Great expectations as the shows go on
Few people, including Nicolas Borit, chief executive of AsiaWorld-Expo, could have imagined just how successful the cavernous exhibition venue near the airport could be so early on. In its first 12 months, it played host to about 40 events, five of which, including ITU Telecom World, fully occupied the 760,000 sq ft site.
'I think it's very unusual for a new venue to have the honour of welcoming full-house shows during the first year of operation,' Mr Borit said. 'It goes far beyond what we were hoping to make.'
The sold-out China Sourcing Fairs in April and October also helped put the venue on the map, with 150,000 buyers from more than 160 countries attending,
Nasdaq-listed organiser Global Sources has said it will hold eight trade shows in Hong Kong in 2007. A total of 34 events have been booked for AsiaWorld-Expo so far, including five concerts in January alone.
By comparison, the rival Hong Kong Convention and Exhibition Centre, which saw its 18-year monopoly end this year with the opening of AsiaWorld-Expo, hosted 158 events this year and already has 78 slotted for 2007. It is expanding its atrium to create more space.
The government is evidently keen to cultivate the convention industry given the economic benefits derived from hosting tens of thousands of overseas visitors, who spend on hotel rooms, restaurants, shopping and entertainment.
For ITU Telecom World alone, the government estimated direct benefits of HK$900 million. Revenue for the hotel industry was expected to be about HK$400 million, with average occupancy rates surging past 90 per cent during the five-day event.
Mr Borit said AsiaWorld-Expo's first year of operation would generate about HK$4 billion of economic benefits.
AsiaWorld-Expo's better-than-expected performance has not gone unnoticed. In fact, one organisation tried to reserve the new venue for a show it had no intention of staging while putting on a trade fair with a similar theme at the Convention and Exhibition Centre at the same time, said Mike Rowse, AsiaWorld-Expo's chairman. The 'pre-emptive' booking was rejected.
'It's quite a cutthroat business out there,' said Mr Rowse, who is also director general of InvestHK.
But the Trade Development Council, which operates the convention and exhibition centre, also staged events at AsiaWorld-Expo this year, including trade fairs on printing and packaging, auto parts, building materials and furniture, as well as environmental protection.
'The TDC shows were held there somewhat cautiously but they're coming back as well,' Mr Rowse said.
'They're not daft and, because the shows that they launched at the expo made money, they're doing them again. There's the real proof of the pudding.'
Three years ago, that was not the case, Mr Borit said. The industry was suspicious and viewed AsiaWorld-Expo as a threat because it was offering additional capacity in a market where there was a demand.
There was also uncertainty over its impact on the industry because it was breaking the Convention and Exhibition Centre's monopoly.
'Are we destroying value or creating value? I think, during those three years, we could have taken away part of the calendar of the Convention and Exhibition Centre and we would not have added value; we would have destroyed value,' Mr Borit said.
'It did not happen. Yes, the competing shows could have destroyed value from the shows at the centre. No, it did not happen. The reason is very simple. I think both venues and both organisers are doing quality shows.
'At the moment, the pie is growing for me and the pie is growing for them.'
But not for everyone. Leading organiser Reed Exhibitions is moving its influential Asian Aerospace trade fair from Singapore, which has hosted the biennial show since it started in 1981, to AsiaWorld-Expo.
Mr Borit said a successful Asian Aerospace in Hong Kong was vital as the venue needed to demonstrate to organisers that it could deliver, especially for a first show. AsiaWorld-Expo was working with many of the world's largest trade fair organisers in the hope of growing their business at the venue.
'Singapore is losing its business in this particular industry because of China, because of us, because of the Convention and Exhibition Centre, because of Shanghai,' he said. 'It's a fact that those shows are more successful when they are close to the pool of manufacturers. Singapore today is fighting hard to preserve what's left. The government is giving an awful lot of support to sponsor and support this industry in order to have a better chance to stay on the map.
'The real challenge is not between us but what is around and how to ensure that we keep this very enviable position of the number one trade place in Asia.'
In Macau, Las Vegas Sands, a US developer of integrated resorts, is hoping to start filling 1.2 million sq ft of convention space at the Venetian by the middle of next year. The Venetian is on reclaimed land on the Cotai Strip, which also features hotel, casino, retail, dining and entertainment facilities.
The Venetian's vice-president of conventions and exhibitions, Wolfram Diener, said: 'We expect the number of mainland Chinese attendees at trade shows, meetings and conferences to be higher than in Hong Kong since the product mix of the Cotai Strip is more appealing for mainland Chinese business travellers. However, this does not mean that Macau will not draw from other Asian countries and overseas likewise.
'The toughest thing for trade shows to tackle in this region is that the number of potential buyers is growing slower than the number of exhibitors.'
Michael Duck, senior vice-president of organiser CMP Asia, said most visitors to Macau now were from the mainland and Taiwan. CMP is staging some trade fairs in Macau in 2008.
But Mr Rowse is not entirely convinced that Macau will pose a significant threat to Hong Kong's convention business and believes it will attract some mainland-focused shows.
There have been some strong rumours that the Trade Development Council is about to launch shows in Macau, some of which might have similar themes to those already in Hong Kong. But a council spokesman said there were no such plans at the moment, even though it had been closely monitoring developments in Macau.
Mr Rowse said: 'I think it will be a different focus and a different market. I think they'll have to concentrate on attracting new shows, with perhaps different kinds of themes. I think they have to accept the fact that the exhibition side is going to be a loss leader for quite a long time in order to draw patronage for the hotels. I think realistically that's what's going to happen.'
Competition is also keen from neighbouring Shenzhen, where the convention and exhibition centre covers about 2.4 million sq ft, and the first phase of Guangzhou's venue, which already offers 7.5 million sq ft of space.
The choice for AsiaWorld-Expo is clear. Designed to be built in two phases, it will provide 1.1 million sq ft when phase two is completed, although the timing has yet to be determined.
'We had a first year of operation that was much better than expected. This gives us confidence that the business will continue to grow and hence the need for phase two will likely happen sooner than later,' Mr Borit said.
'Once we have a certain number of shows that are really pushing the walls, then you need to make a decision on whether to expand or not.'
Trade fairs tend to be concentrated in April and October to coincide with buyers who place their orders around this time. This means the rest of the year is a 'structural downtime' in the convention and exhibition industry. Especially during the Lunar New Year, Christmas and the summer holidays, venues vie to fill their calendar with other shows like concerts, corporate events and consumer-oriented fairs.