ave. Europe: 50% North America: 31% Asia: 61% Australia: 22% Africa: 32% 53% of centres realize a gross profit (net of debt service or loans).

Total Operating Revenue Breakout – Profitable Venues Not ProfitableProfitableDifference Exhibit & Meeting Space Rent 43.2% 46.3% +3.1% Food & Beverage 27.3% 20.9% -6.4% Exhibitor Services 14.0% 13.9% -0.1% Parking 1.7% 3.3% +1.6% Telecom & Internet 5.1% 3.2% -1.9% Retail-Office Rent 2.0% 2.3% +0.3% Other 6.6% 10.1% +3.5% Profitable and not profitable centres do not have a significantly different revenue stream profile. Still, profitable centres look to rent more space, have more parking revenue, and “other” revenue streams. The survey question was: Does your facility business turn a gross profit, net of any debt service or loan payments related to past or current construction or development?

Core Revenue Stream Growth is Soft – “New / Other” Streams are Growing Faster

Percentage of Centres that Have Partnered on Events & Activities with Shared Risk Examples Entertainment and cultural events. Consumer shows. Event marketing and promotion. Shared ticket sales. Event management services.

Investment & Development

New Buildings & Expansions 2010 to 2013 Worldwide Expansion activity is picking up. One-third of members are renovating or refurbishing.

Venue Areas that Need the Most Investment The key areas in need of investment are attendee experience related. Service & Tech Areas Requiring Investment Wi-Fi AV Meeting room technology. Digital signage and advertising. More bandwidth infrastructure. “Continuous technology investments.”

Marketing & Clients

How Centre Sales & Marketing Strategy has Changed “Switched tactics” includes the shift to digital marketing.

Types of Events with Best Current Growth or Outlook % Centres Association conventions with exhibits67% National or International corporate meetings63% Association conferences and meetings61% Local corporate meetings44% Consumer shows35% Entertainment events32% Tradeshows and exhibitions31% Government meetings27% Sporting events14% Other5% Associations are the core market. Good sign: corporate meetings are rebounding around the world.

% of Centres Offering More Discounting 2010 to 2013 % of Clients Asking for Incentives 37.6% average worldwide

How Event Management Business Practices are Changing, According to Centre & Event Managers Source: AIPC; Red 7 Media Research & Consulting CentresEventsDifference Increased negotiations88% 75% +13% Requiring more technology, telecom, bandwidth81% 57% +24% Requiring higher-quality food and beverage40% 22% +18% Asking for more Public Relations assistance and outreach to city, regional leaders 34% 44% -10% Requiring attendance promotion assistance29% 38% -9% Focusing more on event design, ambiance27% 44%-17% The #1 event business practice change is to negotiate more, say both centres and event producers.

The New Business Event Model(s) Attendee Focused Content & education focus More lounge areas Higher quality F&B options Higher quality AV More networking Bandwidth needs, mobile More flexibility Convention Centre More model diversity. Some continue to focus on exhibits, others don’t. Demos skewing either “younger” or “older”. Some growing; others in decline. Each is unique with specific issues and needs. Both an opportunity and challenge for centres.

How Attendees are Changing, Say Event Producers “A younger demographic and they want to get most of their information online or through social media." "Attendees are asking for more content, and are better informed." "They book much closer to the event. Bring fewer people, but more key personnel and they stay a shorter period of time." "Harder to capture. Very price sensitive. Required to justify attendance." “We are seeing fewer attendees, but higher quality in role in the purchasing decision." "Need to market differently to several separate age groups." "They are more focused on getting the most done in the least amount of time.” Source: Red 7 Media Research & Consulting

Where Event Producers are Investing to Better Serve Attendees Source: Red 7 Media Research & Consulting A key more recent trend is the explosion of content and information being developed by events. This is driving need for more venue bandwidth, access points and electrical charging outlets/ and areas.

TIME ENGAGEMENT Evolution of Events – A Few Years Ago… Source: ActiveNetwork

TIME ENGAGEMENT Source: ActiveNetwork; Red 7 Media Research & Consulting Events Today – Content Development Throughout Event Cycle

Event Management = Event Content Development Event management has become about managing more content and information. There are over 35 different areas and types of event content, including: –Archived event information –Award events –Social media, digital communities –Educational sessions –E-newsletters –Entertainment –Exhibits, environments and displays –Keynotes –Mobile apps –Networking events –Publications –User-generated content –Video –Virtual events, webinars/webcasts –Post-event survey and evaluations

Source: Red 7 Media Research & Consulting How Event Management Convention Centre Needs are Changing SecondaryPrimary

Recommendations to Venues from Event Producers Better understand each event audience. Offer suggestions, share ideas on what worked well with other client. Cross fertilize ideas from other sectors. Develop case studies and success manual. Help promote events to stakeholders in the region. Provide more IT bandwidth, and access points. Offer more package plans.

Most Important Centre Management Issues & Trends Competitor expansions, new build projects and discounting. Client requirements and negotiations. Government austerity measures impacting clients. Search for new revenue and business models. Sales and marketing focus on new markets and event types. Flexibility and increased value added services and enhancement. On-going facility investment, expansions, renovations and new technology.

Innovation Waves – Events, Then Centers, Now Attendees… 1980s to Early 1990s New Event Formats, Rapid Growth 1990s to 2000s Convention Centres & Hotels Facilities Boom Today Digital; Attendee Experience; Content Focus

Next Innovation Wave – More Specialized, More Services Attendee-driven. Events more specialized and unique. Enhanced services. More bandwidth required. More event management and centre collaboration.

Q&A