Hire Space speaks to various eventprofs about the outlook of business events against a backdrop of budget squeezes.
After the disruptions brought about by the pandemic, businesses have invested heavily over the last year in reconnecting with clients and consumers.
In the first three quarters of 2022, Hire Space has seen average budgets for business events rise to over 25% more than pre-pandemic averages, as businesses seek to harness the renewed appetite for in-person events.
However, while the restrictions of the pandemic may have diminished, another wide-reaching upheaval has taken its place: the cost-of-living crisis.
With inflation impacting consumer spending, and fuel and energy costs driving up overheads, the increasing pinch on company budgets will inevitably have an effect on businesses’ ability to put on events.
Here are the key trends we found:
1. Increased costs will trickle down to organisers
As the price of energy and essentials rises, venues and event operators are finding that the cost of operating as normal is skyrocketing.
As Kerrin MacPhie, chief executive of the Meetings Industry Association, said: “The findings from our most recent industry survey revealed that on average, operating costs have increased by almost a third.”
Many venues and operators aren’t able to sustain these cost increases, and may have to look to offset the increased cost of their operations through charging more for their services.
“To try and combat this, over three quarters have had to increase prices in the form of DDR or room rates, catering or AV provisions,” said MacPhie.
This evidently has significant implications for business budgets. “It’s a layer cake,” said Richard Waddington, chair of the Events Marketing Association (EMA). “Ultimately, the rise in costs will be passed on to the buyer, and margins will be squeezed.”
Sophie Beasor, general manager at the EMA, warned that this could lead to revisions of planned events and event calendars as companies look to protect their margins.
“Budgets approved months ago simply do not allow for the exponential rate at which the costs of suppliers and venues are rising,” she said.
Initiatives like the Business Events Growth Fund may go some way towards helping offset this. But Michael Hirst OBE from UK Events said: “A lot hinges on government support and investment in events as part of a growth agenda.”
2. Revised budgets and calendars
While event spending for 2023 is predicted to rise up to 83%, according to a study by ICE, this is not necessarily a reflection of more events being delivered. In fact, the study credits much of this spend to “spiralling” costs of running events – figures suggest that the average cost-per-attendee of conferences and meetings is forecast to be 32% higher in 2022 than in 2019.
So how will this affect event strategies?
Anecdotal evidence and early enquiry figures for the first quarter of 2023 suggest that companies may be focusing their budgets on fewer, larger events, rather than multiple smaller events.
According to Hire Space enquiry data, the number of attendees quoted for prospective events rose by 14.86% between Q2 and Q3, while budgets have decreased marginally.
The events that companies do put on are likely to be more strategic. As Sasha Frieze, founder of The Business Narrative, said: “Where in the past [businesses] might have run an event because they always have, now they’re looking for clarity and focus around what part the event plays in the bigger picture and what the measurable returns are on it.”
Fewer events, of course, mean a knock-on effect will be felt by the suppliers and venues who rely on events, which is a worrying situation for the industry, and may lead to a perpetuating cycle of cost recovery.
“Communication is key between corporate planners and venues, to keep costs transparent and see where different areas of the industry can support each other,” said Anita Howard, CEO and founder of ICE.
3. The role of delegate incentives
On top of the rising cost of event operations themselves, businesses may also have delegate hesitancy to contend with, according to the EMA.
“Delegates will be feeling the squeeze in their own pockets, which could contribute to lower attendance at events,” Beasor suggested.
More than ever, planners must consider the macro environment of their event. How will their delegates get to the event? Do they need to stay overnight? What will they eat or drink during the event?
“But who will foot the cost of these additions outside of the event itself?,” asked Beasor.
4. Non-traditional event models may become the norm
Overall, the eventprofs said they expect to see more hybrid events in the coming months, as companies cut budgets for events.
Hurst said: “Many companies that will be rationalising their cost structures and the first thing that goes is usually travel.” This is not necessarily new: especially since Covid-19, people have been using hybrid models of working and networking more frequently.
However, hybrid is not the budget option if you want to do it right, warns Frieze. “For a meaningful, impactful, and purpose-driven hybrid event, where online and offline audiences can engage and connect with each other, costs can be the same or often higher than a large in-person event,” she said.
Even so, taking into account international travel and accommodation (for which costs are set to rise in the next year), it’s likely that hybrid events will make up a larger proportion of event calendars in coming months. “Done right, they can provide significant returns, and increase the reach of brands,” Frieze added.
The events industry has been hard hit over the past few years, and many will be concerned at the impending effects of the current crisis.
But the prognosis isn’t entirely devoid of hope: as the industry adapts to these new challenges, there are likely to be significant learnings that will help to push our sector forward, and create stronger, more considered events.
