Cancelled by Coronavirus: events industry scrambles; 5000 crore loss; 10+ million jobs at stake
As the events industry is facing tough times, industry body EEMA projects losses of over Rs 3,000 crore for the first two months.
Anushruti Singh April 11, 2020
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The coronavirus pandemic has left businesses around the world counting costs. One such industry is – events. With almost the entire earth under lockdown, the events industry is the worst affected among other sectors. A case in point is – just the cancellation of Cricket IPL Season is expected to lead to a loss of Rs. 120-150 crore on sale of tickets for 60 matches played across various stadiums in the country, according to CARE Ratings.
Due to the deadly virus outbreak, several mega outdoor events globally have also been called off. The 2020 Tokyo Olympics, which was expected to begin in late July this year, has been delayed by as much as a year – this is the first postponement in the Games’ 124-year modern history. Multiple events such as Hockey Pro League, Asia Cup, UEFA Champions League, Cricket IPL, etc. were scheduled in the year 2020 – of which some are postponed, and few are expected to be cancelled.
In case of cancellation, there shall be heavy loss of revenue mainly from advertising and sale of tickets to audiences. There is an uncertainty on how much it’s going to cost.
On the other hand, events such as IIFA awards 2020, India Fashion Week, India Gaming Expo, ITB India, Goa Fest, META Theatre Awards, India Fintech fest, India Today Conclave and many more got postponed. Informal gigs like comedy shows, MICE events, corporate launches, wedding and other parties too have been on halt as the coronavirus scare continues.
“Since the outbreak of the Covid-19 pandemic, the impact to their business has been unprecedented with multiple global and national events having been postponed or simply cancelled,” Events and Entertainment Management Association (EEMA) said in a statement.
“Sab band,” says Rajesh Varma, founder and director of CRI Events and also a member of EEMA.
“There is no hope for revival for at least till October or November. That too will depend upon how the things will go. We have technically written off the 2020. However, I hope small events might happen in the last quarter, but overall, till then there will be no travel, no MICE and no activations,” Varma told SME Futures over the phone.
Advertising contributes ~45 per cent to the media and entertainment sector’s revenues. Such spends were already subdued in past few months of FY20, as top advertising industries like FMCG, automobiles, retail and fashion, gems and jewellery, telecom, etc. lowered their discretionary spends due to slowdown in the country. The outbreak of Covid-19 leading to cancellation of most events has only worsened the situation.
In addition to this, the event industry is directly linked to the hospitality and the supply chain that constitutes of event management firms, advertisers, digital and technical infrastructure providers, catering services, and most important their employees – are all impacted at the same time.
The impact is just boundless.
“Everything is inter-related. It is majorly impacting the overall economy,” shares Amrita Jha, founder of Mumbai-based company Gratitude Entertainment and Media Inc.
“Events which can be categorized into corporate events, weddings and intellectual property’s (IP) all require public gathering. Till the time Covid19 is completely eradicated, events will be the last thing to be organized,” she further adds, while commenting on the overall impact of coronavirus lockdown on event sector.
The corporates and brands’ marketing budget will be impacted, so sponsorship will also be a challenge in the coming months – Jha informs.
Events industry face coronavirus profit hit
During pre-COVID period, the events and activations industry in India was growing at 16 per cent CAGR; and was estimated to cross Rs 10,000 crore-mark by 2021, according to the EY-EEMA report.
However, the sentiments no more look healthy as losses for the first two months are already over Rs 3,000 crore, as per the EEMA latest report projecting the losses.
According to this report, “The impact of COVID -19 on the events and experiential industry would be to the tune of Rs 5000 crore for the ﬁrst two months, at a minimum, as projected in a survey of 100 companies in the sector. This is in part due to cancellations of existing projects and contracts. Cancellations of conferences, state and central government endeavours, international MICE events, events and entertainment segment, cancellation of valid visas and the person-scare which has impacted the industry.”
The present business sentiments are making stakeholders worry about their projects and operations. “A cascade of cancellations and postponements has wiped events off the calendar. This has slowed down the Indian event industry,” says Sachin Bhalerao, founder of Walktails, an events management company.
Talking about the impact of lockdown and COVID on Walktails’ operations, Bhalerao tells SME Futures that it has come to a halt, and it is too soon to calculate the losses. “The coronavirus has defiantly degraded the business, but it is hard to quantify exactly how much money is at stake. Events are the last things that are being organized. All the major events across the globe are cancelled. So, there are defiant losses occurred.”
Similarly, Jha’s firm, too, is yet to calculate the total losses incurred. She informs that at this point of time, one cannot estimate the losses. However, the whole supply chain is seeing significant amount of loss, Jha asserts.
“We are still under the weather; all the operations have been closed. All the corporate events, weddings, recreational events (concerts, marathon etc.) have been cancelled. Right from production labour to artist have been impacted. Hotel venues, catering, production decor all have incurred significant monetary losses.” she claims.
Exhibition sector takes a hit
India’s exhibition sector is witnessing massive disruption due to the lockdown.
Exhibition is all about congregating people together to do business, and social distancing norms may have a big impact on the overall industry. “Apart from the cancelled or postponed shows in the Indian exhibitions industry, the key challenge we are and will be facing is to adapt to the new normal of ‘social distancing’,” says Yogesh Mudras, managing director, Informa Markets in India.
The size of Indian exhibition industry is Rs 23,800 crore with more than 550 events conducted annually in the organised sector. Currently, the exhibition industry sector enables business transaction of over Rs 3,00,000 crore, boosting and supporting the growth of various spectrum of industries, while also being a colossal employment provider with nearly 1,20,000 people employed in this industry, according to the Indian Exhibitions Industry Association (IEIA), an apex body of exhibiting and trade show industry.
“Currently the events for the period March-June have been impacted due to postponement or cancellation. If the issue does not settle in the near future, there could be challenges on running the business the way we have been used to running our events,” adds Mudras.
IEIA stated the sector has been hit hard due to the ongoing COVID-19 crisis. “In last few weeks, more than 90 shows have been reported to be either postponed or cancelled due to COVID- 19, with an estimated loss of Rs 3,570 crore for the entire sector…and this may increase if COVID-19 crisis lingers on,” IEIA president S Balasubramanian said.
Export Promotion Council for Handicrafts (EPCH) recently cancelled the spring edition of IHGF (Indian Handicrafts and Gift Fair) Delhi fair, considered to be the world’s largest congregation of handicrafts and gifts items that was slated to be held from April 15.
“The fair normally generates export orders worth Rs 6,000 crore, and is thereby source of livelihood to seven million craft persons who are from small and weaker section of society,” Rakesh Kumar, director general, Export Promotion council for Handicrafts, an apex body of handicrafts sponsored by the Union Ministry of Textiles, was quoted as saying.
IEIA has urged the government to create an “Exhibitions in India” economic stimulus support package and offer a 10 per cent incentive to Indian exhibition management companies to organize shows in the country and help recover the losses incurred in these “critical times.”
It also appealed for reduction of GST rate for all exhibition services from existing 18 per cent to 12 per cent with immediate effect, deferment of the GST and Income Tax for six to nine months and subsidizing the venue rentals for government-owned venues, among others.
Other than this, Mudras suggests that the government must come up with a grant or an incentive scheme to support the industry. In addition, smaller organizers could also be helped with interest free or subsidized loans, so their working capital can be better managed.
Wedding dreams shattered
The pandemic has impacted the wedding industry too. Vipul Verma, 38, was set to get married on April 12. The compulsion of a limited gathering and that too without his brother, who can’t leave Australia due to travel restrictions, has led to Verma cancelling his wedding for now.
Likewise, particular about ‘auspicious dates’, Priya Malik has eventually accepted the inevitable and pushed her wedding from April to November-December. “We have made advance payments to so many pre-wedding planners and are not sure if the money will get refunded,” the 26-year-old IT professional tells.
India’s wedding market, pegged at US$ 50 billion by a recent KPMG report, has been badly disrupted due to the spread of the novel coronavirus. In India, families – poor and rich – save up for a lifetime to spend on weddings that can run into several lakhs and even crores of rupees.
The COVID-19 has shattered all hopes of many families and also businesses, which were dependent on the wedding season – such as wedding planners, banquet owners, bands, florists, photographers and salons.
“The business has taken a serious hit due to the spread of the coronavirus. I have lost count of the calls we have received for postponing and cancelling bookings. For April, we had 20-25 bookings, almost one a day, and there is a big question mark on whether those will happen or not, ” says Anmol Bummi, manager at the Golden Gates banquet in West Delhi in Mayapuri.
Several wedding planners and catering units like Cosmic Lights Entertainment and Kitchen Kraft Luxury Catering said the business will take a long time to recover.
“March-April have always been good for the wedding business and there were a lot of bookings this year too. But everything changed after the coronavirus outbreak. Be it a destination wedding or routine functions here in the capital, all have been either cancelled or postponed,” informs Raina Kapoor, founder of Cosmic Light Entertainment, a popular wedding planning company.
“In fact, the few functions we organized in March saw such low turnout that we had to advise people to not go ahead with their weddings,” she adds.
Salons and parlours, which in normal times, would have seen brides and bridesmaids making a beeline for their bridal packages — even at exorbitant price – are also bearing the brunt.
Millions of livelihoods to be impacted
The pandemic has put businesses on a pause – leading to an unprecedented loss and impacting livelihood of millions. This is resulting into inability to pay taxes and pay banks and ﬁnancial institutions to honour commitments, and it is a challenging time for vendors and supply chains, according to the association.
Brands are resetting their plans, expectations, markets, delivery systems, marketing focus and logistics. This will force the experiential industry to lay oﬀ employees, reduce salaries, delay mandatory payouts; and worse will be to shut companies. And, if the situation prolongs, it will have a huge impact on the event economy, global and local enterprises, employment, and business environment triggering a new business and economic order.
The pandemic has put at risk the livelihood of over 10 million professionals, who depend on this segment.
CRI Events’ Varma – who has been operating in the events industry for 20 years – says, “There are going to be layoffs and there will be unemployment. Supply chain is dependent on each other. Since there is going to be a cyclic effect on businesses associated with events such as catering, sound and light, audio-visual etc – all of them are going to suffer.”
Commenting on the impact on jobs in the sector, Walktails’ Bhalerao adds, “The coronavirus outbreak and the subsequent market crash have let everyone worried. As there are many daily wage workers in the event industry, it is hampering their income. The jobs are also at risk. As all the events on the calendar are getting cancelled, it will also be difficult for the event industry to maintain the same number of staff on payroll.”
Foreseeing the tough times, EEMA calls out for an SOS anticipating urgent intervention as the industry employs around 60 million people. The apex body claims that of the 60 million staff, 10 million have been directly impacted, and their livelihood is at risk as all major national events are postponed or cancelled due to the COVID 19 pandemic and unprecedented lockdown situation.
Jha believes that it will bring hard times for those who work as freelancers and on daily wages as there will be payment delay issues. “Event industry has a lot of freelancing jobs which are given on an event basis. Also, there are many daily wages workers in event production team. Their livelihoods are definitely at risk. As for jobs in this sector is concerned, keeping people on payroll will be a challenge if the situation doesn’t improve.”
Without a doubt, the disruption in the events industry is going to be huge and there will be a negative growth. To mitigate some of the challenges, experts are looking forward to government measures for at least startups and small businesses to survive in this crisis.
Bhalerao says the industry needs coordinated fiscal action and monetary stimulus to overcome this crisis situation. “The government has to take some measures which will benefit both the small ad business owners who have face losses,” he feels.
“We have to be with the government. But there is no denying that the entertainment industry is the worst hit. Among other things, we need to find a solution to the panic that is being spread through mediums like WhatsApp forwards,” Rajeev Jain of EEMA said.
COVID may push the industry to go digital
Irrespective of the industry, COVID-19 has caught us all. With this, businesses are bound to change the way they work. It means the players in the field need to give technology more precedence than ever.
“The stimulus will be required by the event industry like every other industry. I think in the coming months every industry is going to find a way towards digitizing its operations. Things will change and business, as usual, will not be the same,” believes Jha.
Although this is mostly an offline industry, but as the events are getting postponed and cancelled, the experts are looking for more online solutions and virtual solutions to mitigate the challenges coming their way due to unprecedented lockdown
This is the time when event professionals need to look for newer strategies and new business models. In fact, for quite some time event experts have already been on to the task with web-based events, podcasts, Twitter chats and Instagram and other social media live conferencing events being some of the best examples.
However, experts believe that event industry will bounce back with more energy post COVID as virtual solutions are not long-term solution. “Virtual events don’t satiate the five senses, they address sixth sense i.e. the digital sense. In my opinion, this scenario will last only for two quarters and real events will be back. However, players with deep pockets will be able to survive this pandemic effect,” Varma of CRI Events believes.
Overall, this period is full of uncertainty and extremely stressful for the event community. In the post-COVID era, the stakeholders such as event professionals must undergo risk assessments and next-phase scenario planning keeping in mind that future lies in the ability to transform into digital – in order to remain sustainable in the long term.