One of the first to feel the devastating financial impacts of COVID-19 was the hospitality and events industry. Our global ties are far reaching, and events with an international presence saw early warning signs that this wasn’t business as usual as international attendees started pulling sponsorship and cancelling travel plans early in 2020.
In a time of great uncertainty, how can we best prepare for a new landscape in the hospitality and events industry post COVID-19? We must consider what changes may occur, and what opportunities lie within them.
(1) Event planners will pay more attention to contracts
With event cancellations and postponements increasing by the day, event organizers are spending more time than ever before dutifully reviewing event contracts. It’s clear that everyone will need to be more familiar with contracting terms going forward. While it’s unlikely we’ll see “COVID-19” clauses in future contracts, keep a close eye on what’s included under your Force Majeure clause. Additionally, planners should know the exact financial ramifications should something prevent an event from occurring. Be wary of language such as “costs to be determined” and “the current rates are subject to change” and get an exact figure in the contract when possible. Meetingmax is creating custom education for event planners to gain a deeper understanding of contracts, stay tuned for more information. In the meantime, check out this article for more resources on hotel contracting tips.
Not only will event planners be concerned with contract verbiage, but attendees will likely be more inclined to review cancellation policies in detail. Be as straightforward as possible with your cancellation terms; making this easy for attendees to understand will limit any barriers to entry for your events.
(2) Initially, hotels will be in a period of ‘any deal goes’
The industry is hurting, and initially hotels will be willing to do massive deals to secure new business. Many are already talking of increasing commission rates back to 10%. Others are offering off-season rates in peak months. There’s an opportunity to secure a fantastic deal if you’re willing to move quickly. However, it won’t last forever and once hotels have enough business on the books I predict that they will shift into protection mode and start demanding more financial security upfront…
(3) Hotels will require more financial security upfront
One of the largest shifts will be in regards to hotels financial security. Think about purchasing a flight; you pay the full cost up front, are limited on making any changes (unless you pay additional fees for insurance) and if you can’t make it, you most likely won’t get a refund. On the flip side, with hotels you often put nothing down to secure your stay and have up until 72 – 24 hours prior to arrival to cancel without penalty. I think it’s probable that hotels will demand some form of payment up front. This might take the form of a non-refundable one night room and tax deposit, a group fee guaranteed up front, or more severe attrition clauses. Whether it’s individual travel or group bookings, hotels will require a greater financial commitment for securing rooms.
(4) We’ll face supply and demand issues
Immediately post COVID-19 we are going to see a short term supply and demand issue across a variety of venues. Many hotels have had to close down permanently due to financial loss, once demand for travel is back to pre-pandemic levels, will there be enough supply? I can foresee hotels offering heavily reduced rates at first to boost demand, then a sharp increase in prices due to supply shortage. As for venues, many Convention Centers have been converted to makeshift hospitals; how long will it take to access them again? We might see demand shift towards smaller venues if people are still hesitant to travel later this year. However, the largest impact will be across meeting planning companies. Staff layoffs due to COVID-19 might make it difficult for planning organizations to execute on events, which leads me to point 5.
(5) Meeting planners will outsource work
Most event planning companies have been hit hard financially. As idyllic as it would be to hire everyone back as soon as this pandemic ends, realistically it won’t happen immediately for most businesses. Budgets have been drastically slashed and may stay that way for some time to recover. Naturally, this will lead to a shift in outsourced work as it equates to less overhead and employee infrastructure for organizations. For event planners, the opportunity for freelance work abounds.
(6) Focus on revenue generation from value added services
Everyone is re-evaluating their budgets, and anything that isn’t directly contributing to the bottom line is being cut. As the industry picks up and organizations start increasing their budgets, there will be a focus on services which generate revenue. At Meetingmax, we have many clients who have turned room block management into a profitable entity, and others who offer it as a value added service but see no financial return. There’s opportunity for smart organizations to pivot and change business procedures to create new revenue streams from services, rather than eliminate them.
(7) We’ll see an increase in hybrid events
A lot of event planners have had to pivot their events to virtual meetings, which has been essential during the pandemic. There’s value in virtual meetings, but in my opinion nothing compares to face-to face connections. Magic happens when people gather. Relationships are formed and a sense of purpose is uncovered. While I don’t see virtual events replacing a live experience, there’s plenty of opportunity for them to enhance live events. Prior to COVID-19 it was primarily events on the forefront of technology which included gamification, chat bots, chat rooms, virtual streaming, and more as part of their event. I foresee these being standard across all events going forward, not an afterthought or a nice to have. There will be opportunities for technical event managers in the near future.
(8) There will be an increase in local travel
I predict that we’ll see an increase in local travel in Q4 and Q1. If people are still hesitant about plane travel, regional travel will increase. Driving to a nearby destination for an event, festival or leisure travel will be appealing to many, not only for safety concerns but to reinvest money back into their local economies. For event professionals this is a great opportunity to strengthen your partnerships with local CVBs.
(9) Future hiring will be impacted by how you act now
Culture is such a cornerstone to Meetingmax that I couldn’t leave this point out. When businesses are able to rehire (hopefully sooner than later), future employees will be curious to know how your company took care of their people during COVID-19. Even if you are financially unable to employ everyone, have you maintained open communication and showed that you care? There’s an opportunity to expand your company culture and values during this pandemic.
No matter what shifts occur, one thing I am grateful for is that this pandemic has shined a light on the unity amongst our industry. We’ve been realigned to a common purpose. From meeting venues making large donations of food and supplies to converting to emergency care facilities we’ve seen the events tribe come together when it was needed most. This focus on unity, and how we can help our fellow industry partners, is something that I hope will last long after this passes. We are all part of the same tribe and there is more to be gained from collectively working together than by getting through this alone.