PCO DOMINO EFFECT
Five years ago the largest U.S. investment bank Lehman Brothers went bankrupt and with its collapse, the financial crisis erupted and has turned into a global economic crisis.
Every day hundreds of companies perish in the world. Usually the world because of this is not shaken off the hinges. It seems that the collapse of the legendary Congrex in our industry can be compared to the events of five years ago.
Thirty-one-years of history of the pioneering company also means as many years of history of the meetings industry. In the first fifteen years of business, everything went only up. Development of the company was based on a unique registration system which in the eighties represented a key innovation in the international meetings industry and all the way to the millennium provided a steady growth and a stable base of international associations. The first harbinger of the new age was the purchase of IT company Shoklogic which was supposed to provide Congrex a competitive advantage in the field of information and communication support of congresses.
This was followed by a period of several acquisitions and takeovers. In 2005, takeover of the British Concord, in 2006 of the Swedish SKD Euroconf and Venezuelan Congreco. The peak was in 2007, just before the economic crisis, through acquisitions of Panama Congrexpo, Belgian AGS – Association Global Services and Swiss AKM AG. At the 25th anniversary of the company they founded in 2008, branches in Denmark and Germany. It seemed that the only way is up. The company’s difficulties began in 2011, when it began to accumulate losses and the first restructuring began. As for Meetings International reports Atti Soenarso the company in 2010 created 49 million Euros of revenue and a profit of around a million Euros. Loss began to accumulate from year 2011 onwards.
How much the world has changed in this period is not necessary to explain. Congrex in its golden age was considered to be one of the most recognisable meetings industry companies. To an uninformed observer the collapse of such an important company seems difficult to understand, because only a few months ago the company organised major international congresses.
Congrex probably failed due to a combination of different causes. Some experts warn over too much and too fast growth through acquisitions in recent years. The shift from quality to quantity and overoptimistic planning. As the biggest problem is mentioned also acquisition of the Swedish company SKD Euroconf AB, which was specialised for corporate events and at the peak of the financial crisis suffered the heaviest losses.
It seems that in similar cases present are a lack of understanding of changes in the market and in the mindset of employees as well as lack of organisational communication and innovation. From this perspective, we can point to at least two important aspects of bankruptcy.
The first is the issue of value-added of professional congress organisers. If we look at this issue in terms of clients, the added value is reduced to a specialised knowledge of congress management with the help of a powerful information system, which saves the client time and money and ensures maximum quality and satisfaction for the participants. IT solutions in the cloud, apps for a few Euros that solve the most complex IT challenges and everyday innovation is a new reality. To maintain own IT company with nearly 50 employees, is simply too expensive and associations are no longer willing to pay it. New masters of the business are excellent integrators of the best innovations and apps into a new fluidly functioning but effective support system. Associations are not sheep, and even these can not be trimmed more than to the skin.
The second issue is content marketing. Associations are bringing together different communities around shared content. The basic function of connecting of PCOs is today assumed by the most basic social networks. The key, therefore, is specialised knowledge of content and experience marketing, which is the real value-added of PCOs. In this area better than congress logistics agencies find themselves agencies with comprehensive knowledge of marketing toolbox, which are able to maintain the loyalty and allegiance of members. Today everything must be packed in an extremely attractive package. The system must operate intuitively, informatively and be members friendly.
Other issues will be triggered too. For many years PCOs have been a kind of banks that collected on behalf of the client registration fees and managed the assets of associations. The Swedish case will open a number of unsettled issues in this area. Things may be extended to such an extent that on the level of the EU specific regulations in this area will be introduced. It will also be interesting to see the reaction of some peer associations, which in the past in such situations responded with delay and rigidity. It might be necessary to rewrite recommendations and write the new standards.
The biggest problem however may be a domino effect on the side of associations . After all, Congrex is a global corporation that operated with a significant share of the market. There will definitely appear fear of working with PCOs and additional financial guarantees and insurance will be required. Several large organisations will be establishing their own in-house PCO s.
In the field of PCOs nothing will be as it was before. Bankruptcy of Congrex has to become a kind of a turning point as behind the magnificent façade of the industry there are many problems and challenges that will irresistibly flourish in the coming months
[dropshadowbox align=”none” effect=”lifted-both” width=”250px” height=”” background_color=”#ffffff” border_width=”1″ border_color=”#dddddd” ] Dan Rivlin on twitter: Congrex Sweden went bankruptcy. A big bimpact on our industry :-([/dropshadowbox]