Disney of trade shows
NEC’S Paul Thandi tells how data is helping the company to fairy-tale success
We want to build Disneyland in Birmingham,” says Paul Thandi, gesturing to the view outside his office window, a sprawling site clustered around the Pendigo Lake. “That is, we want to build Disneyland if Disneyland did trade shows too.”
The chief executive of the NEC Group runs four arenas and convention centres in and around Birmingham: the NEC, the ICC, the Genting Arena and the Barclaycard Arena. They play host to a varied portfolio of events, from pop stars Ed Sheeran and Bruno Mars, to Crufts, trade fairs and consumer exhibitions.
The venues, once owned by Birmingham city council, have been given a commercial makeover as a private enterprise, and now welcome almost 7m people each year.
In trendy tortoiseshell glasses, wearing a knitted navy tie as favoured by Hoxton hipsters and with an Apple watch on his wrist, Mr Thandi looks more like the CEO of a tech start-up than a facilities management guy. He explains that the business is now equal parts tech, and bricks and mortar.
“In the past, we used to sell a ticket from the window and then rip it up two feet away. It used to make me cry,” he says. “Now we’re a data-led ticketing business.”
By carefully profiling all its visitors, the NEC knows where they want to park, what they like to drink, even their favourite foods. “We change our offering based on the audience,” Mr Thandi explains. “If it’s a Meat Loaf concert, we’ll get a tanker full of beer. If it’s André Rieu, we get in the champagne and cocktails. For a predominantly female audience, we’ll stock up on prosecco and nibbles.”
This data-led strategy has driven up the average spend per head from £3.33 to £7.81 in two years.
It’s not all about data, however: “Toilets,” he says. “You have to have great toilets. We invest hundreds of thousands into them. If you have good toilets, customers are happy, and the shows come back again and again.”
Mr Thandi has ambitions to expand across the UK and overseas. He reveals that there are “two to three deals on the table” for UK locations. “We’re looking to buy venues from councils and potentially acquire businesses like ours,” he says. New builds are also a possible route to growth, he adds.
Beyond the UK, the NEC has just won a bid to design, build, finance and operate the Colisée Grand Paris, a new 10,000-capacity arena in the French capital. “We’re set to open in late 2019 or early 2020,” Mr Thandi says.
He is also looking at the Middle East, Far East and other territories for new opportunities. “This would never have happened under our previous ownership,” he says. “The council couldn’t pitch to run businesses abroad.”
Not that he’s looking to disparage his previous owners. When Birmingham council acquired the land in Solihull in the late Sixties, and announced it was going to build an exhibition centre outside London, the move was branded a “white elephant”, says Mr Thandi. The 600-acre site was slowly transformed from farmland to five exhibition halls, and the venue was opened by the Queen in 1976.
Later the council added the NEC Arena, then built the ICC conference facilities and a sister stadium to the NEC, which is now called the Barclaycard Arena. “Those two were the catalyst for the regeneration of Birmingham in the Nineties,” says Mr Thandi.
“Exhibition and experience arenas are economic generators. They attract bars, hotels, and become a catalyst for investment in the area.” This theory has been substantiated across the UK: in London, a study in 2015 estimated that the O2 arena generates £405m each year for London, while in Liverpool, the Echo Arena is worth almost £1bn to the local economy.
The NEC supports 29,000 jobs, says Mr Thandi. “From security, to carpet layers, to taxi drivers, we create £2.1bn in supplementary income for the area. People have built their livelihoods off the back of this business.”
The council created the organisation to build on Birmingham’s industrial heritage. “As a piece of forward planning and investment, it was very brave.” The council’s first event, an arts and crafts trade fair, is still going strong today. “It has grown to become the UK’S biggest trade show,” says Mr Thandi.
He says Birmingham City Council was “a great long-term investor” but he found public sector ownership stifling. “We wanted to take more capital risk, create more growth, make acquisitions and take control of our supply chain,” he says. “The council has a day-to-day job that involves emptying bins, looking after children – we weren’t the priority.”
In 2008, he went to his paymasters and presented his vision for the business: private ownership. “Then Lehman happened,” he recalls. “There was ‘no way’ to anything for a while.” It took five years before the council agreed to put the business on the market, and then in 2015, the group was acquired by private equity house LDC in a deal that valued it at more than £300m.
LDC has now owned the NEC for two years, and according to the rules of private equity, could be looking to put the business on the market soon.
Mr Thandi declined to comment on whether his firm is for sale but says that the NEC’S rising profits make it an attractive prospect. “In 2015, we made £27.5m profit, then £33m in 2016 and this year we’re expecting a material jump,” he says. Turnover for the year stands at £166m. However, the industry faces significant challenges at the moment. Terrorism now threatens locations that have a high footfall.
This interview took place just weeks after the terrorist attack at the Manchester Arena, which claimed 23 lives, including many children. “I can’t
talk about the security measures that we have put in place, for obvious reasons,” says Mr Thandi. “All I will say is that we worked with Cobra [the Cabinet Office Briefing Room] to make sure all our events were safe.”
As for Mr Thandi’s “Disneyland” dream, the wheels are already in motion to build hotels on his Birmingham site. Casino brand Genting has invested £200m in Resorts World, the entertainment complex next to the NEC. “High Speed 2 will come in right next to the site, connecting us with London in under 38 minutes,” Mr Thandi adds. A deal with Merlin will put a Legoland next to the Barclaycard Arena, and another brand partnership, which is still under wraps, will open another attraction at the NEC. “We should attract nearly 10m visitors through a combination of all our venues and partners,” Mr Thandi says. “We’re building a boardwalk next to the lake and, inspired by Disney, we’ll build people movers to help move traffic around.
“I always dreamed of taking this business private because I knew the potential it had, if it wasn’t restricted. This place will become a real destination, a place where people come to be entertained.”