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April 24, 2009

Rob Allen:The key to survival is understanding the situation you are in

The immediate past chairman of Eventia assesses the current stage of the recession and says adding value, holding on to market share and best practice are the keys to survival.

In tough times, thoughts often return to the wartime wisdom of Winston Churchill – and while we can’t yet claim to be at the Beginning of the End, it’s reasonable to say that we have reached the End of the Beginning.

Because, even accepting that this is set to be the worst recession any of us will have lived through, there’s some comfort in the knowledge that severe economic downturns tend to follow a predictable pattern. 

The six stages of recession have been identified as: Denial; Anger; Fear and Paralysis; Adaptation; Reassessment; and Recovery. And as companies in just about every sector are reducing their headcount, tightening their budgets and avoiding any activity that could be perceived as extravagant, few people in the events sector are whistling a happy tune.

Extreme caution
So our current state of anxiety places us about half way though those six stages. The grim news is that we may see a further wave of cuts over the coming months, and even assuming that the recession bottoms-out by mid 2010, the events space may have become contaminated by the economic paralysis and we’ll be operating in an atmosphere of extreme caution. 

It’s a fair guess that the events industry will see further casualties. One client succinctly captured the prevailing mood by saying: “We shall only commit to activities that are absolutely mission-critical, have a clear role in generating sales or save us money.” 

In such a constrained environment, event buyers will select tried, tested and robust suppliers, which means that  start-up companies, and those that don’t have a handle on sound commercial management, will be especially vulnerable.

Adding value
So how can we weather the storm? Realistically, we should be looking to hold market share rather than maximise profits. We should be cutting costs – in overheads and particularly staffing, which is the largest overhead by far. This translates to an increased use of freelancers and maybe even following some clients and supplier organisations in introducing a four-day week. 

Agencies can benefit by adopting another client practice - in buying like procurement departments. Throughout the supply chain, rates will be held or reduced and agencies and suppliers alike will need to demonstrate where they can add value. 

The silver lining amid all this gloom is that event activity will unquestionably continue. Organisations will need to communicate – both externally to their customers and other stakeholder groups, and internally to their staff. The events industry has a hugely significant contribution to make here. However, we are witnessing a realignment of values away from conspicuous consumption – in the form of extravagant corporate hospitality and parties – and towards value for money and ‘smart’ events, which deliver bottom line benefits. As an industry, our messaging must be that we can offer a contribution of innovation and creativity, supported by proven expertise and knowledge.

Survival of the fittest
Even in recession, there are opportunities to be exploited, so by taking a proactive stance we can target the more robust client industry sectors, such as food and drink, government departments and, ironically, the recession itself – which is giving rise to the need for people to meet, compare notes and agree strategies. 

We can also sell our creativity to overseas markets. At last the UK is representing better value as a destination, and a viable option for pan-European and global events.

The general thinking is that recovery will begin in 2011 and, with the added optimism generated by the Olympics, 2012 should see some real growth – for those who have survived. Some markets will not return to their previous strength; the financial services and automotive being the most likely sufferers, and the events industry itself will have been damaged by reduced investment.  But as with every enforced shake-out, we’ll witness the survival of the fittest, and opportunities for the best practitioners.

Rob Allen is chief executive at live marketing agency TRO and immediate past chairman of Eventia

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