The Catch-22 of Zero-Covid Zones: Events Happen But Can Cancel on a Dime

Australia and New Zealand provide real-world proof that a zero-Covid policy creates a catch-22 for event planners. Strict control measures mean that events can happen without risk of transmission, but they also mean that events can be cancelled on a moment’s notice. Events may be safe from a public health perspective, but they are too risky from a financial one.

And the numbers confirm this trend. According to Save Victorian Events, 40 percent of event businesses in the Australian state of Victoria project that they will go under once the government’s JobKeeper assistance expires at the end of March. An additional 43 percent expect that they will have to lay off employees. In other words, a whopping 83 percent of event businesses face closure or substantial contraction.

These statistics may seem surprising for a country with such remarkably low case numbers.  Event professionals on the ground explain why international news reports may not always provide the full picture. They also offer insight into measures that the government can take to ensure a more robust event recovery — lessons that may become more and more applicable in other regions as vaccine programs begin to offer a somewhat precarious level of safety.

Swift Lockdowns Mean High Risk of Event Cancellation

Even though Australia’s strict pandemic control measures have been highly successful at containing the virus, those very same measures mean that domestic events are at high risk of last-minute cancellations.

Simon Thewlis, the founder of Save Victorian Events, explained that many organizations are unwilling to invest in events, even when current regulations allow them to take place:

“Two days out from your event, restrictions or border closures could be put in place. There may be only a 2 to 5 percent chance of it happening, but for a big corporate event, that translates to a 2 percent chance of blowing half a million dollars. A not-for-profit might actually be putting their organization at risk.”

– Simon Thewlis, Founder, Save Victorian Events

UNINSURABLE CANCELLATION RISK

The real problem is that while insurance companies traditionally cover unforeseen setbacks like a hurricane out of season, insurers are unwilling to gamble on Covid-related risks. Thewlis explained that his own public liability costs have gone up even with far fewer events on his calendar — and his coverage doesn’t even protect against Covid-related cancellations.

If insurance companies won’t accept the risk with a pool of premium funds to draw from, how can event planners be expected to chance a fall with no safety net?

For this reason, Save Victorian Events is pushing for a government-backed insurance plan, much like the one being proposed in the UK. Thewlis points to Germany’s €2.5 billion ($3.3 USD) event cancellation fund as proof of concept.

UNPREDICTABLE INTERSTATE TRAVEL RESTRICTIONS

Strict localized restrictions are instrumental in suppressing any potential for community transmission and creating the conditions for opening economies locally, but unpredictable interstate border closures have been another significant impediment for event planners.

To see the issue, we need look no farther than Australia’s two biggest B2B event markets: Melbourne and Sydney. Each depends heavily on visitors from the other city, and the state border between them has been vulnerable to closure throughout the pandemic. While the international market accounted for only 4 percent of  Australian conference delegates in 2019, interstate travellers accounted for 17 percent. Those numbers can make or break an event’s viability.

Anna Case, an event consultant based out of Australia’s Gold Coast, suggested that a little more predictability on the side of government policy could help. “Event industry bodies are lobbying the federal government to implement a unified [interstate] border closure program,” she explained, “in this way instilling enough confidence for planners to confirm and operate national events.”

In response to pressure from event industry bodies and the tourism sector, the Tourism Minister is calling for “a consistent approach to using border closures and lockdowns as a last resort on medical advice.” Presumably the strict and immediate border closures and lockdowns are being conducted on medical advice, but this speaks to a deeper and more pervasive contradiction in the discourse around restrictions and events.

In most cases, the reluctance on the part of governments to engage in these measures swiftly enough is in some sense just as prohibitive as the Australian lockdown reflex that produces zero-Covid zones because it ultimately leads to a level of community spread that makes events impracticable in the first place.

If Sporting Events Can Happen, Why Not B2B Events?

If the situation is so dire, how have major sporting events like the Australian Open been able to move forward?

According to Thewlis, it comes down to two factors: 1) a business model that can rely on broadcast revenue, and 2) dedicated government support.

Even when the Australian Open had to shut its doors to live spectators for five days during a targeted lockdown, the organizers were still able to rely on broadcast revenue.

Even so, the Australian Open projected losses of $78 million (AUD) ($60 million USD), partly because of added costs from things like athlete quarantines, and partly because of lower ticket sales. Without government funding, the event would not have been possible.

Why are business events not receiving the same level of support? 

Thewlis thinks it might be partly a question of precedent. While sporting events have long received funding from the government, business events have traditionally gone without.

Thewlis also believes there’s a cultural element: “In Australia, business events are viewed as frivolous, and their value is seen purely in terms of tourism.” Even on a regulatory level, sporting events have been given priority. While business events are allowed no more than 1,000 attendees at non-seated gatherings, the Australian Open was given the green-light for 30,000 daily spectators.

What Is the Government Doing to Help?

While the Australian government has yet to announce an event insurance plan, they have promised other measures to help ease the transition period after the JobKeeper program ends.

In particular, the government announced the extension of its apprenticeship subsidization program and the Prime Minister specifically highlighted the Doltone House, a family-run collection of event venue spaces, after being introduced by Anna Cesarano, the company’s CEO.

To encourage the domestic travel that Anna Case highlighted as so essential, the government will be using a government subsidy program to offer the public 800,000 half-priced plane tickets to select national destinations.

Case also pointed to promotional efforts, saying, “Tourism Australia has recently launched a marketing campaign ‘Event Here This Year‘ to encourage domestic decision-makers to start planning and delivering business events in Australia.”

In short, while the government has not committed to any direct support for the event industry, they are providing some indirect assistance through tourism programs and job-creation initiatives.

What Do Australian Events Look Like Now?

Without the reassurance of cancellation insurance, most Australian event organizers are setting their sights well below the maximum number of attendees allowed under state and federal regulations, and continue to bank on virtual and hybrid events.

Some small-scale events have already been able to move forward. Mabel Lam, an event management professional working in Sydney, reported that she recently secured casual work with Fever’s Candlelight Concert series. She explained that the event normally includes 200 to 300 in-person attendees.

Lam also pointed to the upcoming Sydney Royal Easter Show, an agricultural fair that has received special permission for up to 60,000 visitors a day. As part of a special government funding package for agricultural shows, the Royal Easter show received a $15.1 million AUD ($11.7 million USD) grant to ensure that it would take place this year. The show has developed a special app that will track crowd density numbers throughout the fairgrounds, with the color red used to mark off areas that have already reached their social-distancing capacity.

Lam added, “There is a real need for people to meet face to face, but as organizers, we also have to demonstrate that our events are truly safe to attend.”

Our other interviewees painted a similar picture. Even though mask-wearing policies are sometimes lifted on a region-by-region basis, social-distancing rules continue to be enforced in public spaces throughout the country. Further, most public meeting places — including restaurants — are required to track guests using a QR-code system. It is a very different approach to public safety than we have seen across North America. Although events may still face challenges, those that do take place can confidently claim zero transmission.

Of course, event organizers would be able to take greater advantage of this relative safety with a government-backed insurance program in place.

IN CONCLUSION

While some regions of the world may be faring better in terms of Covid containment, none have escaped its economic impact. The event industry, much like its sisters in hospitality and tourism, has been especially hard hit. The zero-Covid approach may seem like a possible solution to the industry’s woes, but in practice, it cannot stand alone.

As the Australian event industry demonstrates, the financial impact of government restrictions needs to be offset with matching government support. With the high-stake investments and long-term planning behind events, the industry cannot confidently resume without protection from cancellation costs. The Australian Open showed that people can come together and still avoid full-scale outbreaks, even when a cluster of cases emerges — but only with the help of government programs and funding.