When the China Beauty Expo became one of the first large trade shows to take place since the outbreak of the coronavirus pandemic this summer its attendees were ready, queueing patiently for temperature and face mask inspections before entering Shanghai’s New International Expo Center.
Once inside visitors seemed at ease flocking around the displays of mineral concealers, eye lotions and other products promising beauty miracles.
Yet although more than 135,000 people visited the fair — a decrease of only 10 per cent from a year earlier — one in four foreign brands due to exhibit withdrew at the last minute according to Informa, the organiser which ran the show. The same was true for about 300 exhibitors from Beijing, which experienced a fresh outbreak of the disease in late June.
The reopening of China’s economy and gradual easing of restrictions in many countries has provided a sliver of hope for the global events industry — valued at roughly $30bn by Citi — with months of preparation required to organise the largest shows.
But the spectre of local lockdowns — as have been imposed in Melbourne and Manchester — continued infections in the US and several European countries, and reluctance by companies to make staff travel because of health concerns mean when and how the sector will recover is far from clear.
Informa chief executive Stephen Carter insists the group, the world’s largest events company which last year organised 450 gatherings, can ride out the storm.
“I’m not worried about the business model. [Events companies] will all be able to make the same margins again,” he told the Financial Times, arguing that demand for events would increase after a period where staff have been deprived of face-to-face contact. “The only real debate is: between now and normal, do they go bust?” he said.
Informa, which has lost two-fifths of its market value since the pandemic erupted, has warned that revenues will fall by roughly a third this year to £2bn.
The FTSE 100 group raised £1bn in an emergency share placement after admitting that the crisis would be “significantly deeper, more volatile and wide-reaching” than it first envisioned.
But tapping capital markets is not an option shared by others. The events sector is highly fragmented with the world’s 19 biggest players only holding just over a quarter of global market share, according to Citi estimates. Smaller companies with more limited options for funding have no choice but to burn through cash.
“We lost business worth £250,000 — multiply that across all small events companies and that becomes quite a huge number,” said David Mann, director of UK events consultancy and equipment rental firm Engineroom, which helps run corporate events for tech and financial groups.
Mr Mann, who has four full-time employees, issued his last invoice in March and does not expect to send any more this year. “We’re now living off money we had saved to invest in people and assets to grow,” he said.
The risks of a second wave of infections or a tightening of restrictions loom.
Ryan Simonetti, co-founder and chief executive of New York-based events space provider Convene, has had to cut his workforce from 900 to 200 in a few months. “[A few] weeks ago I would have said business would return pretty quickly,” he said. But with cases surging across the US, he added that he could no longer guess when this would happen.
Mark Shashoua, chief executive of London-headquartered Hyve Group, which operates roughly 130 trade shows and conferences around the world, said the pandemic was certain to wipe out many smaller shows.
“After the financial crisis, all the fourth and third tier events disappeared and didn’t come back,” he said. “After this, only the main events will survive.”
Hyve reported a pre-tax loss of £168m in the six months ending March, compared with a profit of £2m in the same period a year earlier, after it was forced to postpone or cancel roughly half of its events. In May the company raised £126m through a share issue for “additional security”.
Over the past three years Mr Shashoua has focused on replacing less profitable shows with fewer large events such as Las Vegas retail festivals Shoptalk and Groceryshop.
Sarah Simon, analyst at Berenberg, is expecting a flurry of deals in the sector “once the danger has passed”, led by bigger players. “There are lots and lots of small shows, you can easily knock out the overhead costs and take them onto a bigger platform,” she said.
But it will take a while even for the biggest players such as Informa and rival Relx, which both have sizeable academic publishing and information businesses to help them weather the storm, to regain confidence.
Last month, Relx said first-half pre-tax profit slipped by more than a third to £666m, driven by a £117m loss in its exhibitions arm. Nick Luff, chief financial officer, said companies whose sole focus was events would “undoubtedly find it difficult”.
Lord Carter argued that the dilution of regular professional contact would boost the need for occasions where international professional communities could get together in person. “The demand [for trade shows and conferences] perversely will go up not down,” he said, adding that the cost of providing face masks and hand sanitisers could be shared with venues.
Since taking over six years ago, he has slashed the proportion of conferences in Informa’s events portfolio from roughly 65 per cent to just under one-fifth on the basis that trade shows, which help companies win deals, are more resilient in downturns.
But others have questioned whether the appeal of networking events will endure if many people do not even see the value of going into an office. O’Reilly Media, a US tech publisher that last year hosted 14 conferences which made $35m in revenue, closed its events business in March and laid off 75 employees.
“Without understanding when this global health emergency may come to an end, we can’t plan for or execute on a business that will be forever changed as a result of this crisis,” Laura Baldwin, the company’s president, said at the time.
She told the FT she would not rule out relaunching the business in the future but added: “I don’t think any of us can predict how and when events will come back.”