At a Standstill: The events industry under the COVID-19 threat
An unprecedented number of event postponements and cancellations came in the wake of the COVID-19 pandemic, as cities and even entire countries are put on lockdown in an effort to mitigate the further spread of the virus. Events such as industry conferences and trade shows, as well as concerts and festivals were among the first to be shelved, followed by marketing activations and company functions. Social gatherings like birthday parties and even weddings are also being nixed left and right.
By its very nature, events is all about bringing people together. Audiences, delegates, attendees, and guests enjoy a show, exchange information, grow their networks, or celebrate special occasions in a single location. COVID-19 is highly communicable, so event postponements and cancellations are drastic but necessary measures.
An uncertain future
“Events is a seasonal business, which means there are peak months and lean months,” shares Lendro Enore, Managing Partner of Stratminds Events. “The latter is what all companies in our industry plan and prepare meticulously for, but I don’t think anyone could have foreseen what’s currently happening.”
This global health emergency is not the first challenge that the events scene has faced, but its effect is unparalleled in the enormity of its impact and reach. Now more than ever, the very future of the event industry, which is driven mainly by micro, small, and medium enterprises (MSMEs) is in jeopardy.
While multinationals and other big corporations will certainly feel the economic repercussions of a crisis of this magnitude, MSMEs will be hurt by it. Most event management agencies, as well as suppliers of major production requirements such as staging, lights and sounds, generator sets, and printing and fabrication, and even vendors for event essentials ranging from giveaways to barricades, all fall under this broad category.
Some companies do have contingency funds. Originally intended for operations-related situations, the money is now being reallocated to keep the business running despite having no sources of income. However, the amounts can no way fully cover the significant financial losses they’ve already suffered, and will continue to suffer if the situation worsens, or is prolonged.
“Everyone knows that having a contingency fund is one of the absolute basics of responsible business management,” adds Enore. “However, the amount of that fund is almost always directly proportional to the size of the business, so of course it’s not going to be in the billions if we’re looking at MSMEs.”
The onset of the pandemic highlights more than ever the value of a comprehensive event insurance policy. A lot of clients willingly pay for premiums that cover possible damages to persons and property. But there are others who are not always convinced of the necessity to pay extra for postponement and cancellation coverage, thinking it won’t happen to their event.
As a result, they are unable to recover the expenses already incurred, such as reservation fees and down payments, and they may also need to pay postponement or cancellation charges to the suppliers and vendors booked for their event, even if the cause is not directly under their control.
And even when clients do agree to a comprehensive event insurance policy, it only applies to events that were all set before they got postponed or cancelled — it in no way covers projects that are in their very early stages of preparation or planning, even though manpower costs may have already been incurred by both agency and client. And there’s definitely no form of event insurance that would cover potential for projects that are still just concepts, no matter how promising they may be.
In times like these, business interruption insurance would have come in handy, but this level of protection comes with a price tag that’s often too steep for event management agencies, and other MSMEs, for that matter. Taking out a policy of this kind is a double-edged sword — as they are not nearly as liquid as their multinational or big corporation counterparts, forcing the premium dues on their budgets could be detrimental to their operations.
In lieu of business insurance, most companies rely on their respective contingency funds as a fallback — but these are enough to cover only short-term deficits and disruptions and will thus not be enough to keep companies afloat if the global coronavirus emergency goes on for much longer. Most event management agencies are prepared only for low-income and not zero-income months or quarters.
Furthermore, a contingency fund is a completely different thing from a contingency plan, and most companies do not have the latter — especially not for a business disruption of this scale.
“The truth is, there is no contingency plan,” laments Frank Lloyd Mamaril, President and Managing Director of FML Creatives and Productions, Inc. “Live experiences and video, that’s our business — and without them, we have no income, even while expenses continue to pile on. I hope that project advances, as well as late payments, would be enough to sustain us for the next few months.”
The necessity of having a contingency plan, not just funds, is also apparent now more than ever. However, even the most carefully-mapped out programs are rendered insufficient or even outdated by extent of the economic damage the COVID-19 pandemic has and will continue to cause. The harsh reality is that not all businesses will be able to survive this crisis, and the tall order for those who do will be to develop a feasible and thorough contingency roadmap to go with their business plans.
Adapting ways of working
As bleak as the outlook may be for the industry, with a handful of event management firms shutting down temporarily, it’s business-as-usual for most agencies who have adapted the work-from-home (WFH) set-up.
“Our HR immediately implemented the WFH arrangement to prioritize our safety,” shares Marvie Jareno of Live Events. “While the arrangement isn’t something new to the team, it took some getting used to with client meetings and alignments.”
Jareno adds that their company’s digital migration in 2019 has also greatly helped with this transition. With all internal processes accessible via their customized digital platform, even the back-end operations team can continue working remotely while on community quarantine.
WFH allows for the continued planning and preparation for events that are scheduled or have been re-scheduled for the latter part of the year. The coordination work remains the same, as it has always been done through phone calls, messaging platforms, and emails. All meetings, however, have been moved to online video conferencing — from client checkpoints to production planning, and even brainstorming sessions. In addition, fabricated materials and customized items were inspected through photos sent in by the supplier or vendor.
“And while we strictly comply with all mandatories and protocols to help flatten the curve, we have also launched some online employee engagement activities to keep our team creative, to increase our productivity, and also to keep us all sane amid the circumstances,” quips Jareno.
Aside from ensuring business continuity in light of the current situation, WFH also sees to the safety and well-being of a company’s employees, which translates to the safety and well-being of their families and their immediate communities. As the country desperately tries to curb the further spread of the pandemic, this work set-up contributes by keeping people simultaneously at work and off the streets.
The road to recovery
Despite best efforts to manage the situation, the road to recovery is expected to be very difficult for the entire industry. Even after the lockdown is lifted, it will take a while for the events scene to go back to its normal pace, as clients will also need time to recover from their own financial losses.
To get back on its feet, the events industry needs all the help it could get from all possible sources.
The government could offer bailouts for MSMEs like event management agencies that are on the brink of bankruptcy, considering that the business category accounts for about 40% of the country’s GDP and employs 60% of the workforce. Tax breaks, or extensions at the very least, would also be beneficial. Events companies are taxed in the 15-20% range, which would be a big boost if the amount could instead be reallocated for recovery.
From the private sector, banks could be a lifeline for agencies. Bigger credit lines or new low-interest loans with friendly repayment terms will help their clients sustain and later normalize operations. As for those who may already have existing loans, restructuring is a way to make repayment more manageable.
In the middle of the crisis, a number of property owners who lease out office spaces to these companies have also pitched in. Some have offered discounts or deferment options, while others even waived an entire month’s rent for their tenants. This is great example of humanity in business, which will ultimately ensure everyone’s survival and eventual recovery.
Leaders of the events industry are also bracing themselves and their teams for big changes ahead — from workplace practices to actual project executions, creativity and innovation have always been mandatories in events, but even moreso now.
“The world is shifting, but good for the Filipino — we are made to adapt,” quips Mamaril.
The COVID-19 pandemic may have left the industry’s future uncertain, but in events, uncertainty has always been the name of the game anyway. The events management scene is a community of strong-willed, creative problem solvers who work together to make every project a success — and in their capable hands, no matter how daunting this challenge may be, the show will inevitably go on.