- On 12 February the GSMA cancelled Barcelona’s Mobile World Congress after a string of large companies pulled out.
- It was the first time the event had not taken place since it moved to the city; hotels, restaurants and services felt it at once.
- Income concentrated on a few dates is a risk that can be measured and covered, but only if it has been thought through beforehand.
On 12 February 2020 the GSMA, the organisation that runs it, cancelled Barcelona’s Mobile World Congress because of the coronavirus. The decision came after a succession of large companies announced they would not attend. It was the first time the event had not taken place since it moved to the city, and the news had an immediate echo well beyond the technology sector.
For Barcelona, the congress was much more than a trade fair: it was an event that filled hotels, restaurants and transport for a week and gave the city international visibility. Its cancellation, with so little time to react, turned a still-distant health matter into a local economic problem, with consequences for businesses of many sizes and sectors.
A cancellation by domino effect
A congress of this size depends on the large companies that give it prestige and draw in everyone else. The best-known exhibitors act as a magnet: they are the ones who justify visitors’ journeys, attract the press and sustain the value of the exhibition space and the tickets. When several of them withdraw, the event loses its reason for being even before the organisers take a decision.
When several companies withdrew, the organisers were left without the core of the event and cancellation was the logical consequence. For the city, the announcement came with very little time to react. Whoever organises an event like this takes on commitments long in advance, and so do those who work around it, so a decision taken in a few days has effects that take weeks to sort out. In those weeks, it is cash that pays for the uncertainty.
Who noticed first
The impact on hotels, restaurants, transport and services was immediate. Around a large event there are many businesses, from the small shop to the temporary-staffing supplier, whose annual turnover counted on those weeks. It is not always visible from outside, but the activity of a congress is spread along a long chain of suppliers that depend on one another.
Bookings made months ahead, staff contracts and stock purchases were left in the air. Some of those commitments can be cancelled or postponed; others cannot, and the difference depends on what each contract said and on whether there was a force majeure clause or cancellation insurance. Anyone who had not checked beforehand had to find out in a hurry and under pressure.
Dependence on big events
For many local businesses it was the first sign of how exposed a model heavily dependent on large events could be. A company that concentrates a significant part of its income on a few dates should know what it would do if one of them disappeared: which costs it can cut, which insurance covers a cancellation and how much cash it needs to hold out until activity recovers.
It is also worth reviewing contracts with suppliers and customers to know who bears the risk when an event is cancelled, and whether payments can be deferred or activity relocated. It may also help to look for income at other times of the year or from other audiences, without giving up what already works. These are prudent measures that are taken calmly, before they are needed. And if the business depends on a few large customers or a few seasons, the forecasting exercise needs to be even more demanding.
Income concentrated on a few dates is a risk that can be measured and covered, but only if it has been thought through beforehand.
This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.
