Event industry: hardship despite full order books

Dusseldorf The order books at exhibition stand builder Ralph Ebben from Cologne are well filled until the summer. The event industry was paralyzed for almost two years because of Corona, and so was Ebben’s business. Now he could start again, but now he lacks the staff. “Before the pandemic, I had 24 permanent employees, now there are only eleven,” says the head of Innova Neo Messebau.

Short-time work has caused many employees in the event industry to migrate to crisis-proof sectors. Ebben has eight trucks, but can’t find anyone for the driver’s cab: “Long-distance drivers are desperately wanted everywhere.” The stand builder had to cancel orders for May. As a result, he lost a good six-figure turnover.

One in four companies in the industry has lost more than half of its skilled workers. This is shown by a survey by the Rifel Institute on behalf of the FWD Federal Association of Event Management, in which 400 industry representatives took part. It is exclusively available to the Handelsblatt. Before the pandemic, the fragmented events industry had a turnover of around 130 billion euros a year and employed around 1.5 million people. That is significantly more than the automotive industry, which is considered a key sector with around 800,000 employees.

From Easter on, the orders for Christian Seidenstücker’s event company begin to pile up, and then through the summer until October. Joke Event from Bremen organizes product presentations for DAX companies, sales kick-offs for medium-sized companies, company celebrations and conferences. Here, too, there is a lack of personnel to implement all orders. The people of Bremen only had to let go of 15 of 120 permanent employees during the pandemic.

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But many solo self-employed have left the crisis-ridden industry entirely. “They fell through the funding grid and only received a small amount of compensation despite being banned from working,” explains Seidenstücker.

A lack of staff and capital slows down the restart

The strongly seasonal events business is dependent on independent specialists at peak times. The Cologne trade fair builder Innova Neo has only one third of the freelancers left. Many craftsmen found work in the booming construction industry. Joke Event is now missing light and sound technicians, logisticians and construction workers. In addition: “If one of our service providers fails, we have to be liable,” says company boss Seidenstücker. Unlike in the past, spontaneous replacements are no longer easy to find.

The two previous pandemic years have hit the entire event industry. According to the survey, the drop in sales in 2021 was an average of 63.2 percent below normal operation, even more than in 2020 (59.9 percent). In the first year of Corona, Joke Event’s net sales of 20 million euros collapsed by 70 percent. In 2021, sales were only 25 percent lower than before the pandemic – thanks to a strong digital business. Joke Event helped to initiate the successful vaccination campaign in Bremen. “We survived because we built alternative digital business,” says Seidenstücker. “Not everyone in the event industry has been able to do that.”

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That cost the industry trust. “We have to pre-finance everything without having any income,” reports Seidenstücker. Customers no longer pay a discount, which used to be the norm. They fear that event service providers will go bankrupt before the event. For the same reason, Seidenstücker’s service providers such as stage builders or caterers also demand advance payments.

“Despite full order books, the event industry is in need of liquidity,” says the head of Joke Event. According to the survey, companies’ liquidity reserves have fallen by almost 44 percent in two years. Because the repayment of the KfW loans, which many companies have taken out to survive, has long since begun. Event Joke is also paying off installments on its EUR 2.2 million loan to KfW.

Christian Seidenstücker

The head of Joke Event in Bremen: “Despite full order books, the event industry is in need of liquidity.”

(Photo: Joke Event)

The industry’s equity ratio has fallen on average from 50.2 percent in 2019 to 37.8 percent in 2021, the survey shows. Exhibition stand builder Ebben therefore had to contribute privately.

The thin equity base and the weak liquidity lower the credit rating. This makes interim financing and borrowing considerably more difficult and expensive. 52.8 percent of the companies surveyed need external funding to restart. However, a quarter of the companies have already been denied loans due to a bad rating. “Insufficient sales, equity reserves that have been used up after two years of the pandemic, repayments that unexpectedly reduce liquidity and are not the subject of bridging aid, harbor a high risk of insolvency,” states IG Messewesen.

Fear of bankruptcies

“We are very grateful for the state aid,” emphasizes event specialist Seidenstücker. “Without this, very few in the industry would have survived.” However, the FWD association and IG Messewesen are calling for the help to be extended by up to six months after the end of all corona restrictions. That’s how long it takes to get your own sales. Should the bridging aid IV cease to exist at the end of June, there is a risk of a wave of insolvencies. Then, according to IG Messewesen, all government funding measures of the past two years would be lost.

Ebben also fears that a number of exhibition stand builders will be left behind when state subsidies expire. He expects a wave of consolidation in the industry. Ebben will therefore soon join forces with a competitor.

Ralph Ebben (left) and employees

The Cologne stand builder had 24 employees before the pandemic, now there are only eleven. The others have migrated to crisis-proof sectors.

(Photo: Innova Neo)

The industry-wide restart of the events industry is being made more difficult by the current wave of inflation: as a result of the pandemic and the Ukraine war, costs have risen sharply everywhere, especially for wood, energy and freelancers. “We therefore have to increase our prices by double digits,” says Seidenstücker. Exhibition stand builder Ebben has already felt compelled to raise its prices by 35 percent. “I doubt whether that will be enough in the medium term in view of the general rise in prices.” However, the event budgets of the client companies are limited.

Putin’s war also means that certain events are not taking place. The first company celebrations were canceled for reasons of piety, reports Joke Event. Or conferences take place without an evening event or without a DJ. “Companies are worried that happy celebration pictures will end up on social media while people are dying elsewhere,” says Seidenstücker.

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