Exhibitions
Hal
Vandiver
Executive Consultant
Material Handling Industry of America
Using Business Cycles to
Predict Event Outcomes
Hal Vandiver
Material Handling Industry of America
Material Handling Industry of America
The Industry That Makes The Supply Chain Work ®
• 800 Member Companies
• Umbrella for 18 Vertical Industry Groups
• Programming Includes
– Membership Development
– User Education
– Education Foundation
– Exhibitions
Exhibitions
• Material Handling, Logistics, Supply Chain Solutions
• Exhibitors are MHIA Members
• Capital Buyers, Specifiers, Influencers
• Atlanta/Chicago; Even/Odd Years
• 180,000 to 300,000 Net Square Feet
• 500 to 750 Exhibits
• 22,000 to 32,000 Attendance
Re-purposed Skill Set
• Industry
– Business Management
– Economic/Market
Analysis, Demand
Planning
• Association
– Association Management
– Exhibition and Event
Planning
Would you like to …..
• Predict your Market Size and Growth with
high confidence …
»a YEAR or more in Advance?
»at little or no cost?
• Develop Event and Exhibition Plans that are
»REALISTIC and
»ACHIEVABLE?
Have you ever …..
• … been asked to deliver an Exhibition or
Event budget that was unrealistic in
unfavorable economic conditions?
• … wished for a simple framework to guide
you through a rational planning discussion?
Session Objectives
• Enhance your framework for Exhibition
and Event Planning
• Convey basic Cycle Planning Concepts
• Share MHIA results and demonstrate
applicability to other Exhibitions
• Provide a Tool Kit for Exhibition Cycle
Planning
Observations
• Exhibitors and Attendees are Investors and
Consumers
– Invest in Time, Space, Design, Decorations, Talent
– Consume Content, Entertainment, Hospitality
• Business “cycles” exist in the Exhibition Industry
reflecting market dynamics
• Understanding business cycles is fundamental to
good planning
• Exhibition cycles and activity can be forecasted
Business Cycles
Business Cycle Concepts
Annual Rate of Change
Growth
(Expansion)
Decline
(Recession)
Business Cycle Concepts
Annual Rate of Change
Growth
(Expansion)
Accelerating Decelerating
Accelerating Decelerating
Decline
(Recession)
Leading Indicator
• A statistic that precedes an economic event
• Can be used to predict what will happen in
the economy or a market
• Can be used to forecast a trend
• Important when the economy is reversing a
trend - either coming out of a recession or
heading into one
Annual Rate of Change
Leading Indicator Examples
Corporate Profits
Business Investment
Annual Rate of Change
Leading Indicator Examples
Consumer Confidence
Personal Expenditures
Annual Rate of Change
Leading Indicator Concept
Your Market,
Event or Exhibition
Annual Rate of Change
Leading Indicator Concept
Leading Indicator
Your Market,
Event or Exhibition
Forecast Elements
Economic Forecasts
– GDP and Demand
– Capacity, Production,
Utilization
– Profits, Investments
– Capital Spending
Leading Indicators
– Manufacturing Activity,
Production, Utilization
– Investment (Plant &
Equipment) Activity
– Consumer and Investor
Confidence
– Consumption Activity
New Orders and Shipments
MHEM vs. Industrial Activity
40.0%
30.0%
20.0%
10.0%
0.0%
-10.0%
-20.0%
-30.0%
-40.0%
Material Handling Equipment Manufacturing
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Shipments FRB Manufacturing
Source: USDOC, FRB
2009
2010
2011
2012
18.0%
12.0%
6.0%
0.0%
-6.0%
-12.0%
-18.0%
Industrial Production
New Orders and Shipments
MHEM vs. Industrial Activity
40.0%
30.0%
20.0%
10.0%
0.0%
-10.0%
-20.0%
-30.0%
-40.0%
Industrial Production Leads MHEM by 9 Months
1998
1999
2000
2001
Turning point as predicted
2002
2003
2004
2005
2006
2007
2008
Shipments FRB Manufacturing + 9
Source: USDOC, FRB
2009
2010
2011
2012
18.0%
12.0%
6.0%
0.0%
-6.0%
-12.0%
-18.0%
Industrial Production
Profits vs. Investment
Investment Annual Rate of Change
40.0%
30.0%
20.0%
10.0%
0.0%
-10.0%
-20.0%
-30.0%
-40.0%
1993
Profits Lead Investment by 4 Quarters
1994
Profits
+ 4 Quarters
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Non-Residential CP after Taxes +4Q
Source: BEA, Global Insight
2009
2010
Forecast
by
Global
Insight
2011
2012
2013
80.0%
60.0%
40.0%
20.0%
0.0%
-20.0%
-40.0%
-60.0%
-80.0%
Profits
Profits vs. Investment
MHEM Annual Rate of Change
40.0%
30.0%
20.0%
10.0%
0.0%
-10.0%
-20.0%
-30.0%
-40.0%
1993
1994
Profits Lead MHEM by 4 Quarters
Profits
+ 4 Quarters
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
MHEM Orders CP after Taxes +4Q
Source: BEA, Global Insight
2009
2010
Forecast
by
Global
Insight
2011
2012
2013
80.0%
60.0%
40.0%
20.0%
0.0%
-20.0%
-40.0%
-60.0%
-80.0%
Profits
Shipments
MHEM Forecast 2011 – 2012
40.0%
30.0%
20.0%
10.0%
0.0%
-10.0%
-20.0%
-30.0%
-40.0%
1997
1998
GDP has been offset to
indicate a three quarter lead
of MHEM.
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Forecast
Shipments Shipments Forecast GDP Nominal +3Q GDP Forecast
Sources: USDOC, Global Insight, MHIA
2011f
2012f
8.0%
6.0%
4.0%
2.0%
0.0%
-2.0%
-4.0%
GDP Four Quarter Percent Change
MHIA Events
MHIA Events vs. GDP
1994
1993
Nominal GDP Leads
Events 1 Year
1996
1995
1998
1997
Exhibition Forecast 2009
2000
1999
2002
2001
2004
2003
2006
2005
2008
2007
2010
2009
2012
2011
Event 2Yr ROC GDP 2Yr ROC +1
Sources: MHIA and Global Insight
Forecast
2014
2013
2016
2015
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
-1.0%
GDP Nominal
MHIA Events
MHIA Events vs. GDP
1994
1993
Nominal GDP Leads
Events 1 Year
1996
1995
1998
1997
Exhibition Actual 2010 - 2011
2000
1999
2002
2001
2004
2003
2006
2005
2008
2007
2010
2009
2012
2011
Event 2Yr ROC GDP 2Yr ROC +1
Sources: MHIA and Global Insight
Forecast
2014
2013
2016
2015
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
-1.0%
GDP Nominal
Why is this important?
Business Impact is Significant
Exhibitions represent …
– Up to 85% of our Revenue Stream
– Up to 70% of our Member Value Proposition
Institutionalized Planning
• At every Board Meeting, Financial and
Strategic Planning Session
– Current and Future Macroeconomics
– Industry, Event and Exhibition Forecasts
• Financial and Strategic Plans
– Current Year by Quarter, Each Quarter
– Five-year rolling horizon, Annually
Events
12.0%
9.0%
6.0%
3.0%
0.0%
-3.0%
-6.0%
-9.0%
-12.0%
CEIR Index vs. Business Investment
2001 2003 2005 2007 2009 2011 2013 2015
2002 2004 2006 2008 2010 2012 2014 2016
NRI NSF Index
Forecast by
CEIR, Global Insight
24.0%
18.0%
12.0%
6.0%
0.0%
-6.0%
-12.0%
-18.0%
-24.0%
Business Investment
Events
NTEA Events vs. Industry Sales
2001 2003 2005 2007 2009 2011 2013 2015 2017
2002 2004 2006 2008 2010 2012 2014 2016
NSF Paid Industry Sales +1
Forecast by
Global Insight
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
-10.0%
-20.0%
-30.0%
-40.0%
-50.0%
Industry Sales
Events
NAB Events vs. Industry Sales
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
NSF Paid Broadcast +1
Forecast
by
NAB
20.0%
10.0%
0.0%
-10.0%
-20.0%
Industry Sales
Events
NAB Events vs. Corporate Profits
1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
NSF Paid CPAT +2
40.0%
30.0%
20.0%
10.0%
0.0%
-10.0%
-20.0%
-30.0%
-40.0%
Corporate Profits
Events
NRA Show vs. Industry Sales
1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
NSF Paid Industry Sales - Real $
6.0%
4.0%
2.0%
0.0%
-2.0%
-4.0%
-6.0%
Sales
Events
NRA Show vs. Consumer Sentiment
1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
NSF Paid ICS +1
20.0%
10.0%
0.0%
-10.0%
-20.0%
-30.0%
-40.0%
Consumer Sentiment
Outcomes
• 2007 forecast for 2008 – 2011
– Net Square Feet: next slide
– Cyclical timing: on target
• 2010 Financial Results:
– Decline in space revenue from 2008
– Down from revised revenue volume forecast
– Over profit target at plan level
Outcomes – Accuracy
Net Square Feet Sold
• +/- 3.5% one year out
• +/- 6.0% two years out
Planning Year
Actual vs. Forecast
2008 2009 2010 2011
2007 3.4% 5.6% -3.6% -9.5%
2008 2.2% -3.6% -9.5%
2009 -2.8% -6.4%
2010 -3.6%
Note: Two-year rolling
Exhibition Planning Toolkit
• MS Excel Workbook
• Cycle Calculator, Charts
– Your Event, Your Metrics
– Leading Indicators
• Annual
• Quarterly
• Monthly
Five Easy Steps
1. Determine key macroeconomic elements and track
them monthly or quarterly
2. Identify key leading indicators and track them
monthly or quarterly
3. Obtain or produce an industry or market forecast at
least annually; better quarterly
4. Factor these into your planning discussions
5. Maintain the “Exhibition Planning Toolkit” with key
macro elements and leading indicators
Information Resources
• US Government Data
– US Bureau of Census www.census.gov
– US Bureau of Economic Analysis www.bea.gov
– US Department of Labor www.dol.gov
– US Federal Reserve Board www.federalreserve.gov
• Economics
– Manufacturers Alliance - MAPI www.mapi.net
– National Association for Business Economics www.nabe.com
– Global Insight www.globalinsight.com
Many thanks to …
Chris Brown, Executive Vice President, Conventions and Business Operations
National Association of Broadcasters
Steve Carey, Deputy Executive Director
National Truck Equipment Association
Doug Ducate, President & CEO
Center for Exhibition Industry Research
Hugh Easley, VP Meetings & Expositions
National Association of College Stores
Mary Pat Heftman, Executive Vice President, Convention
National Association of Restaurants
Sherry Romelo, VP Meetings & Conventions
National Association of Convenience Stores
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