WORKING CAPITAL

Exhibitions in Britain are attracting an increasing number of overseas visitors and exhibitors, according to the latest figures from the Exhibition Industry Federation. Last year, the proportion of international visitors at UK exhibitions was the highest ever, at ten per cent, while 18.3 per cent of exhibitors were from overseas.

These figures are particularly significant because the exhibition industry in this country has always had to fight hard for recognition of its true worth. While in many European countries, exhibitions and trade shows are seen as not just valid parts of the marketing mix, but essential components of an industrial marketing communications strategy, in the UK the industry has had to overcome considerable prejudice.

One factor which has hit the UK exhibition industry hard in the years since the war has been the attitude of successive British governments. While central, regional and city authorities in other European countries – Germany and Italy in particular – have encouraged and funded the building of major exhibition venues, UK authorities have not, with the exception of the Birmingham National Exhibition Centre and International Conference Centre. The main exhibition venue in London – Earl’s Court Olympia – was built with private sector funding.

One industry expert explains that post-war UK governments, of whatever political persuasion, have told British industry that if it wants to export then it should go abroad and take its wares with it, not hold exhibitions in the UK and expect foreigners to come to it.

German and Italian industry was told the exact reverse in the post war years, it seems. They were encouraged to build large exhibition venues to bring the world to them, to see how the countries and their industries had been reconstructed after the war. Ironically, the expert adds, much of this advice came from British economic advisers.

As a result, many medium-sized German and Italian cities have exhibition venues that dwarf the UK’s largest. The three cities with the largest amount of exhibition space in Europe are Hanover, which has something like 480,000 square metres, Frankfurt with 270,000 and Cologne with 255,000. By comparison, the NEC in Birmingham has about 160,000 square metres, Earl’s Court has 60,000, Olympia 40,000, Wembley 17,000 and Alexandra Palace 10,000.

International accountancy and management consultancy company Touche Ross recently conducted a study of the UK’s exhibition industry space requirements, for the London Docklands Development Corporation. The LDDC is seeking funding to build a major new exhibition centre in London’s Docklands.

The Touche Ross study concluded that it is very difficult for exhibition venues of less than 20,000 square metres to achieve a genuine return on investment, and that there was a particular shortage in the UK of venues between 50,000 and 100,000 square metres.

The study also makes the point that the NEC in Birmingham, while a large exhibition centre by European standards, “hosts relatively few truly international events. The UK is not a favoured location for international events, because of its position away from the geographic centre of Europe.”

Many in the industry accept the argument that the UK needs more and higher quality exhibition venues, but who would argue with Touche Ross’ assertion that the UK is not a favoured destination for international exhibitions. They would say that if the UK, and particularly London, had the space, then it would be a favoured destination, because of its status as Europe’s main hub for international air traffic.

Robert Gordon Clark, director of marketing and communications for London First, the organisation established to promote London as a site for inward investment, says: “The shortage of good quality exhibition space here has in the past lost us business to competitors both in the UK and elsewhere in Europe.”

There is a debate going on in the industry, not over whether there should be a new exhibition centre in London, but over its siting. While the LDDC and its supporters argue vehemently that it should be built in Docklands – at the Royal Victoria Dock – another consortium, backed by P&O Exhibitions, which owns and operates Earl’s Court Olympia, is arguing for a West London site, close to Heathrow.

One insider claims the industry in general, and the users of exhibition space in particular, are in favour of the West London site because of the proximity of the airport and the general infrastructure of the area. The Government, on the other hand, is believed to favour the Docklands option, because of the beneficial impact it would have on the economy of the area.

Gordon Clark has no preference – he just wants it in London. “We don’t care if it is in the west or the east. We also don’t believe it will drive down prices – we think it will attract new business.” But he warns there is a danger that whoever gets the green light, and theoretically it could be both consortia, will build “sheds” rather than good quality space.

“We want the best quality space, not the lowest common denominator. The more exhibitions and conferences we can attract from Europe, the more chance there is that overseas companies will set up here,” he adds.

Dianne Gettinby, deputy marketing manager at Alexandra Palace, argues that London has more than enough exhibition space already. “There’s no shortage in London – the real problem is the mix of facilities. It’s very difficult for people who are looking to combine an exhibition with a conference to find a venue which offers the right sort of space for both.”

She is not necessarily against the development of new exhibition space in London, but “the key must be flexibility. Whoever builds it should liaise very closely with exhibition and conference organisers and find out what they need”.

Stephen Gaimster, development manager at the LDDC, says that the Victoria Dock proposal, which involves a 47,000 square metre exhibition facility opening by 1998, with an eventual total of 110,000 square metres, is well advanced.

The scheme, under the Public Finance Initiative, the Government’s attempt to encourage private sector investment in public construction projects, involves the LDDC donating the land for the exhibition centre, and an investment group putting up the money for the development. A funding package is being put together at the moment by US merchant bank Bear Stearns.

Gaimster says: “We believe there has been a proposal for a West London site – but no planning permission has been put in yet. We already have planning permission.” He also suggests that the involvement of P&O Exhibitions, which owns Earl’s Court Olympia, in the West London development might impede its progress. “Clearly the owners of existing exhibition sites have a vested interest in making sure other developments don’t go ahead.”

The LDDC argues the Touche Ross study shows that new exhibition space is going to be required in London by 1998, when its first stage is supposed to be completed. However, Caroline Moore, communications manager for Earl’s Court Olympia, says that while the Touche Ross study does indeed show there will be a demand, it will not be before the turn of the millennium, well after the LDDC says it will be needed.

She bases her argument on an examination of the use of existing exhibition space. The industry measures the efficiency of an exhibition venue by the number of times during a full year that it sells its total space (the “turn”). The Touche Ross study found that if the industry average for venues is 13 turns, no new space is needed until the year 2000; if it is 12 turns, then new space is needed in 1998, and if it is 11 turns – which has been the industry average for the past few years – then new space is needed in 1997.

Moore says, however, that last year (which she claims was a poor year) Earl’s Court Olympia managed 18 turns. While she admits that the event is the most used in the industry, she argues that the average number of turns is higher than 12, so the fact that the LDDC scheme is supposed to be completed in 1998 is irrelevant. The Heathrow scheme, which will be ready at the turn of the century, will be ready to take advantage of any upswing in demand.

As things stand, there appears to be little love lost between the two consortia, which, given the amount of money involved in such developments, is perhaps understandable. Obviously, both parties believe there is money to be made from a new exhibition centre, and each is spending a considerable amount of time and effort finding flaws with the other’s proposals.

Unfortunately, that could mean that the biggest threat to any future exhibition development in London is that the two groups behind the Docklands and Heathrow proposals will waste so much of their energy sniping at each other that neither project ends up being completed.