Trade Show Executive

association executives, to find out how
this issue might impact show organizers
in the years to come.
By The Numbers
From 2011 to 2012, full-year trade
show performance was so so, according
to the Trade Show Executive Dashboard
(February 2013). “Net square footage
rose 2.4%, exhibitor growth was a weak
1.5%, and attendance outshined both
with a 2.9% growth.”
But the Gold 100 Class of 2012, Trade
Show Executive’s list of the 100 largest
trade shows, posted notable gains in all
three metrics. Using same-show comparison,
the largest shows of 2011 grew
4.4% in nsf, 2.3% in number of exhibiting
companies and 2.8% in total attendance.
It’s clear that trade shows in many
industries have rebounded, and many
are seeing growth but at a more
conservative pace. The industry has
matured but proven its worth as a
successful marketing and sales tactic.
But the last decade has been challenging
for the industry as a whole. From 2000 to
2011, the compounded annual growth rate
declined slightly for net square footage
(0.3)%, exhibitors (1.0)% and attendees
(0.3)%, according to the Center for Exhibition
Industry Research (CEIR). TSE’s database
of convention center statistics was
developed in 2003 so comparable statistics
are not available. However, in the ten-year
period from 2002 to 2012, exhibit space
expanded by 6.1% to 56 million square
feet of prime exhibit space at convention
centers nationally, and the number of
facilities grew from 228 to 248, according
to Trade Show Executive’s 2012 World’s
Top Convention Centers directory.
In the U.S., these 248 convention
centers offer more than 56 million sf of
prime exhibit space, according to TSE’s
World’s Top Convention Centers (June 2012).
By comparison, China has 28 convention
centers, Mexico has 33 and Canada has
24. The average convention center in the
U.S. offers 226,995 square feet of prime
exhibit space.
While it’s true that convention centers
have operated as loss leaders, CVBs have
also generated significant revenues for
their hotel, restaurant and local business
members. They’ve fulfilled their mission
of getting heads in beds.
In fiscal year 2012,
MCCA generated $99.5
million in revenues with
expenses of $115.0
million. That means
MCCA operated at a loss
of more than $15 million
last year. The question:
Does the $461.2 million
in economic impact justify
an operating loss of more
than $15 million?
Paradigm Shift
In 2012, events in Boston attracted more
than 670,000 attendees and filled more
than 519,000 hotel room nights for a
total economic impact of $461.2 million,
according to the MCCA’s 2012 Economic
Impact & Annual Report. The 2012 BIO
International Convention, produced by the
Biotechnology Industry Organization,
attracted 16,505 attendees filling 25,802
hotel room nights with an economic
impact of $19.5 million.
In fiscal year 2012 (which ended June
30, 2012), MCCA generated $99.5 million
in revenues with expenses of $115.0
million. That means MCCA operated
at a loss of more than $15 million last
year. The question: Does the $461.2
million in economic impact justify an
operating loss of more than $15 million?
In 2013, MCCA is budgeted to operate
at a loss of $23 million, which is the funding
cap approved by the state legislature
in 2005. “I’m proud to say that we have
not asked for an increase in our subsidy
since we opened, despite the fledgling
economy,” said Rooney.
“All three convention centers realized
an increase in revenues,” according to
2012 Annual Report. “Overall the authority
performed significantly better than the
previous year.”
Driven in part by the positive financial
performance last year, MCCA is looking
to expand Boston Convention & Exhibition
(BCEC), which means they will have
to address financial questions by political
leaders. “There’s a hesitancy by government
officials to make a large capital investment
because they are concerned about increasing
subsidies indefinitely going forward,”
said Rooney. “I’d like to bend the curve
and not have to increase the subsidy.”
Entrepreneurial Spirit
How do you expand a facility without
increasing the subsidies? Generate new
revenues. “We decided we couldn’t rely
on existing organizational structures
to make that happen,” said Rooney.
“Solutions are going to lie in destinations
actually doing something different about
it, so we created a group and unburdened
them from sales and operations responsibilities.
They will conduct research
and concentrate on product development,
like the private sector.”
Led by Johanna Storella, chief strategy
officer, MCCA’s team began to form last
October, but it has really ramped up since
January. The team includes four current
employees with expertise in operations,
IT, research and business analysis who
were moved from other departments.
Storella, who has an MBA from Northeastern
University, joined MCCA in
2003 and most recently served as CFO.
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