The coronavirus pandemic is turning business as usual on its head for sectors around the globe. One of the first to feel its impact, and one of the hardest hit, has been the hospitality and events industry.
According to Eventbrite, the UK event industry was worth £42.3bn to the UK economy in 2018, employing over 500,000 people and delivering 35 per cent of the UK’s total visitor economy.
Companies around the world were already cutting back or banning corporate travel even before the postponement or cancellation of major sporting events - including the Olympics and football’s Euro 2020 - music festivals and exhibitions.
Unsurprisingly, with flights grounded and a third of the planet now social distancing, the impact of the global pandemic on the events and hospitality sector has already been extraordinary.
How bad is it?
In a study of 2,000 MICE (meetings, incentives, conferences and exhibitions) industry professionals by our sister brand C&IT, 79 per cent of respondents said that they had witnessed a drop in bookings, with 64 per cent of UK respondents saying they were “very worried” about the financial future of their firms.
Hotels and venues were particularly concerned, with 98 per cent being worried about the financial impact on their business.
On top of the obvious collapse in revenues, this fear could also stem from the fact that 69 per cent of firms said that their events were not covered by insurance in the event of cancellation, which explains why many are choosing to push events back instead of canning them outright.
“Most planned events had to be postponed or cancelled, and it puts many event creators in a tough financial situation,” says Joel Crouch, vice president of ticketing and events site Eventbrite. “On top of having to pay suppliers, venues, artists, etc. they are now facing refund requests from attendees for cancelled events.”
That's also having a knock-on effect on the hotels venues that host them, many of which are already suffering a drop off in occupancy rates. In a release, Raphael Herzog, chair of Bristol Hoteliers Association, says that most conferences that had been scheduled to take place between now and May have been cancelled - as have many planned as far ahead as July.
“Most hotels are offering alternative dates over the next 12 months, but the big worry is all the uncertainty,” says Herzog.
Occupancy rates across the association’s 40 member hotels are already at half of their expected levels and that is anticipated to fall further over the next fortnight.
If there is some good news, it’s that only 29 per cent of C&IT’s respondents said that their company had made redundancies - a decision no doubt helped in the UK by Rishi Sunak’s promise to pay employers to furlough rather than lay off employees due to the COVID-19 outbreak.
So what can we expect?
Among the chancellor's multi-billion pound rescue package was a 12-month freeze on business rates for all operators. At the time it received lukewarm support from industry bodies. “The damage is being done now, so we need help now,” said Kate Nicholls, chief executive of UKHospitality in a statement on the association’s website.
Emergency legislation to protect businesses that cannot pay their rents from eviction for three months has helped to further allay those fears, but groups are also calling for a cut to VAT (as opposed to a deferral, as has already been announced) to encourage people to book rooms, a delay in the proposed April introduction of the national minimum wage and slashing national insurance contributions for a year.
Nevertheless it remains a deeply uncertain time, and we just don’t know how long this will go on for. Even for those firms that have postponing events to later in the year, there are still no guarantees demand will have recovered by Christmas.
“Some hotels are planning to close as soon as the end of March or partially close; some which are part of larger groups are looking at merging their operations, so that they have just one hotel open,” says Herzog.
“Hotels, venues, and event agencies are going to struggle in the short to medium-term. SMEs particularly are going to have cash flow problems that even government aid may not be able to solve," says Calum Di Lieto, editor of C&IT.
"I don't think it is all doom and gloom though. I am hopeful that the industry will pendulum swing back, as the desire for face-to-face events and travel is going to be higher than ever once the world returns to normal."
Clare Bingham, engagement and operations director at events and engagement agency FMI, is also optimistic about the long-term prospects of the industry bouncing back, believing that the coronavirus outbreak will force businesses to consider “smarter” and more “digital” ways of working.
“This week alone, we’ve moved an international roadshow onto an online forum, we’ve switched travel trip rewards to digital e-codes, we’ve taken new briefs for brand videos to communicate to employees that they are supported during these global challenges, and, we’ve launched new products by leveraging online engagement programmes whilst field teams are grounded.
“It’s likely that the digital shift will change the face of business forever,” says Bingham.
Image credit: Construction Photography/Avalon / Contributor via Getty