Why the Events Industry May Be Headed for A Recession, And How You Should Prepare

If you’re like most event professionals, you probably read this article’s headline and scoffed, Recession? What recession? We’re crazy-busy, and can’t hire people fast enough!

And you’re right; the event industry is most certainly not in a recession, at least not right now. Agencies and suppliers are coming off record quarters. In fact the only sector not booming is virtual events, though business there is still greater than pre-Covid, and by orders of magnitude

Events As A Lagging Indicator

But - and this is a huge ‘but’, one which usually doesn’t get mentioned – events are lagging indicators, meaning they maintain an existent trend for some time after the economy has turned in the opposite direction. The events taking place now represent business decisions made months or even years ago, in a very different economic climate.

By contrast, the decisions that senior business leaders are making today, based on the current state of the economy, won’t be felt until later this year and well into 2023, when the events they’re evaluating right now will be scheduled to take place, or not take place.

Recession Drivers

There are several factors pointing to a recession, though the extent to which they bring one on is yet to be determined.

1. GDP DECLINES: A recession is technically defined as 2 consecutive quarters of a decline in GDP, which is what the latest economic figures just acknowledged happened in Q1 and Q2 of this year. This is a backward-looking indicator, however, so let's look at what's happening now, and what might be coming our way.
2. INTEREST RATE HIKES: The Fed just raised interest rates .75 points at its last meeting, in July, and that’s on top of an earlier .75 increase in June. Those are big hikes, whose impact has yet to work its way through the economy. You can already see how it's impacted the housing market, since mortgage rates react quickly to changes in interest rates, but it takes time for many other sectors of the economy to react. The bottom line is that higher interest rates make it more expensive for businesses to borrow money, which puts a damper on new investment. ?The FED sees interest rate hikes continuing for a while, and the market has already priced in a .5 point rate hike to come at the Fed’s September meeting.
3. QUANTITATIVE TIGHTENING: The Fed also began its program of QT (Quantitative Tightening, which pulls money out of the economy) to the tune of $45 billion per month starting in June, which is set to double to $90 billion a month in September. Again, these measures have only just started to be felt. Right or wrong, the Fed is pulling out all the stops to halt inflation, and if it means throwing the economy into a deep recession to do so, well, that's a consequence they’re willing to live with.

Decisions that senior business leaders are making today, based on the current state of the economy, won’t be felt until later this year and well into 2023

1. JOB LOSSES: Most recessions are usually accompanied by massive job losses, which is not the case right now. But that is starting to shift. Many companies, led by tech, have announced layoffs or hiring freezes, as CEOs brace for some tough times ahead.
2. RECORD AIRFARE INCREASES: Average airfares went up 18.6% from March to April, the largest 1 month increase in history . For the year, prices are up 33% compared to this time last year . That information is going to affect business decisions about events over the next few months, particularly internal events where the company pays for everyone to travel, which will affect bookings in the fall for future event dates. The Global Business Travel Association (GBTA) recently released a report on costs for business travel, which includes some sobering numbers. GBTA projects 2023 increases of 8.4% in airfare and 8.2% in hotel rates. This is on top of predicted 2022 increases of 48.5% in airfare and 18.5% in hotels. Overall they see the cost per attendee for meetings and events to be 25% higher in 2022, and another 7% higher in 2023. Recent headwinds now push anticipated full recovery of global business travel from 2025 to 2026.

The more uncertainty there is, the more value you can bring as a trusted advisor.

1. REDUCED ATTENDANCE RATES: While everyone may be super-busy with work right now, attendance for in-person events is still down significantly from pre-Covid levels. In early July, Skift reported that event attendance is stalled at 65% of pre-pandemic levels , a number confirmed by separate data from Freeman . Bear in mind that this is an average, and many events are doing much better. Collision, the major tech conference held in Toronto this past June, had record numbers, pulling in over 35,000 people, a 40% increase from 2019 . The message is that well-designed events that deliver strong ROI for attendees, exhibitors or other stakeholders will continue to thrive. However, many events kinda suck, and while they might have gotten by in the booming pre-Covid landscape, they can no longer escape their lack of a solid value proposition.

The Case Against A Recession

1. STRONG JOB MARKET: If we are in a recession right now, someone forgot to tell the job market. Payrolls increased by 528,000 in July , more than double the projected number of 258,000. The unemployment rate for July was 3.5%, the lowest level since 1969. Wage growth also surged. There’s simply no way to spin this other than good news for the economy.
2. ?NO MALAISE: Recessions are often felt more than they are measured. GDP numbers aside, we’re generally not experiencing the sense of stagnation and malaise that usually accompanies recessions.

How To Position Yourself for Success

1. Be laser-focused on knowing how to calculate your event's ROI for all stakeholders (host, attendees, sponsors, exhibitors, etc.) and being able to talk intelligently with those stakeholders about how it drives their business goals. [To allocate the impact of an event on a specific business objective, see Building Attribution Models . For a deeper dive on how to use data to tell a story about your event, check out PCMA Event Leadership Institute 's new Event Measurement & Analytics course .]
2. Be smart about what events should be in-person, virtual and hybrid, and more specifically, which aspects of your events (e.g. learning, sales, networking, motivation, etc.) are best deployed through which event delivery models. Be a voice of insight about which event formats are most cost-effective for each attendee persona. [This all depends on the event's goals, however. See Helping Clients Define & Weight Event Goals for tips on helping articulate what those goals might be.]
3. Embrace the ongoing uncertainty caused by changes in the economy, travel, health and other disruptions that may require pivoting your event strategy on a dime. Yes, it’s very stressful, but the more uncertainty there is, the more value you can bring as a trusted advisor .

Jeff Bezos famously said "Your brand is what people say about you when you're not in the room." Think about how your clients, stakeholders and key decision-makers describe your value proposition when you’re not in the room.

1. Know your VORP (Value Over Replacement Planner), a version of baseball's VORP (value over replacement player), which measures the gap in performance between you and the average person you could be replaced with. The higher your VORP, the greater your value to your clients, bosses and stakeholders. [See Recession-Proofing Your Job: Do You Know Your VORP ?]
2. Jeff Bezos famously said "Your brand is what people say about you when you're not in the room." Think about how your clients, stakeholders and key decision-makers describe your value proposition when you’re not in the room. Who is advocating on your behalf? Do they know what value you bring?
3. Continue to invest in your own career & professional development, honing the next generation of critical skills needed to thrive in your organization and your field.

Conclusion

Of course no one has a crystal ball, and most of those who claim to do so are usually dead wrong. Famed economist Paul Samuelson once joked that the stock market has predicted 9 of the last 5 recessions.

But that doesn’t mean there’s not value in trying to look ahead and see around corners. To learn more about how to refine these skills, check out our article How to Think Like A Futurist , or watch the video from our session of the same name at our Innovation and Engagement Summit. And the tips listed above will serve you well regardless of what state the economy is in.

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A version of this article first appeared in MeetingsToday's free Budget-Saving Strategies ebook , to which PCMA Event Leadership Institute contributed several additional articles.