Coronavirus travel slump putting event and conference organisers at risk

The Sydney International Convention Centre has already had one event cancel due to coronavirus fears.<i>Photo supplied</i>

The Sydney International Convention Centre has already had one event cancel due to coronavirus fears.Photo supplied

Leaders of Australia’s $30 billion events and conference industry are watching nervously as clients take precautions to keep visitors safe, or – in rising numbers – postpone or cancel their plans due to coronavirus.

Chief executive of Meetings & Events Australia Robyn Johnson said when the economy contracts, the events industry is one of the first affected.

“It’s a very large industry – it employs over 190,000 people across Australia, it delivers about 400,000 events a year and has an economic value of $30.2 billion to the economy,” she said.

Tech giant Cisco was supposed to host more than 8500 people at its key Asia-Pacific conference Cisco Live in Melbourne for three days this week, but cancelled the event due to “ongoing concerns” about the outbreak.

“Our customers, partners and employees are our top priority and we strongly believe this is the right decision given the current circumstances,” the company said in a statement.

Caryn Shipp is with Place Management NSW, the body responsible for managing some of Sydney’s heritage and cultural precincts at The Rocks and Darling Harbour.

“It’s a bit scary thinking about the future,” she told ABC News.

“Most people get surprised that there are so many things going on behind the scenes,” she added, noting a pop-up event for the T20 World Cup was still going ahead on Wednesday.

“I always get told, ‘I never knew there were so many people involved in an event’,” she said.

Caryn Shipp, with Place Management NSW, says there are scores of people involved in putting on events. Photo: Bryan Milliss/ABC News

Events globally get cancelled

The upheaval for the events industry is a global problem.

The Tokyo Olympics, set to start on July 24, may yet be postponed or even cancelled.

The Tokyo Marathon normally has almost 40,000 runners and many times that lining the course.

This week only elite runners and wheelchair athletes raced, along empty streets.

The Geneva International Motor Show was cancelled after the Swiss government banned gatherings of more than 1000 people.

The Louvre museum in Paris, with one of the most famous art collections in the world, is shut.

And while the Australian Grand Prix is going ahead, the Shanghai race in April is cancelled and the event’s stop in Vietnam is in doubt.

Global hotelier Hyatt Hotels has withdrawn its recently released 2020 financial projections because of the impact of the virus, particularly inside China and with corporations imposing travel restrictions on staff.

The US company detailed a decrease in last-minute bookings and a rise in group cancellations in North America and Europe.

The company’s chief executive, Mark Hoplamazian, said the situation was evolving.

“And our ability to assess the financial impact of COVID-19 on our business continues to be limited, due to quickly changing circumstances and uncertain consumer demand for travel,” he said.

Bushfires already had a negative impact on tourism

The peak time of year for the industry – February and March – was already affected by the summer’s catastrophic bushfires before the coronavirus started its global spread.

The “downstream” industries of tourism, hotels and restaurants are bearing the brunt of the slowing number of foreign visitors.

“Hotels are really badly hurt by the virus, they’re down, some say, from 20 to 40 per cent depending on the destination,” Ms Johnson said.

“Our industry members are getting very nervous.”

“Some of our other smaller members would be losing $100,000 in one month.

“And that’s going to be a struggle for our industry because we have about 80 per cent of our members are small businesses and if this is long term, they will really struggle to keep the doors open.”

Robyn Johnson, chief executive of Meetings & Events Australia, said when the economy contracts, the events industry is one of the first impacted. Photo: Bryan Milliss/ABC News

The International Convention Centre (ICC) in Sydney has 70 events booked this month, and more than 100 booked the month after.

Only one has cancelled, but chief executive Geoff Donaghy expects that number to rise.

“[There’s] a great deal of concern being expressed by those clients,” Mr Donaghy said.

Events that have delegates attending from Asia were likely to be impacted.

“Only a relatively small number have taken the decision to postpone at this stage, but we do expect that to escalate,” he said.

The daily news about the spread of the disease locally is “starting to bite” now, with concerned inquiries from the hosts of events with a domestic audience.

But it’s not the first time the industry has faced such issues.

“When I look back at all the major issues, major crises that affect us every four to five years … health epidemics SARS, MERS, things like the September 11 [terror attacks] and things like natural disasters … something like this happens on a relatively regular basis,”‘ Mr Donaghy said.

Industry hopes to recover but uncertain how fast

There is an understandable focus on health and safety required to enable meetings to keep running, with conferences booked up to five years in advance, but the operator of Sydney’s key conference venue wants organisers to look to the future.

“Epidemics do finish,” Mr Donaghy said.

“So we need to make sure we maintain a market position, we keep a relationship going. We keep their pipeline of business activated – it’s incredibly important to have that dual approach to these sorts of situations”.

Accommodation Association chief executive Dean Long said escalating travel bans made it “difficult to determine outcomes,” but noted the “bounce” in global travel six months after Severe Acute Respiratory Syndrome (SARS) was contained in 2003.

“The support by both consumers and businesses will be vital in ensuring sustainable employment and operations for businesses in the visitor economy,” he said in a statement.

Hotel broker Dean Dransfield said the real impact was yet to hit the events industry, and the accommodation operators who depend on the trade.

“My read of it is that we’re a month away from knowing whether it’s worse than people are currently thinking, or a lot better,” Mr Dransfield said.

The managing director of Dransfield Hotels & Resorts, Mr Dransfield has been helping clients buy and sell hotels for three decades.

He doesn’t foresee chains collapsing as bookings slow, but acknowledges there will be pain.

“We’ll see some big losers and also some moderate winners, and that will change throughout the year,” he said.

“I think the losers will emerge relatively quickly and the winners will emerge slowly through the balance of the year.

“What we don’t know is how long the hard part is going to be.”

Geoff Donaghy, ICC Sydney CEO, expects conference cancellations to rise because of coronavirus. Photo: Bryan Milliss, ABC News

Hotels sector the biggest loser as Chinese visitors drop

Mr Dransfield predicts the losers will be hotels highly dependent on international visitors, particularly from China and South-East Asia.

He said while solid reserves of capital and low interest rates would likely limit financial distress, diving cash flow was a problem as guests stay away.

He predicted there would be a slowdown in future investment, potentially killing off some developments that haven’t yet broken ground on construction.

Uncertainty created by the spread of the virus will be ongoing.

“There’s a real leveraged impact if an event doesn’t come,” Mr Donaghy said.

The convention centre (ICC) in Sydney boasts it created more than $900 million of spending in Sydney and NSW last year, with 90 per cent of that spent outside the building.

Conference guests stay for a shorter time than tourists but spend up to four or five times as much money in restaurants, shops and hotels while they’re here.

“We lose out, but the city and the city’s businesses lose out even more, unfortunately,” he said.

Mr Donaghy said Australia may have already hit the worst-case scenario.

“It [coronavirus] is having a very significant effect on travel plans,” Mr Donaghy said.

But it was important to separate the economic discussion from the health discussion.

It feels like what’s happening at the moment is the economic outcome is significantly worse than the health outcome,’’ Mr Donaghy said.

“The approach that the different governments are taking to dealing with containment will be something that they’ll have to carefully review periodically.

“And it will be very interesting to see, in hindsight, whether they feel they’ve done enough or too much.”


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