A researcher at the University of Westminster carried out a global study into the predicted impact of COVID-19 on the events industry and the stance that some organisations may take in the near future.
Due to a significant reduction in demand for events due to the pandemic, nearly half of all those surveyed (40%) implied that the business they are involved in may not exist in its current form within the next 6-12 months and urged that alterations to the realignment of their costs are imperative in order to stay afloat.
The research involved 675 survey respondents from 59 countries. It takes account of the COVID-19 environment and global economic contraction predicted by the International Monetary Fund and the Organisation for Economic Cooperation and Development over the rest of the year.
The research explored the three key areas of staffing, premises and capital management, all of which have a strong influence on business survival in a recession, which three quarters of respondents indicated that they expected to have to plan for. The report indicates significant staff lay-offs and furloughs, with over 25 per cent of respondents having furloughed full-time employees, while 13 per cent have made job cuts. There was also significant evidence from respondents that downsizing, sharing and the relocation of premises to decrease premises costs was taking place throughout the sector.
As a service-based industry that relies on networks of people meeting in a live environment, the report suggests that the events industry is not well positioned to see demand returning to the levels experienced in 2019, with one third of respondents suggesting that demand will significantly decrease due to the pandemic. 66 per cent of respondents said that a downward change in pricing is needed for the sector to survive.
Many companies are taking advantage of government loan schemes or approaching banks for loans. However, there is anecdotal evidence that as business valuations decrease in 2020, cash rich companies may start to acquire devalued companies, or merge both vertically (with a supply chain) and horizontally (with competitors).
Dr James Morgan, Principal Lecturer in Event Design and Lead Researcher, said: “We have seen some parallels to recession planning from 1991 and 2009 where businesses have had to take similar actions to stay afloat. This includes redundancies and business closures. What is different about this ‘health recession’ is that working from home has become habitual on a large scale. This amplified factor needs to be taken account of in the wider economy as it has negative implications for the commercial property market.”
The full report can be accessed from https://westminsterresearch.westminster.ac.uk/item/qzxz3/covid-19-business-impact-study-global-perspective