Billions of Dollars Lost in Coronavirus Event Cancellations

The spread of coronavirus has wreaked havoc on daily life, grinding most of our routines and plans to a halt. Schools and universities around the world have canceled classes, professional sports leagues have suspended their seasons, Coachella was postponed and candidates are canceling their campaign rallies. Major tech conferences around the world are scrapping their events.

As of early March, the economic impact of these cancellations had surpassed 1.1 billion dollars. And since that time, the number has only increased, as more events are canceled every day. Facebook announced that it is canceling its F8 developer conference. The mayor of Austin announced that he’s issuing an order that effectively cancels South by Southwest.

These major tech conferences in particular have a large economic footprint, as attendees are a huge boon for the host city’s hotels, restaurants and small businesses. Oftentimes hosting a major conference involves hiring hundreds or even thousands of part-time workers. Now, these workers may find themselves out of a job and the cities and companies themselves are facing major financial losses.

Some major tech cancellations include South by Southwest in Austin, Texas, Google I/O in Mountain View, California, Facebook’s F8 event in San Jose, California, and the Mobile World Congress in Barcelona, Spain. This news comes as cases of the new coronavirus, COVID-19, have slowed in China, but grown rapidly outside the country’s borders, throwing international and domestic markets into turmoil.

Major cities from San Francisco to New York have banned large gatherings as diagnoses in the U.S. have soared. It’s undoubtedly a smart move for public safety, but all these cancellations, particularly of major conferences, are taking a huge financial toll.

Canceling large gatherings, both domestically and abroad, is now par for the course. This helps promote social distancing. It’s a main strategy that the CDC recommends to avoid catching or transmitting the virus. We’re at a point now where every large in-person event in the next few months, no matter how significant, is likely facing cancellation. But that does come at a major cost.

Mobile World Congress 2020

One of the largest major tech events to get canceled due to COVID-19 is Mobile World Congress, the world’s biggest exhibition and conference for the mobile industry. The GSMA, the organization behind the annual Barcelona-based event, officially called it off on February 12th, a little under two weeks from its supposed start date, after a number of exhibitors and companies had already pulled out.

This event typically generates nearly half a billion euros in revenue for the city of Barcelona, draws a crowd of over 100,000 from over 200 countries and generates over 14,000 part time jobs. And it costs a fortune to put on. In the financial year 2017 to 2018, the last year for which the information is publicly available, the GSMA paid the Trade Fair Organization Fira de Barcelona $40 million dollars for its services and $2.6 million dollars to exhibition hotel management services around the city. But they likely won’t get any of that back.

GSMA’s event insurance, as well as the insurance policy for individual exhibitors, do not provide coverage for these, “exceptional circumstances”, in which a communicable disease makes cancellation necessary. This means GSMA probably just can’t afford to issue refunds to exhibitors, sponsors or other attendees, since most of its annual revenue comes from the event itself, 97 percent according to the organization’s latest publicly available financial data.

That’s bad news, since a standard admission ticket costs the equivalent of 872 U.S. dollars. It’s a huge blow, but they’re far from the only ones facing this reality.

SXSW 2020

For many, the news that Austin’s South by Southwest festival would be canceled may have come as the biggest shock of all, as it’s a staple on the cultural calendar. The annual 10-day-long event features film, music and interactive tech. There are live concerts, film screenings and endless presentations and panels to attend, scattered throughout the city of Austin itself. Last year, the event drew a crowd of over 4 17,000 people.

It is the single largest, from a revenue generation perspective, the single largest event for the hospitality industry in the city of Austin. Ben Loftsgaarden, Partner Greyhill Advisors

But on March 6th, just one week before it was slated to begin, the city of Austin called it off.

We didn’t learn that until four o’clock on the Friday before we were supposed to start delivering foods and stuff to the volunteers and the South by South workers, which is who we fed. These two weeks in March represent 2, 3, 4 months, even more in revenue for the year. Between 25 and 30 thousand dollars is about what we were anticipating, and what we’re not going to be making anymore. Justin Owen, Two Spoons Foods

Austin will lose about $355 million dollars in revenue. But in terms of impact, the bigger hit could come to the festival itself, which may not be able to recover after losing tens of millions of dollars due to the cancellation . As was the case with Mobile World Congress, pandemics are not covered by the event’s insurance. And while event organizers hope the show will go on in 2021, the festival’s co-founder told The Wall Street Journal that he’s unsure how to make it happen.

Unfortunately, they have already made some layoffs. They laid off about a third of their employee base, I think it was about 50 people. So for them especially, it’s very devastating financially. Megan Graham, CNBC reporter

The organization is reportedly scrambling to find additional sources of income to keep from running out of money by this summer. While it likely can’t afford to offer refunds, it’s instead allowing ticket holders and sponsors to defer registration to a later year.

Most of the Bay Area and Seattle-based tech events like Facebook’s F8, Google I/O, Apple’s WWDC and Microsoft Build have been canceled as well or moved to an online-only format. And at this point, it seems like merely a matter of time before any other tech events still scheduled for the following months follow suit.

The first U.S. case of unknown origin was reported in Solano County on February 26, and the following day Facebook announced that it was canceling the in-person component of its annual developer conference F8, which was to be held in San Jose in May.

While F8 was more modest in size than something like Mobile World Congress, the conference is still nothing to scoff at. Last year, it drew over 5,000 attendees and the price of admission was $595 dollars. After the cancellation, the company announced it would be doubling its annual donation to $500,000, prioritizing organizations serving the San Jose area.

While that’s certainly appreciated, the economic toll for both San Jose and Facebook extends far beyond this figure. PredictHQ estimates the direct losses to be 12.2 million dollars, a figure that includes losses to hotels, airlines, restaurants and transportation providers that would normally profit from the F8 conference.

“And people who rely even on tips, I think, when you have a big business event like that, you know, you could you could have your biggest, you know, day a year because of something like this if you have a few big corporate dinners”, Megan Graham.

This figure doesn’t include the unknown losses that Facebook is incurring from planning for an event that won’t happen or the amount that Facebook would have made from hosting it.

While Google initially indicated its own annual developer conference, Google I/O, would proceed as planned, it too ended up canceling the Mountain View-based event, making the official announcement on March 3rd. That conference draws over 7,000 attendees and the direct economic loss for the cancellation is estimated to be about 19.5 million dollars.

Our small businesses, our restaurants, our retailers were really looking forward to that extra foot traffic. Margaret Abe-Koga, Mayor Mountain View, CA.

The company says it will make a $1 million dollar donation to the city of Mountain View to help small businesses recoup the losses and support computer science education in the community And unlike many other companies, Google is able to offer full refunds to attendees who paid $1,150 dollars for a general admission ticket.

Following these cancellations, Apple and Microsoft also announced that their respective developer conferences will now be online-only. Apple’s June event was set to take place in San Jose, and it too will donate $1 million dollars to the city, though like the other events, this only represents a fraction of the revenue that would have been generated. Microsoft’s May event was set to take place in Seattle, one of the areas that’s been hit hardest by the outbreak.

Amid these announcements, the spread of the virus has worsened and city officials have been banning large gatherings altogether, even as they struggle with the inevitable economic fallout.

“One business restaurant owner mentioned that they had lost 70 percent of their business”, Margaret Abe-Koga.

Ultimately, health officials hope that these protective measures will decrease the total number of coronavirus cases. But even if that doesn’t happen, event cancellations and social distancing can slow the rate at which the virus spreads. This matters a lot, because if too many people become sick at once, it will overwhelm our health care system, ultimately leading to inferior care and preventable deaths. For its part, economic activity is starting to pick back up in China as strict quarantine measures have proven effective.

“So I think we can keep an eye on other markets that have been affected and just see how they rebound, and that might give us an indication. And if China continues the way it is now and we follow in that path, and that’s a lot of ifs, but that might indicate that things really do improve in the next couple months”, Megan Graham.

But while we exist in this period of uncertainty, every major gathering, no matter how important or economically impactful, is being called into question. Perhaps most devastating of all is the uncertainty surrounding the 2020 Olympics, set to begin this July in Tokyo.

There’s been talk of holding the games without fans, which could cost the Olympic organizers about $850 million dollars in ticket refunds. In the worst case scenario though, the Games would be cancelled altogether, a devastating blow to the athletes who have been training for years to represent their countries and the millions of fans looking forward to tuning in, and the city of Tokyo itself. It would also be a major financial hit to NBCUniversal, CNBC’s parent company, which expects to surpass $1.2 billion dollars in ad revenue for the 2020 Games.

“It’s over 7,000 hours of content. So that’s like across TV and digital, and then some stuff is on Twitter. So that’s just, the scale of how much advertising that is is insane”, Megan Graham.

For now, the Olympic Committee organizers are remaining optimistic, though President Trump suggested the Games may need to be postponed. As with everything else right now, we just have to wait and see.

“From a business perspective, I don’t think we will have ever experienced this or hopefully we’ll ever experience again”, Megan Graham.

Collins Valentin

Collins is a blockchain enthusiast, who spends his time between documenting the blockchain revolution in Africa, and writing the latest on the cryptocurrency space. Email: editor.news@blockpublisher.com

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