Home Uncategorised Long read: why has the events industry been left behind?

Long read: why has the events industry been left behind?

by Martin Fullard

On 30 March I started a blog saying that the events industry had entered a holding pattern. It seems we are still circling and by now running only on fumes. It is hard to stay positive when so much uncertainty remains.

For the best part of a month, we have been told an announcement about our industry ‘is coming’, to the point where we have even had dates: 13 June, 4 July, and 8 July. All have yielded nothing for those involved in the organisation and supply of conferences, meetings, exhibitions and tradeshows.

After the temporary respite of the much-welcomed furlough scheme, the reality of the scale of the impact of Covid-19 on the business events industry is now becoming apparent. On 8 July, Celtic Manor and ICC Wales announced they would be making 450 redundancies, the Association of Event Organisers (AEO) say 20% of the exhibition workforce is already gone, and the Hotel Booking Agents Association (HBAA) go higher by saying 30% of those working in conferences and meetings will be gone by the end of July.

With no extension of the furlough scheme to an industry that legally cannot earn any income, the Government is almost wilfully flushing £31.2bn in direct spend away.

Why, then, have we been left behind?

What is the events industry?

We all know the line. You tell someone you ‘work in events’ and it is assumed you organise parties and weddings. One rolls their eyes and continues to explain away all the variations of conferences, meetings, incentive travel, exhibitions, festivals, cultural events and so on.

It is no secret that the events industry is fragmented, but unfortunately it is this fragmentation that has been our undoing in this crisis.

The Standardised Industrial Classification (SIC) code issue is, essentially, the core of the entire problem. For the uninitiated, a SIC code describes the main business activity of a company when it registers with Companies House. Each company selects one or more codes that express the nature of their business from an official list of SIC codes. It sounds simple enough, but there are ‘only’ 750 or so (I counted), and of that total only three relate in any way to the events industry. Section N, code 82301 is assigned to ‘activities of exhibition organisers’, code 82302 ‘activities of conference organisers’, and Section I notes code 56210 is assigned to ‘event catering activities’.

That’s it.

As such there are literally thousands of businesses which work in, and rely on, the events industry, but as they do not match the SIC codes available, they are effectively registered with other industries. AV and production, signage, marketing services etc all sit elsewhere, effectively in other industries.

​​​​​​​A lot of work was done ahead of the pandemic to bring these more into line, but it has all stopped for now.

As a result of this, the stark reality, as far as the Government is concerned, is that there isn’t an events industry, or at least not one on the scale of the way we say there is.

There is too much crossover, with many businesses using events as a secondary income stream (the irony being that nowadays the events side is the real revenue driver).

Let’s look at some examples.

The primary purpose of a hotel is to provide overnight accommodation, but event bookings are a cornerstone of their business plans, with many hotels boasting large events spaces and countless smaller meeting rooms. Yet the hotel business will be classified as SIC code 55100, ‘hotels and similar accommodation’. There is no way of making a distinction of the events revenue, so it goes into the hospitality pot.

The same is true of football stadiums. League One football club AFC Wimbledon is currently building a new stadium. With football budgets always on the rise, matchday ticket sales are often not enough to cover the cost of a healthy playing squad, so income must be supplemented. As such, the new stadium will have a 500-capacity conference centre, two mid-size event spaces, and several 12-person capacity smaller meeting spaces for hire on non-matchdays.

Yet the business won’t have an event SIC code, it will likely fall under code 93110, ‘operation of sports facilities’. Therefore, the earnings of the events spaces won’t be classed as events revenue.

See the problem?

How do we know we are worth £70bn?

The net result of this ambiguity with SIC codes is that the events industry’s value (as we classify it), has to be researched and worked out manually. The UK Events Report, which is a superb piece of work put together by the Business Visits and Events Partnership (BVEP), goes into granular detail about the industry’s value.

The 191-page document highlights how the value in direct spend to the UK economy breaks down:

 

Conferences and meetings £18.3bn
Exhibitions and trade fairs £11bn
Incentive travel £1.2bn
Corporate outdoor events £0.7bn
Arts and cultural events £5.6bn
Festivals, fairs and shows £6bn
Music events £17.6bn
Sporting events £9.6bn
TOTAL DIRECT SPEND £70bn

Looking at the list of sub-sectors above, you begin to see the fragmentation taking place. When you hear ‘events’ discussed in the Commons, on the news, or in the socially distant pub, what springs to mind is the bottom half of the list above: music events, festivals, arts and cultural events, and sport. Add those sectors together and you have over £38bn, which pretty much covers the Brexit divorce bill. It is, of course, great news that some parts of this sector can now get back underway.

But all of these events – all – exist to serve consumers. They exist for the public to enjoy, and rightfully so. It is therefore understandable why they get a fair bit of media attention: they speak to the wider public.

When you look at the top half of the list, conferences and meetings, incentive travel, corporate events and trade shows, then you are looking at a mostly B2B landscape. There is no direct public interest in these industries. (Many exhibitions are B2C and designed for consumers, and they are woefully ignored).

It is hard to avoid cynicism here, but anything which involves business growth or is seen to benefit corporations is viewed as ‘evil’ and ‘capitalist’ as far as the media and vast corners of the public are concerned. The Government knows this. A political media strategist would look at business events as a vote loser; bad for the people-first image the Government wants to have.

This is as absurd as much as it misses point and demonstrates an alarming lack of understanding about what this industry is all about.

Conferences and tradeshows are not ‘corporate jamborees’, as one Sunday Times journalist once put it, but they are cradles of innovation and knowledge. More fool anyone who thinks a conference is just an opportunity for the boss to get his leg over with the secretary: it’s a fictional stereotype.

Cures for diseases such as cancer rely on conferences. I will leave that sentence hanging.

A medical breakthrough must be presented in a live environment to other healthcare professionals, it cannot be replicated online. That is a business event, plain and simple. Business events exist to serve every other industry.

The issue of gatherings of large people is obviously bad optics for the Government in the middle of a socially-distanced pandemic, but as we have seen, those rules are already being flouted. But two wrongs don’t make a right. Events can ensure social distancing guidance is met with jaw-dropping ease. And with pre-registration already in wide use for all major events, trace and track is something the industry can manage easily, too. This, I suspect, was the reason the Conservatives cancelled their conference.

Compare that to the scenes on Carnaby Street when the Jaeger bombs come out at 10pm.

Government sponsorship is disjointed

Take a quick look at the list of sectors above once more. Done? Isn’t there something odd about it? The events industry falls under the sponsorship of the Department for Culture, Media and Sport (DCMS), so it is fitting that art and cultural, sporting, and music events slot neatly into this bracket.

What about business events, though? This discipline is worth £31.2bn, but does it really fit the mould of culture, media or sport? No, in a word.

Let us row back a bit.

Business events are a key component to not just the national economy, but to regional ones too, perhaps more so. Former industrial towns and cities around the UK, which were left to ruin as the UK became a service nation in the 1980s, have today been regenerated and revitalised through business tourism and business events.

Glasgow is an example of a city that gets it. The Glasgow Convention Bureau works tirelessly to ensure joined-up-thinking across the city, and to ensure that everyone knows when a large business event is coming to town. They even offer training to taxi drivers, who are often a delegate’s first contact upon arrival.

This week in fact, the Scottish Event Campus (SEC) confirmed it has secured £168m worth of conference business for the Scottish economy. The events will happen between 2021 and 2024. That is a big win, but just a small snapshot of the power and value of business events.

Look at Newcastle, which is currently building a brand new £260m events complex at Gateshead Quays. You don’t spend that money unless there is demand.

Leeds is one of my favourite examples of a successful business events destination. While the nearest large exhibition centre is up the road in the equally impressive Harrogate, Leeds offers a unique product to smaller business events across a multitude of venues, which includes its universities.

Manchester is a city with an aggressive plan. In 2019, Marketing Manchester unveiled a five-year business plan which targets 40% growth, adding £345m to the city’s existing business tourism value of £862m (according to figures taken from 2017). That’s a total of £1.2bn worth of conference business for Manchester alone.

How can this sort of value be ignored?

Hundreds of thousands of jobs are directly supported by this sector, and there are millions more which benefit indirectly.

Prime minister Boris Johnson talks about levelling up the economy, well business events are the easiest and most effective way of doing that.

This, then, is why business events are out of place under the sponsorship of the DCMS. The industry is under the tourism umbrella, when really we should be at the top table under the sponsorship of the Department for Business, Energy and Industrial Strategy (BEIS).

Our sector does have a channel to Nadhim Zahawi, MP for Stratford-upon-Avon and parliamentary under-secretary of state for business and industry, but this relationship must be strengthened on the Government side.

In fact, as the UK exports £2bn of exhibition services globally each year, making it a top 10 exporter, there should be a stronger tie to the Department for International Trade, too.

There is representation from both these departments on the Events Industry Board, for the record.

I won’t tolerate comments that question the industry’s trade associations’ work so far. They have jumped through hoops for the Government, doing exactly as asked and providing all evidence required. The DCMS, of course, have as hard a job lobbying Downing Street as we do them. The blockage, as they put it, seems to be coming from the scientific advisors.

Our European cousins are ahead of us on this, and the UK risks losing its market share if we wait much longer.

What does the events industry need?

There is a moral conundrum here for sure. As the economic landscape worsens, the desperation to get the economy firing again trumps all else. Yet, this beastly virus is still in circulation and people are still dying every day.

As such, the events industry at large accepts it cannot run events now, today. If, though, we are to get going in October, we need that start date confirmed by Government no later than 31 July.

Firstly, this ensures there is adequate lead time to get events planned, marketed, and organised, in accordance with the Government-approved hygiene guidance that is already out there.

Secondly, and perhaps more importantly, this start date will give businesses some manner of certainty. For every day we do not know when events can run, more and more businesses close and more jobs are lost.

The chancellor of the exchequer, Rishi Sunak, says he can’t save all jobs, fine, that’s understandable, but we are talking about an entire industry here. However, one that he can’t see exists because we don’t have the right SIC codes.

For as long as events are not allowed to run, and for now are actually illegal, event organisers, venues, agencies, and suppliers will have zero income, so the Government has a moral obligation to offer the following: a start date to reopen, with clear guidelines; reduced VAT on all services and products related to business events, accommodation and meetings; extended furlough for business events, accommodation and meetings sector; PAYE holiday; grants for businesses which legally cannot operate.

On top of that, and one that must be addressed sooner rather than later, is the updating of the SIC codes available for the business events and meetings sector. This is crucial in future-proofing our industry and getting proper recognition from central Government.

Co-ordinated campaign to #GetBritainMeeting

Government policy is driven by public sentiment, but also pressure from the media. In its most basic form it is a pretty straightforward game: continued pressure yields results.

As such, it is imperative that the national media take notice and pick up on our stories.

The #GetBritainMeeting campaign is gaining momentum, and it is crucial to capitalise on this. I have here a template that you can use to write to journalists, and pressure must be kept up on local MPs, too.

We cannot have any of you, eventprofs, sitting by waiting for someone else to fix this crisis. It is bestowed on us all to act.

As such, next week we will be launching details of a co-ordinated campaign, which will make use of a letter template, that I hope as many of you as possible will join in to send, en mass, to TV and radio shows all over the country.

We are not in the habit of protests in Whitehall, but as an industry we are defined by our ability to bring people together, and to be co-ordinated and organised. So, it is time for us to practice what we preach.

Stay tuned next week, we are going to need each and every one of you.

Related Articles