What Will Pricing in the Events Industry Look Like After COVID?

Like many business owners, I’ve spent a lot of time in the past few months trying to think about how to steer through the situation we’ve found ourselves in, and how we can emerge at the other end as a strong, viable and relevant company? I looked at everything with three priorities in mind – protect the staff, protect the company, protect our customers and the level of service we offer them. In fact, it’s only in the past few weeks that I’ve been able to widen my perspective and give some time to thinking about things outside of Conference Care and our customers immediate needs.

This led me to start considering the current landscape from a venue’s point of view, and how this might impact their longer-term future. Not during lockdown (we all know what that means for any business)
– but as and when restrictions are lifted – probably ever so slowly, and hotels & event venues are allowed to actually open their doors for business events.

But just because venues are permitted to open, does that mean that they should? With Social Distancing regulations and increased cleanliness / Health & Safety measures, can a venue operate at anything approaching a breakeven level?

At the moment, there is understandably a lot of clamour for the Government to start giving solid target dates and more acceptable distancing rules. My concern for the venues is that once they open under new rules, bring staff back from furlough, adopt all the new measures in place – can they sustain this for any amount of time, and what’s their pricing going to look like?

Our booking team at Conference Care have been experiencing the whole range of pricing coming back from venues, for the few live event enquiries we’re currently dealing with –

Scenario 1 – Bristol – October

A monthly internal team meeting for 11 delegates. Meeting room proposed has regular capacity for 200. Day delegate rate quoted was £28.00 with no further supplements.

Scenario 2 – Home Counties – October

An offsite residential away day for a sales team of 22 people. The meeting room proposed has regular capacity for 150. 24-hour rate unchanged from rates previously achieved, but the venue wants to add a flat room hire supplement of £5,500.

Scenario 3 – Birmingham – September

An afternoon meeting for 20 cabaret style, offered a room with regular capacity of 80 cabaret. Previous room hire rate £300, rate offered for this meeting £800.

Scenario 4 – London – November

Regular series of meetings with varying numbers – client wishes to hold offsite as internal office space will not work with current distancing measures and their own internal health & safety measures. Previously (pre-Covid) negotiated Day Delegates rates held and appropriate meeting room sizes offered with no supplement.

So, four different booking requirements, getting a completely different response and pricing in each situation. It should also be said that for each of these enquiries, responses from other venues were completely different as well.

I’m not going to say that one approach is “righter” than the other. As an events agency, we’re very aware that industry pricing is completely reliant on supply and demand – and that’s one of the main problems at the moment. Nobody knows what type of marketplace it’s going to be after lockdown. Buyers’ market? Sellers? You tell me. The overall picture is difficult, if not impossible to predict. However, predict is exactly what I’m going to try to do….

I think that future pricing will be more driven by economics, rather than anything which is specifically pandemic or safety related. We’re predicting that the events industry will initially be very slow to restart, and that the buyer will be king. This presents venues with a difficult decision to make in pricing. Should they re-open at any cost, to get us all back into meetings again, or only accept bookings which reflect the true cost of operating in the post-Covid world?

This isn’t an easy decision to make for venues, and those which get it wrong may pay the ultimate business price of not being able to cover their costs. Recent analysis by the Meetings Industry Association (mia) indicates that nearly 60% of venues will not break even – at the fullest possible capacity – at the current 2m distancing rules. It’s an interesting read and available at
https://www.mia-uk.org/write/MediaUploads/Apr20_mia_Social_Distancing_Survey_-_Report.pdf

if you add what we expect to be weak demand to that equation, I do foresee that sadly we are going to lose some venues which just aren’t able to bridge the financial gap to them being able to operate more normally.

If I was running a venue (thankfully for the future of hospitality, I’m not!), what makes sense to me would be –

1. Understand the breakeven / profitability level for a given event space
2. Rework that breakeven point based on acceptable current, and predicted future occupancy or distancing levels, along with the additional health & safety cost considerations
3. Re-price accordingly.

Realistically, we can’t expect pre-Covid pricing to still apply in the immediate future. Although as we’ve found, there seems be many instances where this is exactly what’s happening. Perhaps this is linked to my last point…

The other challenge that we are seeing is reduced leadership capacity in venues. With the latest flurry of furloughs made, these now seem to include many at General Manager level, which begs the question – who is steering the ship and making strategic future decisions for that venue?

One thing that we can be certain of in the future is uncertainty. If you’re looking at possible locations for a future physical event, make sure that you (or your agent) are spreading the net as wide as you can, as there’s such wide diversity in pricing between different venues and groups that you need to get the full picture of what’s available to you. If our experience is anything to go by, expect some shockers – but you can also expect to find more reasonable offers – and the occasional bargain as well.

I’d love to hear any other views on this, feel free to contact me to talk over how any of these points might impact your events in the future.

chrisp@conferencecare.com  / 07760 174440