Roland Berger study on the importance of trade fairs for the hotel industry: smaller cities benefit most from additional jobs

• Nearly seven million overnight stays at Germany's ten biggest locations
• Weighted contribution of trade fairs to hotel-occupancy rates has risen from 7.2 to 7.6 percent
• Düsseldorf and Hanover benefit most
• Trade shows generate most new jobs in smaller cities; little effect felt in Berlin and Munich
• Average length of stay of trade visitors almost constant

The importance of trade fairs for the hotel industry has risen over the last few years. From 2001 to 2008, an average of about 6.8 million overnight stays a year were generated by the fairs studied by the Society for the Voluntary Control of Fair and Exhibition Statistics (FKM). These were in Düsseldorf, Hanover, Frankfurt, Munich, Cologne, Berlin, Nuremberg, Essen, Leipzig and Stuttgart. Düsseldorf's hotel industry benefits most from trade fairs with more than 1.4 million overnight stays, while the biggest impact on the surrounding area is recorded in Hanover. Overall, trade shows and exhibitions represent an important tool for generating additional demand for the hotel and catering industry, and with it positive macroeconomic effects (indirect returns). This is the conclusion of a study called "The Importance of Trade Fairs for the Hotel Industry" recently released by Roland Berger Strategy Consultants.

"Trade fairs are becoming more and more important for the hotel industry," says Norbert Stoeck, Head of the Mega Events & Trade Fairs Practice Group at Roland Berger Strategy Consultants. From 2001 to 2008, the fairs examined by the FKM at the ten most important German trade-fair venues (Düsseldorf, Hanover, Frankfurt, Munich, Cologne, Berlin, Nuremberg, Essen, Leipzig and Stuttgart) generated about 6.84 million overnight stays a year. The fairs' contribution to hotel-occupancy rates has risen from 7.2 percent in the period from 2001 to 2004 to 7.6 percent over the past four years. This increase in importance looks small at first glance, but that is mainly due to the marked (19 percent) increase in bed capacity – above all in Berlin.

Düsseldorf's hotel industry benefits the most

The hotel industry in Düsseldorf is benefiting the most. Not only does the city have the highest number of trade-fair-related overnight stays (1.4 million), fairs also make the highest contribution (18.2 percent) to occupancy (as a percentage of annual room capacity). Hanover also manages about 1.35 million overnight stays. Because it stages relatively large events in a city with only limited capacity, the local trade-fair company Deutsche Messe has by far the biggest impact on the surrounding area. Munich has the highest number of trade-fair-induced inner-city overnight stays: just under 709,000. Despite their slightly lower absolute figures, Leipzig, Nuremberg, Essen and Stuttgart recorded the highest growth rates in trade-fair-induced overnight stays. These cities are increasingly successful in establishing internationally attractive trade-fair programs. One square meter of net exhibition space there leads on average to 1.1 overnight stays (the top scorers are Düsseldorf with 1.51 and Hanover with 1.44).

Trade fairs as a tool for regional economic development

The contribution of trade fairs to hotel-occupancy levels in Munich and Berlin is below average and falling – even so, these cities have the highest bed-occupancy rates, despite their massive increase in capacity. Munich and Berlin are evidently especially good at filling hotels and guest houses by means of tourist attractions and conventions. "Overall, our study proves that trade fairs and exhibitions make a significant contribution to generating additional demand and thus substantial macroeconomic effects for a region," says Stoeck, although this applies most to "second-tier" cities that are not tourist magnets. "For these cities in particular, the so-called indirect returns of trade fairs are an important economic-policy tool for creating income and jobs," says Roland Berger's expert Felix von Grega. Stoeck adds: "From an economic perspective, therefore, it would be more effective to concentrate on strengthening expo sites in the smaller cities and to protect them against a subsidy race. In places like Berlin or Munich that are popular tourist destinations anyway, trade fairs only make a relatively small contribution to hotel-occupancy rates. Here, the trend towards mutual poaching is a zero sum game." In the end, nobody except the exhibitors really benefit: "Because of the fierce competition between the locations, the prices per square meter are lower in Germany than anywhere else in the world, despite the excellent quality," Stoeck says.

Trade visitors' length of stay almost constant

The average number of nights spent in hotels by trade visitors remained almost constant at 1.66 over the last four years (compared to 1.68 in 2001-2004). It actually increased in some cities, such as Frankfurt, Berlin, Nuremberg, Essen and Düsseldorf. The average length of stay in 2008 at the locations studied was 1.58 nights. Visitors stayed an average of 2.24 nights in Düsseldorf, 2.06 in Frankfurt, and 1.71 in both Berlin and Cologne. "A key argument in favor of investing in trade-fair locations is the macroeconomic impact of such events. Our study clearly shows that hotels and restaurants, for example, benefit enormously from trade fairs," says Stoeck.