Credit crunch vs credit sharks
Björn Kempe believes Covid-19 will accelerate consolidation and examines some likely future impacts
ovember 9 , 2020 marked an important day for the global exhibition industry – with the announcement of the success of the latest trial of the vaccine by the Pfizer / BioNTech joint venutre . The result on the stock market was stunning - Netflix , Zoom , Alibaba , MS , Facebook all initially lost up to 20 % in stock value on the news , while exhibition companies like Informa Markets , Fiera Milano and major hospitality players made big gains . The reason could be simple - the world is craving for social interactions and contacts again . People still value social contacts over sitting home alone in isolation , even if full holographic walkthrough experiences might not be too far away .
The Covid-19 pandemic has shown us our weaknesses this year and has shaken our entire industry globally . Research has reported an average 70-80 % loss of revenues for industry players in all markets except China . China , which recorded the start of the pandemic , turned out a winner due to its very strict travel management and success in isolating the virus . Its tradeshow business ( domestic at least ) is back in full swing .
China International Import Expo ( CIIE ) was another great success in Shanghai recently with many international companies represented . While China is celebrating and Thailand and Singapore are bringing their exhibition worlds back to life again through strict rules , other markets are still in crisis and experiencing the full force of the second wave of coronavirus .
European exhibition organisers had thought there was some autumn light at the end of the tunnel with shows running in Leipzig , Duesseldorf and Friedrichshafen , as well as in Milan and Paris in September and October , but most European and US organisers were back to hibernation by December .
Even in cases where organisers are prepared and willing to run their in-person shows , many exhibitors and visitors don ’ t yet feel confident despite strict Covid-19 prevention measures undertaken in Europe .
Organisers on this continent have suffered massive losses of revenues and have had to raise significant capital increases from their key stakeholders and the financial markets . Reed , Tarsus , Informa Markets , DMGT , Hyve have all gone this route . Central European organisers such as Comexposium and the German Messes have also been hit hard , with Comexposium having to jump under the default rescue umbrella in October to survive and to receive fresh capital . German Messe companies have also asked for more than € 600m from their stakeholders and the winter months are proving harsh for most supervisory boards in Germany .
For 2021 some are forecasting more annual loss of revenues of at least 50 % and Frankfurt and Berlin Messes have already announced
Björn Kempe , CEO ExposAsia
no tradeshow activity there until at least April .
Not only do the German companies need capital but they also realise how expensive their current organisations are and many have been reducing their workforces . Credit sharks have also entered the stage . Many Private Equity companies , banks and Asian exhibition companies and funds have realised this could be a one-time window to open up the German exhibition market . The question is , will the German Messe model be sustainable and grant every city tax dollars from visitors and exhibitors in future ?
What is certain is that Covid-19 will accelerate consolidation in our markets . Many family companies in Asia will not survive the crisis and digital formats will slowly take over .
European organisers must think how to stay competitive and not be eaten up by credit sharks . Chinese and Asian organisers will likely be not feeling such a credit crunch and will be waiting with full pockets for what could possibly be a Black Friday shopping spree of a lifetime !
Meanwhile , I wish all readers to stay positive and healthy and I wish you all the best for 2021 and a Merry Christmas season !
www . exhibitionworld . co . uk Issue 6 2020 35