THE BIG PICTURE: Global Industry Status and Prospects Europe Iker Goikoetxea Managing Director Kursaal Congress Centre and Auditorium

Europe: Uncertainty and Variability  Old Europe is not in the “best shape”  It went through 2008/2009 pretty well compared to other advanced economies  BUT some countries are falling back into recession in 2012  And forecasts show a slow recovery, in the best of the cases, for the coming years. Gross domestic product, constant prices International Monetary Fund, World Economic Outlook Database, April 2012

 Besides Greece and Portugal, Spain, Italy and Netherlands forecast a reduction in GDP for 2012  And French and German economies also show lower GDP growth for the current year than other advanced economies. Europe: Uncertainty and Variability Real GDP growth rate - % change on previous year (f)=forecast; (p)= provisional Source: Eurostat

-Markets’ –and inhabitants’- CONFIDENCE goes down as risk premium goes up * This crisis –and so-called markets- are testing the strength of our European Union, and particularly of those that make up the Eurozone. *Our European economic policies are being tested by different national economies’ realities. - Paradox: deflate domestic prices to compete with the emerging world BUT need for burdening our debt by inflating domestic prices. - Balance between austerity and growth programmes. *Our European economic policies are being tested by different national economies’ realities. - Paradox: deflate domestic prices to compete with the emerging world BUT need for burdening our debt by inflating domestic prices. - Balance between austerity and growth programmes. *Basis of our “monetary union” are tested, opening back questions not solved when EURO was adopted. -Fiscal policy union. -Banking System union. -ECB’s role, Eurobonds, … * Even our European democracy is being tested, with the emerging need for a fast decision making process without a real political union. Europe: Uncertainty and Variability

General government gross debt; percent of GDP International Monetary Fund, World Economic Outlook Database, April 2012  Risk premium increases mean more expensive financing for weakest economies  OPINION: it is not so much a sovereign debt issue but a European project’s development issue

Europe: Key Insight from AIPC Survey * The AIPC survey confirms the aforementioned about the general economic situation: 53% (highest) see weak, very weak or even no recovery 8% “are still in recession” (only region) Average growth rates –both revenue and attendees- still positive for 2012, but lower than in 2011 (revenue: +4,8%) “Economy” is biggest concern (69%) for EU Centres * However, and in contrast to other regions: Space pricing has “stayed the same” (51%) and there aren’t “more incentives” given (54%) compared to last year. 49% of EU Centres (highest region) considers currently government shows “same level” of inclination to invest in our industry.

Europe: Key Insight from AIPC Survey * On the other hand, and also in contrast to other regions: “New revenue sources” have been added (58%) And most of European Centres (80%) have either no development plans or are simply considering renovation. * Similarly to other regions (trends): Associations continue as the best growth opportunity Events are shorter and attendance is declining. Those attendees stay shorter periods, do less tourism related activity and spend less on services Negotiations increased and booking windows are shorter

 OPINION: I am afraid these results from AIPC Survey are aggregates that smooth and hide a tougher situation in certain areas of EU. Europe: Worse scenario Prices Costs Investment Innovation  Centres from 2 nd or 3 rd tier cities in countries with deepest recession are in trouble. * Usually these centres are very dependant on national/local economy National Corporate stays close to Headquarters (1st tier cities) Local -small meetings, exhibitions, corporate… coming down (faster or slower) Government events being reduced (number and size) Entertainment/cultural events: o private initiative: struggling with attendance o public funded: struggling with finance support So, national associations’ business is under high price pressure Additional Pressures

KEY: for how long? * Centres from 2 nd or 3 rd tier cities in countries with deepest recession are in trouble. * They cannot suddenly move into international business – destination constraints- *Owners –mostly public institutions- can no longer afford to maintain or start to paying for negative EBITDA * Sales: “red lines” related to keeping a balance with citizenship under question. * Costs: high pressure to minimize all costs putting the level of service at risk. - potential issues with personnel due to the measures being taken * Future strategic investments at risk. Europe: Worse scenario

-We will make an OPPORTUNITY out of the challenges faced by the European Union project - moving faster towards a real political union - making Old Europe definitely much stronger in the global context we compete I AM OPTIMISTIC Europe: Uncertainty and Future - The economy is cyclic - and already taken measures: - structural changes to reduce the deficit - financial system restructuring - “internal devaluation” - plus others to come: - growth programmes -will make the cycle change upwards –sooner or later- -faster or slower- -will have to be sooner than later!!

Thank you