Denzil Rankine, Executive Chairman, AMR International analyses the impact of coronavirus on the global exhibitions industry.
Coronavirus has put us all in an unprecedented situation, one that is rapidly changing almost by the hour. First and foremost, I want to extend our support to the global organisers and investors we work with, and to the wider events community. We understand this tragedy is making it extremely difficult to operate and for many, business survival is the paramount concern.
At this stage, we have compiled the following update on what we currently know. We explain the impacts, how the future may potentially play out, along with some potential strategies. As developments evolve, we will provide further updates.
Likely impacts and players most at risk
Coronavirus will certainly cause a double-digit percentage revenue and profit hit to the global industry in 2020. AMR International will provide its Globex subscribers with updates in advance of the five-year forecast to 2025, which is due for release in September.
Organisers and service providers most at risk include any highly leveraged or under-capitalised businesses. Those trade associations that depend on their flagship event for the lion’s share of their income and which are forced to cancel will face substantial challenges. A limited number of weaker events or service providers risk failure.
Largely, venues will weather the storm due to long-term contracts and their capital structures. Organisers with business media have a distinct advantage, due to their sophisticated use of digital tools and ability to keep databases up to date.
Repositioning and potential investment opportunities
Whilst most players will ride out the crisis, postponed or cancelled events will require substantial communication and potential repositioning. Some challengers will seek opportunities, including through alternative event formats.
Whatever the recovery scenario, we expect to see a one-off retraction of the industry size. The forced choice of not participating due to event cancellations or travel bans will cause some attendees and exhibitors or sponsors to change their future behaviour as alternatives are proven viable or even more attractive.
The partial London Underground strike of 2015 caused 5% of commuters to change their regular journeys. Given the range of choices available to attendees and marketers we foresee a similar phenomenon playing out, particularly in relation to poorly differentiated events.
Some investors will take the opportunity to enter the events ecosystem, seeking opportunities at potentially attractive multiples, although they will need to pick those with clear recovery as the bifurcation of the industry accelerates.
Players with market leading events and which address Exhibitions 2.0 – including the delivery of sustained value to participants and using digital tools – will take share from those that are secondary or under-invested.
Acceleration of digital tools
Coronavirus will also bring a lasting change to the industry as forward-thinking organisers accelerate their embrace of digital tools. Cancelled events bring the need for 365 engagement into focus; cancelled travel calls for livestreaming and related tools. Examples include Collision taking its 30,000-person tech conference online; Art Basel is offering online viewings.
Event tech businesses that offer services beyond the event will enjoy accelerated growth, already reporting a massive up-take in enquiries. Challenger technologies that support alternatives to events will gain ground.
Recovery timing
Unless the crisis is prolonged, we expect to see the industry recover much of its lost ground within two years. This will depend on how many postponed events take place soon enough not to damage their annual cycles and the extent to which exhibitor and sponsor cost cutting is required by a downturn.
The fundamental value of meeting face-to-face can be expected to endure. A proof point for the continuing demand for exhibitions is the rise of customer events in the tech sector, which would be the first to replace physical interaction with purely digital alternatives.
Long-term outlook
Post recovery, growth will resume as switched-on organisers embrace Exhibitions 2.0, understanding that space sales are not the core driver of engagement and success. Forthcoming Globex updates will provide the full five-year forecast and we will update this view periodically.
AMR International will do whatever we can to help organisers, other industry players and investors navigate through these extremely difficult times. We hope this crisis ends swiftly so our friends in the events industry can get back to what they do best.
To discuss any of the issues raised above in more detail, contact: denzil.rankine@amrinternational.com
AMR International is a leading strategy consultancy to the events and exhibitions industry with offices in London, New York, Paris and New Delhi.
