Who’s Going to Pay Increased COVID-19 Related Event Costs?
Last week I wrote a blog post about the impact COVID19 is going to have on the shape and design of events moving forward. In that blog I talked a little bit about the implications of COVID-19 on the cost of events. Since that time, I’ve had the opportunity to sit down and think through what those costs are going to be for us. The result is a bit scary.
I looked at the cost of PPE, inventory quarantine and both the loss of revenue and the costs of space; labour costs to do the extra sanitizing over and above the cleaning we already do; ongoing workspace sanitizing; ongoing truck sanitizing; post set-up, pre-event cleaning; materials to mark sanitized goods as safe for use: pre-load-out sanitization, and for the materials, equipment and chemicals involved in maintaining virus free inventory. The result was a 7.2% increase above our current cost of sales.
We are but one of many suppliers who would be showing up to fit-out an event, and while our costs may be slightly higher because our products are coming into direct contact with attendees, many other suppliers will be facing a similar set of costs.
These costs are just the tip of the iceberg. Things like increased space costs due to reduced occupancy loads, increased costs for space due to not meeting F&B minimums, ongoing cleaning staff costs during an event; information and code of conduct signage; floor marking indicating where to go where to stand which direction to move; spit guards around reception, coat check, information desks, bars and buffets; and extra staff to operate and maintain a safe and sanitize environment stand out as “new normal” requirements. All of this will be added costs associated with staging an event. These costs will not be insignificant.
Venues will need to start looking at retrofitting their facilities. Things like automatic and gesture activated door openers and washrooms with touchless dispensers for water, soap and towels will be expected.
Who’s going pay those costs is the question?
My fear is that these costs will not be passed on to the clients but will instead be downloaded to event industry suppliers. Budgets may change a bit but clients will still come to the table with their budgets set and expect their planners and producers to make it work. I’ve been in this industry for 30 years and have time and again seen additional costs absorbed by suppliers who have been fearful of losing business if they passed increased costs onto clients. I fear that in this case, the situation will be the same.
As an industry, we need to decide what costs we are willing to absorb as the cost of doing business and what costs are going to need to be passed down to the end user. We need to agree on a way to share equitably in the distribution of these costs amongst all players in the market.
For our clients, we need to start telling them that the game has changed and that their ROI calculations will get a bit more difficult to reconcile.
I welcome other people‘s comments and hope that a conversation will start now, before we are back up and running.