1 Current market situation
According to a study by the European Institute for Meetings Industry GmbH (EITW) at the Harz University, the events and meetings market in Germany recorded constant growth in the number of participants until 2019. Compared to the previous year, 2019 showed an increase of 2.7% from 412 million participants to 423 million participants. The degree of internationalization had also increased by then. In 2019, 43.2 million subscribers from abroad were recorded, 15.9% more than in 2018. 1
The Corona crisis had abruptly interrupted this success, as all major events have been cancelled since the beginning of March this year and their execution has been subject to so many restrictions that they have become unfeasible for the industry. At the end of May, Jan Kalbfleisch, Managing Director of the MICE trade association Famab, spoke of an ongoing dramatic situation, which was hardly noticed by politicians and the media.
"We have repeatedly pointed out that 60 percent of the companies will run out of liquidity after four months. This critical phase is now beginning." he said, fearing that 250,000 people will have to be laid off starting in June.
One reason for this, he said, was that the financial aid offered by the federal and state governments could not effectively support the industry. First, the current upper limit and the way in which the loss of revenue is calculated already exclude many companies from the entitlement to receive the aid, as there is no adjustment for the specifics of the MICE industry. Secondly, the financial support is limited to 50,000 € per month, which for a company with 250 employees means only 200 € per employee. A company with 100 employees, however, would make losses between 200,000 and 250,000 € despite internal cost reductions.
The association therefore fears that this type of support will not prevent the loss of businesses and jobs. Instead, it is calling for a monthly fixed cost subsidy fund amounting to 2% of annual turnover and an unbureaucratic, quickly realizable loss carry-back. After all, the industry not only secures several thousand jobs, but also generates over ten billion euros in VAT revenue through the guests at events.2 The turnover volume of trade fair organizers in Germany is estimated at around four billion euros, making Germany one of the most important trade fair locations in the world. The Research Institute for Exhibition and Live-Communication (R.I.F.E.L.) has calculated that the damage in the area of trade fair stand construction amounts to 670 million euros, and for the entire trade fair industry as a whole to over 1.6 billion euros.3
The EITW study offers possible scenarios for the future development of the MICE industry. A more optimistic and a more pessimistic scenario was developed for this purpose. According to the study, more than half of the events planned for the year have already been cancelled by 30 March 2020. One third was postponed additionally in case of an improvement. This was especially true for larger events, whereas smaller events were either cancelled immediately or changed into a virtual event. The more optimistic scenario expects the market to begin to recover at the end of the year, provided that the peak of the Corona pandemic would occur between June and August. However, due to the strong regulatory requirements, only about one third of the events could take place again after this period. In this case, the smaller events could be the winners and experience a normalisation by the end of the year. Large events would therefore not return to normality before February or May of the following year.
In the more pessimistic scenario, around 90% of the planned events would be cancelled by December and the market could not recover until summer 2021. As in the first scenario, this would then only apply to smaller events for the time being. Larger events could therefore not expect the market to recover before autumn 2021.4
3 Prospects for the future
The EITW study dealt not only with the current and forecast market situation, but also with how the MICE industry could change. Digitalization seems to be becoming more and more important for events as well. The study compared opinions on the importance of digital event formats and came to the conclusion that the number of those who could imagine a future opportunity for such formats had risen from 47% to 75% within a short time as a result of the corona crisis. Furthermore, hardly one in three people gave hybrid events a chance before the crisis, whereas at the beginning of March 60% of those surveyed could already imagine the potential.4
In an article on the subject of virtual trade fairs, the Springer Professional digital specialist library notes in an article about virtual fairs as an alternative, that most B2B trade fair visitors had already been largely pre-informed about the event and exhibitors before the Corona crisis, so that the leap to a completely digital trade fair could be a clever emergency solution for trade fair participants, especially in times of crisis. Various organizers, such as the all-finance broker pool Fonds Finanz Maklerservice GmbH, for example, had already dared to take this step and made webinars and lectures available on the Internet for streaming free of charge during the virtual trade fair. However, one should not ignore the fact that a complete virtualization of events is expensive for the providers. In addition to virtual events, social authority and social selling, especially the latter, could also be an opportunity for organizers in the crisis, as these methods could achieve similar successes as with direct marketing. Although such measures in the social media are time-consuming, it is possible to address specific target clientele directly, just as trade fair organizers do at trade fairs. What virtual event formats currently do not yet allow to go beyond an emergency solution is the lack of integrated brand experiences that cannot be conveyed without personal presence or at least technological solutions such as augmented and virtual reality. 5
Michael-Thaddäus Schreiber, Professor of Destination and Congress Management and Head of the European Institute for the Meetings Industry (EITW) also believes that smaller event formats will return to normality more quickly, which would benefit regional economic clusters in metropolitan regions, as well as green meetings in more rural areas. However, he does not believe that digital formats could completely replace presence fairs and events:
"Despite all the "digi hype", the crisis also shows us very clearly where the limits of digital capacity lie; the quality of attention in our sessions already decreases significantly after a short time, and after the third video conference on a day at the latest, the desire for "social programs" grows - but in virtual space there is no one waiting for us whom we can perceive with all our senses and experience with our emotions. For business success and private satisfaction, we need live communication; the event industry is more than just "system-relevant", we are "human-relevant": More humanity with meetings".
Instead of complete digitization, Schreiber estimates that the convention bureaus will be more important in the future in terms of promoting conference and congress locations and also in effectively finding suitable venues and event agencies for event organizers. He also assumes that the convention bureaus will have to aim for an effective target group approach based on solid MICE market research and develop new formats and communication channels. Convention Bureaus could therefore be increasingly a source of innovation and motivation in the future, as long as the federal states and local authorities do not cut back on the promotion of financial and human resources. Overall, Schreiber therefore assumes that the MICE industry could emerge from the crisis stronger than before.6
June could be a key month for the MICE industry in which it could be shown how effectively federal and state subsidies have actually prevented company closures. Furthermore, depending on the real exit scenario, it will become clear whether and how quickly the industry can return to its 2019 success figures.
1 Europäisches Institut für TagungsWirtschaft GmbH (EITW): Meeting- & EventBarometer 2019/2020 – Studie (last viewed on June 10,2020)
2 Expodatabase; "Jetzt wird es richtig ernst“ Jedes zweite Unternehmen geht unter (last viewed on June 10,2020)
3 Börse ARD; Coronavirus: Wer unter der Krise richtig leidet (last viewed on June 10,2020)
4 German Convention Bureau (GBC); German business event market in transition (last viewed on June 10,2020)
5 Springer Professional; Corona-Krise lähmt auch die Messebranche (last viewed on June 10,2020)
6 EventCrisis; Mehr Menschlichkeit mit Meetings (last viewed on June 10,2020)
7 Scenario graphics: Europäisches Institut für TagungsWirtschaft GmbH (EITW); Auswirkungen Corona-Virus (last viewed on June 10,2020)