Transcript PPP AOCA 2007 Economic Impact
AOCA Conference 2006
1.11.2006
Impact of events on a Destination Venue. The value chain
Benefits for Companies and the State.
Günther Kruse Messe Frankfurt Germany
B1 GGK 1
What business does Messe Frankfurt?
2
Messe Frankfurt corporate group 2005: a global player in the trade fair sector
Organiser of
117 trade fairs
worldwide Shareholders: City of Frankfurt (60%), State of Hesse (40%)
14 subsidiaries outside Germany, 5 branch offices and 50 foreign representatives covering more than 151 countries
Turnover in 2006:
over 400 million EUR
More than
60,000 exhibitors 3.9 million visitors
and some Third largest exhibition centre worldwide: Total
exhibition space: 578,000 m 2
(indoor: 322,000 m 2 , outdoor: 83,000 m 2 ) Messe Frankfurt Group 3
We make markets. Worldwide.
Mexico City Atlanta São Paulo
14 Subsidiaries 5 Branch Offices
Buenos Aires
50 Foreign representatives 151 countries in the portfolio
Paris Milan Moscow Istanbul Dubai Beijing New Delhi Mumbai Singapore Seoul Tokyo Shanghai Taipei Hong Kong Messe Frankfurt Group 4
117 events worldwide with more than 60,000 exhibitors and 3.4 million visitors
2005 business year Trade fairs and exhibitions at the Frankfurt exhibition venue (of which group events) Number of events Exhibitors 41 (22) 38,663 (23,000) Visitors 2,394,604 (832,000) Net area in m² 1,432,000 (960,000) Other trade fairs and exhibitions in Germany 8 2,648 84,120 72,163 Events outside Germany Total 68 117 18,850 60,151 914,733 3,393,457 412,926 1,917,851 Messe Frankfurt Group 5
Exhibitors from all over the world
International participation at the Frankfurt exhibition venue* in 2005:
14,415 exhibitors from 100 countries Top 10 exhibiting countries
1. Italy 1,663 2. China 3. India 1,526 838 7. France 4. Taiwan 5. UK 788 737 662 9. Spain 572 10. Turkey 524 * own events Konzern Messe Frankfurt 6
Trade visitors from all over the world
International participation at the Frankfurt exhibition venue* in 2005:
250,983 visitors from 180 countries Top 10 visitor countries
1. Italy 21,109 2. Netherlands 3. UK 4. France 5. USA 15,802 15,495 15,466 12,964 6. Switzerland 7. Spain 8. Belgium 10. China 12,013 11,928 11,849 9. Austria 9,254 9,238 * own events Konzern Messe Frankfurt 7
Highlights in 2006
Ambiente
with record visitor numbers and even more international orientation
Musikmesse/Prolight+Sound
– record results in terms of exhibitors, visitors and net space In September, the largest
Automechanika
ever is expected “Fair trio” Paperworld, Christmasworld, Beautyworld with two figure
increase in visitors
from Europe and significant increases from abroad Successful relaunch of the
Fine Art Fair Frankfurt Light+Building
abroad with powerful boost in growth from German and Successful debut of
Design Annual Joint Venture
Exhibition in China: Guangzhou International Lighting Launch of
Productpilot
Messe Frankfurt Group 8
Economical Impact is a difficult topic
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Economic impact on the venue
• • •
Exhibition and convention centers earn money with:
renting out space
, squaremeters and rooms
selling monopoly services
else then the landlord: – Electricity, water, heating (which cannot delivered by anybody
selling other services
like – Standconstruction – Personnel services like security, hostesses – Cleaning, waste disposal – Signing – Printing – Letting technical equipment – Catering 10
What‘s important about economic impact?
• Economic impact calculation for venues and convention centers is a
topic of great interest
.
•
Different approaches
to calculationg and presenting such figures.
• Level of interest understandable: the venues
have to demonstrate their value
to the community and the shareholders, particularly when an
operating deficit
may need to be justified.
•
intensifying competition
increases this need in the future.
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What‘s important about economic impact calculation?
•
Many different models
developed for measuring economic impact.
• Economic impact calculation has a
„black box“ reputation
.
• the calculations are a matter of
common sense
.
•
Understanding the purpose and audience, actual delegate and planner surveys
• This presentation is rather an
identification of the factors to approach the calculation
and
how
•
and how the resulting information can be put to work
12
Why do an economic impact analysis?
• It‘s a
basic measure
to estimate the benefits of a facility •
Comparing performance
with other venues or business sectors.
• Governments deciding over
investments
economic return.
look first at overall • Useful for
estimating return on investment (ROI)
and get get the
whole picture
.
•
justifying financial performances
environment.
in an increasingly competitive •
Discussion: overall net benefit
• Convention Centers
typically operate as a „loss leader
“ -
the situation
,.
justify
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Before you begin the economic impact evaluation…
• One of the most important preparations is to ensure you have
confidence in your own business figures
and what they represent.
•
Different types of facilities
requirements, this can impact the way you approach the calculations.
have different accounting and reporting • Recognize that
carrying out a proper economic impact analysis represents a real commitment
of time and funding. To be done properly, an analysis must be based on accurate, original survey information collected over a period of time.
• „Cutting edges“ in this process will only weaken the value and credibility of the results and of the presenting persons.
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Economic impact evaluation simplified:
Four steps of an economic impact evaluation:
1.
2.
3.
4.
Designing appropriate surveys
for all relevant data from organizers, delegates, exhibitors and other participants.
Gathering spending data
by applying the survey over an appropriate period and to the right sample group.
Running the data through an appropriate input / output (I/O) model
to calculate induced effects and spin-off benefits such as taxes
Using
the resulting information effectively and
adapting specific target groups
.
it to 15
Clarifying the purpose
• .
Define exactly who it is being done for and to what uses it will be put.
Who‘s the audience
? local or national government, local or national industry or the overall community.
•
Adressing business or community interests
? •
Depending on what level:
delegates and visitors.
including resident or non-resident •
It‘s not a feasibility study
with projections about new business. •
Yes or no:
joint approach with other partners: •
Other, existing studies
received.
may influence how own results are 16
•
Different models for performing the calculation:
Delegate day multiplier factor
. Estimates of delegate days by a „standard“ figure for per diem expenditures by a typical delegate or visitor. Problem: actual expenditures vary considerably depending on the region.
Example Frankfurt
•
Delegate spending calculation
with actual survey, how much they spend in a certain time and in what areas.
•
Expanded spending surveys
: delegate spending surveys enhanced by identifying various categories instead of lumping them together in a single figure. Input-Output model with exhibitors and organisers.
•
Direct plus induced impacts
: The most advanced economic impact model: Direct spendings by delegates and exhibitors and also those „induced“ effects that result as those expenditures move through the local economy. 17
Delegate day multiplier factor
Increase and preview of convention business Spending per Delegate: 1994: 70 €, 2004: 117 €, 2014: 160 €
1994 2004 2014 Delegates
2.201.989
3.393.395
5.000.000
Hotel nights
452.145
1.133.815
2.200.00
75.000
Number of conferences Business turnover Big conventions and events
44.177
153,6 23
TCF
Source: Frankfurt Convention Office
57.966
399 Mio.
80
800 Mio.
120
Preview
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Components of the calculation
• • • • The key is to capture as many of the different areas of spending associated with conventions and exhibitions as possible. Some items to consider:
Survey design
: generating original spending information through surveys. Applied to the proportion of the numbers of delegates, visitors, organisers and exhibitors
Production costs
: those associated with actually staging the event. Site and off-site event, food and beverage or through suppliers not associated whith the venue.
Indirect spending
: associated with pre- and post-travel and by accompanying persons.
Input/output calculation
: accurate spending estimate can be run through an I/O-model for induced benefits with spin-offs and taxes.
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Accessíng and using an input/output (I/O) model
Two major factors
comprehensive picture possible of the economic benefits a venue creates: in generating the most accurate and 1.
Carrying out a
comprehensive client survey
to determine as accurately as possible the spending by delegates, visitors, organizers, exhibitors and accompaying persons 2.
Performing an input/output calculation
to get a broader picture of the overall effects resulting from that spending.
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I/O model
• Survey questions correspond to the
„input“requirements
of the model. • Access an appropriate I/O model
specializing on behalf of clients
.
• Selecting the appropriate:The more general the model, the less accurate. Better use a
specifically for your own area developed model
.
•
Price structure
is a consideration.
• Additional benefit with using a
local government model
.
• Identify the
necessary outputs for different audiences
(i.e. tax revenues and employment calculations) 21
Creating a framework for sampling: how much is enough?
Statistical requirement
to ensure to have enough surveys • Calculate the
number of surveys
„confidence limits“ that reflects the statistical validity and representativeness.) (statistical principle known as •
Capturing seasonality
: Schedule the timing of survey process.
•
Categorizing business types
: reflecting the ratios of different business type (convention/exhibition/conference etc.) •
Categorizing respondents:
outside Capability of being separated into resident and non-resident figures. The latter may be identified with „new“ money entering the local or regional or national economy from 22
Categories of information required from surveys
To ensure surveys that they gather all possible information about spending •
Spending categories: (transportation, accomodation, food and beverage, retail, entertainment
) •
Duration of the event
daily expense figures.
to supply an appropriate „multiplier“ factor for •
Accompanying persons spending
•
Pre/post event spending
•
Production costs on and off-site
•
Additional exhibitor costs
associated with client hospitality, booth construction and local production, goods handling, shipping costs.
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Example Messe Frankfurt – some years ago
1.
a)
1989 : Survey of different big exhibitions (Exhibitors and visitors)
How much money was spent to the venue, to booth constructor to hotels, food and beverage, entertainment, b) c) How long did visitors stay in Frankfurt The result was about
800 US $ in 3 days per person Meanwhile the average spending grew, but the average length of the stay decreased dramatically to 1,3 days.
2.
1993: Early ifo-analog model: general „multiplier“ of 6,0 to the allover turnover of the fairground.
3.
1998: Survey of federal minister for economics and technology
of the general economical impact of exhibitions in Germany, made by ifo-institute Munich. Delivered
a general „multiplier“ of 10,5 to the turnover for squaremeters.
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Example Messe Frankfurt – primary effects 1999 General „Multiplier“ 10,5
Turnover of Messe Frankfurt with Squaremeters
Multiplier 10,5
Minus „security-figure“ 15 %
general national economic impact of fairs made in Frankfurt
200,3 million US $ 2,04 billion US $ 1,8 billion US $
1,7 billion US $
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Tax impact of exhibitions in Frankfurt 1998
Taxreason Employment effect Social economical effect Fair business in Frankfurt Sum National Federal K US $
3.040
Regional State K US $
3.040
Communal City K US $
1.075
50.340
12.395
65.775
50.340
12.177
65.557
18.120
8.218
27.413
Sum K US $
7.155
118.800
32.790
158.745
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In the End …
„Like most other management tools, economic impact figures are only as valuable as managers make them. The first step is getting good information – the second, and equally important step, is putting that information to good use.“
AIPC-guide 27
Using economic impact data effectively
What to do with reliable, defensible figures representing the economic benefits your venue generates?
• Prepare an
announcement
: Media release • Make sure your
local and regional governments are aware
of the information.
Supply the important audience
.
• • • • • • Include Ec. Imp. Calc. Information in
community and corporate information materials Annual „year to year“ comparisons:
Even a negative story can have benefit: to point out issues of increasing competition or a need of new investments.
Include in business statistics Communicate with beneficiaries Explain the breadth of spending and its impact. (I/O) Think about timing
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It‘s not just about economic data!
Because there will always be those who will want to measure the benefits of a venue in other terms. So translate it into other contexts.
• The data should be
interpreted in the sense
(i.e. the third largest industry in the region.
to the local community. • •
Induced Employment benefits Trade and investment impacts
•
Broader community benefits:
educational opportunities, technological, professional and cultural development
,
• Conferences, exhibitions and congresses
promote international cooperation
• Be on the lookout for ways of
community issues linking your announcments to local
• Finally this information
can be the basis for a common set of performance goals amongst facility managers and shareholders
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If you have the right message…
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…you just have to bring it over!
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Thank you for your attention
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