Adaptability has always been at the center of every event planner’s job, but the global spread of the coronavirus is testing this exponentially. The strain on the industry is just coming to light as we see the first signs of the economic impact revealed.
It’s impossible to tell the full economic impact the coronavirus is wreaking, but it’s clear that the events industry is likely to be one of the hardest-hit sectors worldwide.
Major event organizers and smaller businesses within the supply chain alike are becoming more affected as the virus continues to rock Asia and Europe and become more widespread across North America. As social distancing becomes increasingly accepted as the best path to slow the outbreak, more and more event cancellations are being announced every day.
In this post, we’ll evaluate both the direct and indirect economic impact faced by the event industry across the world. While the short-term effects are certainly painful, it’s more important than ever for event professionals to find ways to mitigate losses in the long-term.
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An Event Season to Remember (Though We Want to Forget)
Under normal circumstances, the months of March through May represent the busiest season of the year for face-to-face business events, trade shows, and conferences. However, the outbreak of the coronavirus has been the catalyst of many global events being cancelled, even before the World Health Organization declared it a pandemic.
Mobile World Congress in Spain and ITB Berlin were some of the earliest major casualties, and the rash of cancellations have now spread from Europe across the U.S. (along with the virus itself).
Many state and local governments have even placed a total ban on any public gatherings. In New York City, which is under a state of emergency, Mayor Bill de Blasio placed a ban on all events with 500 people or more. Similarly, the state of California has recommended even stricter measures, limiting events to 250 people or less.
A Global Events Economy Under Fire
According to a 2018 study by the Events Industry Council, global business events from the previous year involved 1.5 billion participants across 180 countries, leading to $1.07 trillion in spending. From an employment perspective, business events supported 26 million jobs worldwide and produced $1.5 trillion of gross domestic product (GDP).
To date, more than 500 trade shows alone have been canceled worldwide, according to UFI. The association estimates that the cost of lost business typically generated at these events for exhibitors has reached $26.3 billion. These projections primarily refer to Asia and Europe, where the earliest coronavirus outbreaks were concentrated. However, now that the virus is spreading more globally, more lost revenue is expected in North America and other areas.
UFI recommends that event organizers postpone events rather than cancel them, particularly as we enter what is typically the busiest event season of the year. While the short-term economic impact will still be felt, postponing could help businesses manage the mid- and long-term effects.
Lost Event Revenue Is Just the Beginning
Small businesses are particularly at risk as the economic impact of the coronavirus grows. According to the National Federation of Independent Business, only 23% of U.S. small business report being negatively affected to date. But those companies report both supply chain interruptions and slower sales, and the study recognizes that American businesses are still in the early stages of bearing the brunt of the outbreak.
As event cancellations rise, event-related businesses are already feeling the effects. Following the cancellation of SXSW in Austin earlier this month, multiple business owners and contractors in Texas are hurting. The recently launched website ILostMyGig.com crowdsources financial information of those impacted and to date has estimated at least $2.1 million in lost income.
Large event businesses are also suffering in the wake of the coronavirus outbreak, including publicly traded companies with exhibition-related business on the books. A drop in stock prices over a one-month period paints a telling picture of both the loss of revenue and investor confidence.
Informa, RELX, Clarion, Ascential, Tarsus, Comexposium & other mass market event giants were buying event companies at up to 20X EBITDA multiples, those times are gone, in an instant. Their own biz will take a big hit, convention industry may change forever. https://t.co/FegZg0NcuP
— Rafat Ali, Media Owner & Operator (@rafat) March 10, 2020
Ascential is also publicly traded with 25% of its business devoted to events. While its stock has encountered a 23% decrease over the last month, the company has amazingly announced it does not plan to cancel its European summer events, including the Cannes Lion Festival and Money 20/20 in Amsterdam. As we saw with ITB Berlin, however, announcements like these can quickly change depending on the evolution of the situation.
It’s impossible to precisely predict the event industry’s total economic loss because of the coronavirus. The siloed buckets of data that we’ve found, however, reflect a grim outlook for the near term and will likely get worse before it gets better, particularly as we navigate how quickly the outbreak will spread throughout North America.
Planners should try to lessen the impact by creatively engaging attendees and sponsors until the environment begins to normalize. Incorporating online events will help stabilize the industry in the interim.
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