Every quarter, the Center for Exhibition Industry Research (CEIR) releases a deep analytic look at the trade show and conference sector with its CEIR Index for the overall exhibition industry. The most recent report, released June 13, reveals slow steady growth over the last year — the latest data, for the first quarter of 2013, show a 1.3 percent index growth rate, while total U.S. economic growth, as shown in the GDP, is at 1.8 percent. CEIR also produced two very revealing graphics with the latest report. Take a look at this graph of GDP and the CEIR Index:
Here we see the annual and quarterly growth rate for the CEIR Index (red line) vs the GDP growth rate (blue line). Note that the CEIR Index was more deeply affected by the Great Recession than the economy as a whole was, and it seems to have begun its dip before the wider economy did. The implication is that the CEIR Index (and thus, the event industry more generally) may be a leading indicator for economic disruption. That is, as the canary in the mineshaft, the event industry is hit earlier and harder as the economy tanks. Which makes sense given the recent history of companies cutting education, travel and expense budgets at the first sign of a downturn.
The CEIR Index itself is composed of four metrics, each measuring an aspect of the industry: show area, number of exhibitors, number of attendees and revenue. Here are the four metrics graphed over time, per the CEIR:
It is interesting to note that the attendance growth metric (the green bars) is the one that started to improve first as the Great Recession ended, and that attendance growth was the highest of the four metrics from 2009 through the second quarter of 2012. Thinking that through, it implies that before exhibitors started coming back to shows, before square footage started to recover, before revenues rose, it was attendees who came back to events first. That is, attendance drives event growth earlier and to a greater degree than the other three metrics. Events don’t grow until attendees start coming back after an economic shock.
Which is to say, attendance growth may be a leading indicator for the CEIR Index, and for the event industry more generally. When attendance rises, the exhibitors and revenues follow — or so the detailed CEIR graphics presented above seem to indicate.
Does the converse hold true? When attendance shrinks, does that herald a future trend toward a decrease in the other metrics? The data presented here do not reveal an answer. Still, it would be very interesting to look at the same graphs as those presented above for the 2005-2009 time period, to see if, as the economy entered the Great Recession, the CEIR Index dipped before the GDP dipped, and if the attendance growth metric dipped before the CEIR Index as a whole dipped.
Now let’s go back to the graphics above — specifically, to the data for the last three quarters. In contrast to the preceeding two years’ worth of data (during which time the CEIR Index and the GDP moved more or less in sync), over the last three quarters, the CEIR Index has grown more slowly than the GDP. Not by a lot, and not to the point of negative growth or contraction — as the CEIR analysis correctly points out, the CEIR Index has shown growth for 11 consecutive quarters. But the Index is moving more sluggishly than the GDP is.
And look at the most recent three quarters of attendance metrics. Attendance had been the highest growing metric, but it has fallen, in Q3 and Q4 2012, to second place, and in Q1 2013, to last. In fact, the attendance metric fell into negative growth in the most recent quarter, the first time any metric in the CEIR showed contraction rather than growth since 2010.
If attendance is a leading metric for the event industry, and the event industry is a leading metric for the GDP more generally, what does that declining event attendence imply about future economic growth? Does a decline in event attendance foretell a decline in the economy?
That’s a very broad generalization to draw on a very scanty basis of three quarters of data, to be sure! But the data is nonetheless worth watching.
And there is an obvious situation that may explain the attendence trend without recourse to Chicken Little’s lament: The ongoing federal government sequester is definitely having an effect on the event industry, as federal agencies cut costs and as recent scandals focus attention on the use of taxpayer dollars. Moreover, anecdotal evidence suggests suggests that government workers are having a harder time getting approval to speak at conferences.
CEIR also tracks its event metrics vertically, looking at event trends over a variety of markets. It would be interesting to look at verticals heavy with civil servant attendees, such as government and education events, and compare attendence metrics with those for other vertical markets. If the data show that the dip in attendence is primarily or even exclusively a concern for government employee attendance at events, then perhaps we can sigh a breath of relief on behalf of the GDP and instead pressure our elected representatives to end the sequester before its negative impact hurts business even more widely.
With that in mind, I went looking for some of CEIR’s vertical data, and found this:
Released April 8, these data show the latest 2012 one-year growth rate for 14 vertical sectors. And down in the red, what are the sectors showing actual contraction? Construction, Government and Education. Another 11 sectors grew in 2012, some just a smidge, others clearly up.
So what’s the takeaway from the overall declining attendance metric? Most likely the majority of that decline can be laid in the door of tightening public budgets. It may be that a closer look at the metrics — or a look at new metrics altogether — would be a wise way to go forward.
[Full disclosure: CEIR is an ABM partner organization that offers invaluable assistance in compiling ABM’s BIN Report.]
By Michael Moran Alterio