State of the events industry…
August 9, 2016
Events Industry Reports and Standards
Conference and Incentive Travel (C&IT) magazine recently published their comprehensive annual ‘State of the Industry Report’ for 2016, which together with the big headline stats and profiling of the top agencies, includes commentary on the key trends and challenges facing the events industry. The trends that carry forward year on year include; developing and recruiting the best people, procurement, and event technology.
The wonderful thing about the ‘events’ industry is its diversity. The report’s authors Conference and Incentive Travel (C&IT) magazine kind of neatly sums up that diversity with agencies focused on conferences being quite different to those with a focus on incentive travel based business.
Therefore, when you read through the report it’s necessary to understand what the core business is of the agency offering up the commentary. For example, an agency that provides venue and accommodation booking and management services to its clients can very easily report a contract win of £2m+ which looks and sounds impressive but that work is traditionally high on cost and low on margin to deliver successfully.
Similarly, those corporates and agencies most affected by global political and economic uncertainty are likely to be those that invest budgets in overseas ‘incentive’ based style of events.
Interestingly sustainability, which was featured in the 2015 report, does not warrant a mention, being replaced by a discussion on compliance in relation to data protection. Inevitably ‘Brexit’, terrorism and security concerns are high on most people’s agenda creating an uncertainty that affects both clients and agencies alike.
Page 7 of the report sets out the top 50 agencies ranked by turnover in the events industry in 2015. It is often said that ‘Turnover is vanity and Profit is sanity’ so after scanning the list to see who’s in the top 5 and who’s new to the list, I always move to the pre-tax profit line and the percentage as a proportion of turnover. The current report reveals that there is a span of lower than 1% to a high of 29% although 7 out of the top 10 do not disclose their pre-tax profit figures. There are also a few agencies with very high staff numbers and very low profit margins indicating either that they are one of those in the high volume/low margin businesses, 2015 was a year of exceptional costs or their business model is very fragile.
Of the 30 agencies that declared their pre-tax profit 16 reported 5% or less and just 4 reported double digit profits. Those with +5% and modest staff numbers appear to be the more sustainable agencies. So if I were a corporate buyer I’d be looking at not just who’s in the top 50 but how hard they appear to sweat their assets.
The Top 5
The top 5 event management agency challenges are cited as, talent and recruitment, global and political uncertainty, managing growth, lead times and winning new business / clients.
The top 5 corporate event management challenges are; managing budgets, time, delivering more for less, innovation and creativity and meeting internal demands / expectations.
So, what of the future? Unlike 12 months previous when the UK General Election had elected a new single party government and an improving economic picture was emerging, the current picture is one of uncertainty with what the report cites as a ‘cloudy horizon’.
It is true that event and marketing budgets are usually among the first to suffer in a climate of uncertainty, as was experienced in the recent recession. This however makes event management agencies experienced in managing political and economic turbulence. Those agencies that keep central costs tight and develop strong relationships with their suppliers and critically freelance network are well positioned to operate flexibly.
A positive aspect of uncertain times is that clients and agencies are encouraged to ‘sharpen their pencils’ looking for ways to make each £, $ or € go further. Creativity, innovation and return on investment are all much better tested during tough times where the business need for an event is put under the spotlight.
It’s going to be an interesting 12 months ahead.