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eNewsletter - 2nd Quarter 2009

It's The Economy, Stupid!

By Emily Nichols
Account Executive, Metroplitan Exposition Services, Inc.

During the 2000 Presidential election, the slogan "it's the supreme court, stupid" was popular among Democrats, emphasizing that more than any other issue, the ability of the next president to shape the Supreme Court would have the most lasting and wide-reaching impact on the future of the nation.  Given that the nation currently faces an economic mess unlike any that most of us have experienced, I'm not entirely certain how true that slogan was; however, I applaud the sentiment.  Namely, that when faced with an overwhelming number of issues, it's important to prioritize not only what is most immediate, but what in fact has the most impact and is the most far reaching.  In other words, don't forget you're in a drought just because there's a rainstorm.

The meetings industry, a vast and diverse collection of companies and individuals, is currently being battered by the economic storm that has inundated our country. (My apologies.  This is the fifth day of non-stop rain and I'm all about the weather metaphors today!)  A year ago, rising fuel prices affected transportation costs, hotel prices, and freight rates.  That slight spring shower was nothing compared to the current downpour, as companies slash budgets and staff.  Events are cancelling, attendance is down, show floors are shrinking, hotels are experiencing painfully low occupancy rates, and people are losing their jobs or taking pay cuts to keep them.  The so-called "AIG effect" has swept in like an Arctic chill fueling the existing storm, as otherwise fiscally viable events cancel for fear of a negative public perception.

The economy is undoubtedly a large and immediate problem, upon which we as an industry are justifiably focusing our attention.  Drought or no drought - at this moment it's raining cats and dogs!  However, when this storm clears, we have some underlying conditions with which to contend.  Before we officially entered this recession, the hot topics in our industry were pharmacodes, technological innovations, and generational shifts.  When the recession ends, those issues will remain-how much of challenge they present depends upon whether or not we lose sight of them in the storm.

Pharmacodes

Pharmacodes, the self imposed restrictions on spending and giveaways in the pharmaceutical industry, have affected exhibit floors and sponsorship revenue.  Associations and tradeshow managers have felt the economic impact of pharmacodes directly and indirectly.  Directly, companies spend less money on sponsorships and rent less exhibit space, decreasing significant revenue streams for show management.  Indirectly, shrinking show floors and decreases in freight lead to increases in general contractor pricing to show management.  General contractors face shrinking exhibitor revenue as the show floors become smaller and the freight becomes lighter.  Facilities that charge exhibit hall rental based on net square feet are seeing their revenues shrink; moreover, smaller booths generally coincide with decreased booth orders, for the facility and the suppliers.  Hotels see decreased revenue from room nights as Pharma companies send less personnel to show site.  Food and beverage revenue decreases as ICW-"in conjunction with"-events decrease.  Like a stone in a pond, the ripples keep going and going.

Everyone is cutting back currently, so the pharma companies' cutbacks don't necessarily stand out in our assessment of the situation, but when the recession ends and the economy rebounds and everyone goes back to spending and doing what they did before the recession, the pharma companies will not return to pre-recession levels, because their cuts have an entirely different genesis.  A benefit of the current economic situation may be that it provides us with additional time to strategize how best to offset the financial downsides of the pharmacodes.  

Technological Innovations

I consider myself to be somewhat of a technological dinosaur.  I'm the only resident of a Western nation without a Facebook account.  If my job didn't necessitate computer usage, my laptop would serve as a large silver paperweight.  I don't "surf" the net, I don't watch U-tube videos (apparently I can't even spell "YouTube"), I forget to check my Yahoo e-mail account for months at a time, I don't have an i-pod (I can't spell "iPod" either!), I don't text message, and I think that Twitter was invented by the devil!

Prevalent in the meetings and convention industry is the belief that technology enhances interpersonal interactions and that the value of personal contact will always support the B2B Industry.  The B2B industry!  Technological dinosaur and anti-blogging activist, and even my language is infected by the lexicon of the text-messaging generation.  Bloggers are replacing trained and experienced journalists in providing information about the world.  Watchers of U-tube (oops, YouTube!) videos are replacing medically trained personnel in delivering babies.  And my car can parallel park itself!  Well, not my car, but the 2009 Lexus!

The B2B industry is made up of individuals who engage in much smaller face-to-face activities every day, that have, over the years, become less face-to-face.  Two people on a date, each speaking to someone else on their cell phones.  A family gathering for dinner together in the dining room, using cell phones and instant-messaging to call the kids to dinner.  Holiday cards sent via Hallmark.com, not the postal service.  Degrees in social work earned on-line without ever walking on a campus.  Technology is changing every aspect of our lives overtly and covertly faster than we can fathom!  How can it not transform the meeting industry?

On-line meeting sites and "virtual convention centers" are replacing face-to-face interactions at a fraction of the cost and the ease of a password.  Why go to the airport and remove my shoes, when I can attend meetings from my home barefoot?  Why print custom static signage when you can display interactive graphics on LCD screens?  Why print program books and session handouts when the entire event can be on a thumb drive or blue-toothed to everyone's blackberry?  Why install carpet, furniture, and custom designed booths when you can design a virtual display space and invite your clients to interact via their cell phone, laptop, or the nav-system in their car?

I agree that technology will never replace face-to-face meetings, but it is most definitely reshaping those meetings.  What happens to the millions of people directly and indirectly employed by our industry if that new shape is smaller, requires less people to produce, and makes less of a financial impact upon our economy?  How do we design and engineer the new shape of our industry so that it continues to be robust, diverse, and economically significant?  The decisions we make today to contend with the current economic challenges must be made with an eye to the long-term future of our industry.  

Generational Shifts

It is not simply a matter of technological changes, it's an issue of generational differences.  Recently, I read that the average age of a convention attendee is 50 years old.  As an average age, that seems old!  (I'm not saying 50 is old - 50 is the new 30, ask People magazine!)  I'm saying that if 50 is the average what does that tell you about how many, or how few young people are attending conventions?  Is it possible that to the new generation, attending a convention is perceived as being as old fashioned as writing a letter, or listening to a record, or manually locking a car door?  Every new generation brings with it new perceptions and priorities and unforeseen changes.  I wonder what the average age is of the many industry pundits who claim that B2B interactions will never die?  I hope it is much younger than 50!

It's the planning, stupid

Now that you are wishing the recession will continue forever, so that we will never have to deal with pharmacodes, technological innovations, and generational influences upon our industry, let me remind you of one very important thing.  If you are reading this, you are a meeting planner or supplier.  You work in the tradeshow and convention business.  You solve problems, big and small, every single day!  If I have learned one thing from my years in this industry, it is that with hard work, the correct resources, and good planning we can solve any problem.

Many in the industry knew we were in a recession long before it became official and planned accordingly.  If the recession is indeed a downpour - those who survive and thrive are the ones that ensured their roofs were in good repair and they had plenty of sandbags before the deluge began.  Whether or not or not you are in a flood zone, hopefully you have assessed your environment and prepared for the storm in advance.  Compared to our current recession, pharmacodes, technological innovations, and generational shifts probably don't require a "severe storm warning" but they are "weather" conditions for which we need to begin planning now.  Even as we check for leaks and fill sandbags during this current downpour, we should not forget to prepare for what comes after this storm.  (I warned you about the weather metaphors!)

As we gather to discuss the immediate challenges of the recession, we should carve out a little time to plan for the long-term challenges that face our industry.  It's possible that the current challenges are simply serving to prepare and strengthen us for the bigger challenges ahead.   We have marshaled our resources, we have redoubled our work efforts, and now all we need is a plan!  If any industry can survive and thrive whatever challenges come its way, it's our industry.  It's the planning, stupid!

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Emily Nichols, is an Account Executive with Metropolitan Exposition Services, Inc., active in both the New York and Greater Philadelphia PCMA Chapters.  Although this is not Emily's first recession, it is the first since acquiring a mortgage, 401k, IRA, and all the other financial accoutrements of adulthood!