Consolidation in the trade fair market
Somewhat delayed, the financial crisis is now having a considerable impact on the international trade fair market. This market grew by an annual average of 4.5% between 1998 and 2007, but stagnated in 2008. However, developments were not the same the world over: while the German trade fair industry realized 7% growth and generated record sales of EUR 2.9 billion, the US market shrank by 3.1%. Furthermore, available exhibition space and thus competition rose steadily. This has resulted in an ongoing consolidation process. The 20 biggest trade fair companies already have almost 45% of the world market. Media and private equity companies in particular have been able to systematically expand their trade fair activities. The crisis will accelerate the consolidation trend. Especially established markets will profit from this, above all Germany, which has a higher than average number of premium trade fairs. What's more, despite their high quality, German trade shows have among the lowest stall fees worldwide. Transferring established trade fair brands abroad continues to be a success model. Inorganic growth through acquisitions and shareholdings as well as active portfolio management are becoming more and more important.
"The established trade fair countries – especially trade fair world champion Germany – will be the big winners of the crisis in the medium term," says Dr. Norbert Stoeck, Head of the Trade Fairs and Events Practice Group at Roland Berger Strategy Consultants. "Experts still consider China, Russia, India and the United Arab Emirates to be the more attractive growth markets as soon as the crisis is over. However, German trade fairs will be the first ones to profit from the upswing – and expand their market share over the medium term." The reason: many customers and OEMs view leading trade fairs such as the International Motor Show or Hannover Messe as being vital for their business.
Three core trends in the trade fair business
Our study identified three core trends in the industry:
- The international trade fair market will continue to enjoy strong growth, with up to 15% annual growth in emerging nations. Rising worldwide capacities will make competition even fiercer.
- The consolidation process will continue to go forward, driven mainly by international media groups and private equity companies.
- The world's leading media groups are profiting especially from synergies and will continue to expand their market share.
Consolidation is picking up speed
"The international trade fair market has grown on average by 4.5% annually over the past 10 years. However, due to the financial crisis, even traditional events are facing tough times. The crisis won't end before 2010," says Stoeck. Nevertheless, available exhibit space continues to rise steadily – and thus competition too. This has led to major consolidation: "The top 20 trade fair companies will have more than half the world market by 2012," states Stoeck. "They are growing by aggressively acquiring trade fair companies and exhibits, buying and selling events and clearly focusing on international growth markets." Growth through acquisitions is therefore becoming increasingly important. The crisis is helping to drive this trend as a result of cheap takeover prices.
Four strategic options for German providers
"Growth is imperative for a secure future – and the leading German providers can achieve this only through internationalization," says Stoeck. "Inorganic growth through acquisitions and shareholdings as well as active portfolio management are therefore becoming more and more important." Overall, the study identified four options for German providers to realize further growth:
1) as a specialized provider in a relatively safe but profitable niche; 2) as an internationally important player that can market proven products and services in other countries; 3) as a provider of events and marketing products such trade fair publications or e-marketing; or 4) as an integrated trade fair and communications expert that offers everything from one source. According to Stoeck, "if implemented properly, any provider can improve its position. And with the right growth strategy, any provider can leverage the crisis to realize opportunities arising from market consolidation."
"The established trade fair countries – especially trade fair world champion Germany – will be the big winners of the crisis in the medium term," says Dr. Norbert Stoeck, Head of the Trade Fairs and Events Practice Group at Roland Berger Strategy Consultants. "Experts still consider China, Russia, India and the United Arab Emirates to be the more attractive growth markets as soon as the crisis is over. However, German trade fairs will be the first ones to profit from the upswing – and expand their market share over the medium term." The reason: many customers and OEMs view leading trade fairs such as the International Motor Show or Hannover Messe as being vital for their business.
Three core trends in the trade fair business
Our study identified three core trends in the industry:
- The international trade fair market will continue to enjoy strong growth, with up to 15% annual growth in emerging nations. Rising worldwide capacities will make competition even fiercer.
- The consolidation process will continue to go forward, driven mainly by international media groups and private equity companies.
- The world's leading media groups are profiting especially from synergies and will continue to expand their market share.
Consolidation is picking up speed
"The international trade fair market has grown on average by 4.5% annually over the past 10 years. However, due to the financial crisis, even traditional events are facing tough times. The crisis won't end before 2010," says Stoeck. Nevertheless, available exhibit space continues to rise steadily – and thus competition too. This has led to major consolidation: "The top 20 trade fair companies will have more than half the world market by 2012," states Stoeck. "They are growing by aggressively acquiring trade fair companies and exhibits, buying and selling events and clearly focusing on international growth markets." Growth through acquisitions is therefore becoming increasingly important. The crisis is helping to drive this trend as a result of cheap takeover prices.
Four strategic options for German providers
"Growth is imperative for a secure future – and the leading German providers can achieve this only through internationalization," says Stoeck. "Inorganic growth through acquisitions and shareholdings as well as active portfolio management are therefore becoming more and more important." Overall, the study identified four options for German providers to realize further growth:
1) as a specialized provider in a relatively safe but profitable niche; 2) as an internationally important player that can market proven products and services in other countries; 3) as a provider of events and marketing products such trade fair publications or e-marketing; or 4) as an integrated trade fair and communications expert that offers everything from one source. According to Stoeck, "if implemented properly, any provider can improve its position. And with the right growth strategy, any provider can leverage the crisis to realize opportunities arising from market consolidation."
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