By Doug Ducate, CEIR President and CEO
Where would the exhibition industry have been in 2007 had there not been a correction in 2001-2003?
The exhibition industry grew at a 7.36% CAGR from 1986 through 1999. Without a correction in 2001-2003 and assuming the industry continued to grow at 7.36% CAGR from 2000 through 2007, the Overall Index would have stood at 164.4.
The actual Overall stood at 123.8 at the end of 2007. Given the rate of growth in the recovery years of 2004 through 2007, the estimated 7.36% and the 164.4 number at the end of 2007 is entirely plausible.
What would the decline have been with the free fall in 2008 and 2009 had the benchmark been 164.4? That is hard to answer with certainty. The percent decline is of little value since the fact is there was a correction in 2001/2003.
In effect, one must conclude that the numbers are what they are at the end of 2009 notwithstanding the intervening years. Using that logic, the industry would have experienced a 64 point decline – or some 39% — which is quite possible.
With this data in hand we know a few things:
- During the last 25 years as the industry was experiencing rapid growth, we experienced 3 recessions and the industry never fell below the zero growth line per The Index’s metrics. It was after the recession in the early 90′s when print publishing took a hard hit that we began to say “exhibitions resist decline and are resilient in recovery.”
- During the last 10 years we have experienced two recessions and the industry has responded much like other industries with significant declines. Why? Here are some possibilities…
- Perhaps the industry matured to a point where it could not sustain growth through a recession.
- Perhaps with maturity, we are going to see our industry go through more traditional business cycles.
- We know “exhibitions mirror the industries they serve” so since all industries experienced a very long and very deep recession, it is only reasonable that the events that served them eventually declined also. Remember the decline was four times as great in 2009 as it was in 2008. Had the recession ended in 12 months, would 2009 have perhaps looked very differently?
3. Going forward, there are several new benchmarks that significantly increase the value of the CEIR Index.
- Will the recovery mirror past recoveries?
- If the recovery doesn’t track 2004-2007, what is the variance and what does that suggest?
- Will the industry continue to track GDP?
- What will happen to valuations and multiples?
- Will organizer margins shrink, and, if so, to what level?
- If margins shrink will some owners’ interest in producing exhibitions decline?
Our ability to slice and dice data makes it essential for us to do so to further analyze and predict future performance. The dream behind the original creation of the CEIR Index just got much closer to being a reality.
