Terrorism — The Single Biggest Threat to the Continuing Vitality of Trade Shows Worldwide
Oceanside, CA - Last month was the 13thanniversary of the terrorist attacks on American soil on 9/11. Today, our country faces another similar threat in ISIS, a more violent offshoot of al Qaeda. It is mentioned here to remind our readers of the tremendous economic upheaval on the trade show industry after 9/11 and how another such event may derail the promising momentum prevailing in the trade show industry and the U.S. economy.
Beside the extraordinary human tragedy, the economic losses were staggering nationwide. The airline industry lost an estimated $100 billion annually in the years immediately after 9/11 and several airlines went bankrupt. Insurance costs registered upwards of $40 billion. Estimates of job losses went as high as 1.8 million and a loss in GDP of $500 billion. Oil prices skyrocketed and then settled down, but have remained at much higher levels than before the attacks. Ultimately, it led to two expensive wars and ever-increasing national security costs. More than $1 trillion has been spent on security changes since that day, according to Economist magazine.
One of the industries that suffered the most was the exhibition business. Those at conferences or shows could not return home immediately and many upcoming events were canceled, even overseas. The industry did not resume any semblance of normalcy for a year or more; however, business would never be the same. The lingering impacts were profound:
- Safety rose to the top of most organizers’ concerns, as controlling and monitoring the access of attendees, exhibitors, staff, contractors, and suppliers, along with materials, became a priority.
- Travel restrictions are a way of life now with stricter visa requirements for international travelers to participate in shows as well as the heightened airport and trade show security.
- New materials and design for stronger buildings are now common consideration for new construction of convention/exhibition centers.
- The 2001 recession deepened in the aftermath of the attacks.
“Understandably, this may be a difficult subject for some to ponder, but the industry and country must remain vigilant to prevent another such occurrence that arguably is the single biggest danger to the continuing vitality of trade shows worldwide,” said Frank Chow, chief economist for Trade Show Executive Media Group. The gathering of large numbers of people at trade shows make then vulnerable to an attack. “The fact that the government has confirmed that more than 100 American citizens have joined the ranks of ISIS makes this a more imminent threat.”
Nevertheless, the trade show industry has shown remarkable resiliency after major disasters such as 9/11, Hurricane Katrina, and the Great Recession. After 9/11, attendance started to rebound in 2003 while the number of exhibitors and square footage resumed growth a year later. Trade shows bounced back within a year after Katrina. “On the other hand, recovery from the Great Recession has been very slow but gradual due to the financial aspects of the recession that almost destroyed the credit system worldwide and damaged corporate balance sheets and cash flow,” Chow pointed out.
However, the trade show industry is gaining momentum, and convention centers are expanding or renovating in response to increased demand and sustained economic growth.
Chow said the U.S. may be on the cusp of a long-awaited surge in economic activity. He noted that in 2014 so far, the economy has gained an average of 215,000 jobs a month — the best streak since 1999. He said the U.S. is on track to gain 2.6 million jobs this year. August employment, though not above the average level for this year, still created 142,000 jobs. Historically, the August payroll report is prone to large revisions, and Chow expects any revision to be on the upside since almost every major economic indicator in the past few months points to the U.S. growing faster than what the payroll report suggests.
Last month, Chow questioned why consumers were not spending. In September, he received a partial answer as the August retail sales report was revised sharply upward for June and July. Moreover, August climbed 0.6% from the higher base — the fastest pace in four months. “Despite the revisions, consumer spending is still not where it needs to be for the economy to take off,” he said. “To get there, sustained wage growth above inflation is needed.” He noted that this year, as of August, average hourly earnings have increased 2.1% from the prior year — barely enough to cover inflation. Also, the average workweek has remained the same for six consecutive months.
In the near future, Chow said consumers may loosen their purse strings soon as the University of Michigan/Thomson Reuters Consumer Sentiment Index continues to spiral upward. It hit a seven-year high in August, and the preliminary September index rose to 84.6 — the highest level since July 2013.
Many economists believe the U.S. is unlikely to grow much faster until every major sector of the economy begins to ratchet up. “The economy is not yet firing on all cylinders,” said Sal Guatieri, senior economist at BMO Capital Markets. “Its most important driver, the consumer, is still a passenger in an expansion largely driven by businesses.”
The caution among consumers is best seen in home sales. Housing has been a drag on the strengthening economy since last year when mortgage rates rose. But starting in April, sales have made a resurgence, rising for four straight months. Likewise, new home construction is making a comeback, surging 15.7% in July. Though both home sales and construction starts are still below last year’s pace, the trend has definitely shifted.
Will the momentum in the economy continue in this day of heightened awareness of possible terrorism attacks? Acts of terror are intended to incite fear and intimidation among large groups of people in public places, which makes trade shows and the hospitality industry in general particularly susceptible. We as trade show leaders need to be proactive by calling for the construction of physical barriers at the entrance to convention centers, increasing security, and at the very minimum, creating a social networking team as part of the safety response to update people immediately. Taking proactive steps can make a big difference. To that end, a panel of experts will be speaking at the Gold 100 Awards & Summit on October 23 on security, disaster-preparedness, dealing with uncertainty and other ramifications of the global rise of terrorism.
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