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Costs rising from canceled trade shows

Andreas Rostek-Buetti
March 5, 2020

Be it Berlin, Paris or Geneva — trade fairs across industries have been called off in the past few weeks due to the coronavirus scare. Now those who've incurred losses are asking who will compensate them.

Deutschland Berlin Aufbau ITB trotz Coronavirus
Image: Getty Images/S. Gallup

International trade fairs are important industrial events for professionals and visitors alike to meet up, discuss the latest developments and products, and strike a few key deals. A kiss on the cheek is nothing unusual for those having known each other for years in their common pursuit of business, and many a contract is first sealed with a simple handshake.

With the new coronavirus spreading rapidly around the world these days, such cordial socializing is however no longer considered appropriate behavior, which is why industrial events are increasingly being canceled or postponed.

The first major trade event to fall victim to the COVID-19 scare this year was the World Mobile Congress (WMC) in February, the biggest mobile technology fair that takes place every year in Barcelona, Spain. Next in the line of trade shows that didn't open were the International Tourism Fair (ITB) in Berlin, the Geneva Motor Show and a series of trade gatherings in sectors such as wine, handicrafts and books.

All over the world, about 400 trade shows have so far been canceled or postponed, with the latest entry on the list being the Hannover Industrial Fair, which is now scheduled to take place in mid-July.

Millions of visitors stay home

In Europe alone, more than a hundred trade shows have been scrapped, with Swiss authorities taking the lead by banning all gatherings of more than 1,000 people.  But the most cancellations so far have occurred in Asia.

With more than 410 million visitors annually, Germany is second only to the United States in terms of holding international conferences, trade fairs and conventions. The huge number of potential attendees already suggests that a lot of money will be lost, if they are forced to stay away.

First figures from Barcelona show that the scrapping of the WMC cost the city up to €500 million ($557 billion) in revenues. According to ITB Berlin estimates, tourism deals worth €7 billion were made at the fair last year, and such a hectic dealmaking may elude the industry this year now that the fair has been canceled. 

Picture of visitors heading toward the entrace of the Leipzig Book Fair.
The Leipzig Book Fair was to bring together 2,500 publishers and 280,000 literature lovers from across the world from Thursday next weekImage: picture-alliance/dpa/J. Woitas

Another example is the Leipzig Book Fair. With the event being canceled on Monday, a lot of people are now asking who is going to compensate the firms which built the exhibition stalls, which booked cars and hotel rooms in advance, and which rented exhibition spaces to the participants? Who will compensate the fairground operator's for logistics and personnel-related expenses?

Gaping holes in order books

The first to claim compensation were small businesses that help set up stalls and provide equipment.

"Canceling only one of the big fairs [in Germany] is already tearing a huge hole into our order books," said Jan Kalbfleisch, the head of the Famab industry association. He told DW that the series of cancellations so far this year would result in commercial losses of about €670 million in line with conservative estimates for the businesses represented by Famab.   

"Many firms are now facing questions about how they are going to survive the next few months," he says.

A group of workers carrying a sofa at the Leipzig Book Fair
Firms building exhibition stalls and equipping them with the necessary infrastructure are often small or medium-sized and cannot sustain the blow of unmet billsImage: picture-alliance/dpa/B. von Jutrcenka

The exhibiting companies themselves appear to be hit to a much smaller extent, at least as far as their advance outlays are concerned. Börsenverein des deutschen Buchhandels, the association representing German booksellers, told their members in a statement that they'd at least get the money back for renting space at the Leipzig Book Fair because the event was "officially canceled." 

Generally, this would apply to all trade fairs that didn't take place because of coronavirus prevention measures, the German exhibition and trade fair business lobby group AUMA, said in a statement.

"If an event is canceled in advance, all contractual obligations will be reversed," senior AUMA official Silvia Bauermeister told DW, adding that this would include "reimbursing payments already made for booking exhibition space." Bauermeister noted though that the losses accrued by the trade fair operators wouldn't be covered by anyone under current laws. Expenses for hotel bookings and flight or train tickets, of course, would have to be reclaimed individually, she says.

The loss of revenues for entire cities and communities, however, cannot be calculated so easily. The Munich-based ifo think tank once estimated that visitors and companies attending Germany's 185 most important annual trade shows spend a total of €14.5 billion.

Japanese school kids leaving their school closed because of the coronavirus
In a desperat move to rescue the Tokyo Olympics this summer, the Japanese government has closed all schools until early April to curb the spread of the coronavirusImage: picture-alliance/dpa

EURO 2020 soccer finals and Olympic Games

A really big coronavirus blow is currently expected in the world of sports, where megaevents like the European soccer championship tournament and the Olympics in Tokyo, Japan, are eagerly waiting for the virus crisis to ease with the beginning of summer.

The Olympic Games have already cost their Japanese organizers $12.4 billion (€11.1 billion). US media outlet Discovery alone is said to have spent $1.4 billion on securing TV broadcasting rights only for Europe.

Discovery Chief Financial Officer Gunnar Wiedenfels told Variety magazine recently that the company didn't expect "negative financial consequences" for the company if the Tokyo Olympics were to be canceled. Discovery had taken out insurance for such a scenario, he said — a lesson more companies ought to heed to protect themselves from any future outbreak.