The price of gas is through the roof. How will that affect event planning in 2022?
Just as the in-person event industry is starting to recover, it is being hit with rising prices across the board, but nowhere is the surge more glaring than with fuel.
While the event industry may not be the only sector affected, it was among those most hard-hit by the pandemic. Have these hardships made the event industry more efficient and therefore better prepared for this new setback, or will it shrink the sector even further?
The cost of fuel affects almost every aspect of putting on an event, from catering through accommodation charges right through to how much it costs to get A/V gear on site.
First off, the price of oil directly influences inflation — if oil jumps, so does the cost of everything else. Any manufacturing or transport that requires energy input from carbon will be almost immediately affected, even as interest rate hikes are brought in to control inflation.
This will affect the way that event companies do business, said Brent Taylor, the president of Timewise Events, which provides production and event management, as well as audio/visual services.
During the pandemic, Timewise shuttered its production side and focused instead on capturing media from smaller events to be pushed out via virtual event platforms. Timewise is based in Edmonton, Canada, and in the pre-pandemic era it operated all over the province of Alberta — but now, Taylor said, that has changed.
“In-the-field costs have actually increased by about two-and-a-half times since pre-pandemic, and that is going to make a difference in how we operate the business, in what we charge to produce and deliver events,” said Taylor. As a result, Timewise now operates at a much smaller geographic scale than previously: “Right now, I’m not really interested in leaving the Edmonton region. The cost is just going to be through the roof for trucking.” Even though the amount of equipment he has to move is relatively small compared to the needs of major trade shows, the fuel costs associated with inter-city travel are too high for his company to absorb while also staying competitive with local providers.
Even looking beyond his own immediate company, Taylor is forecasting greater localization within the event sector. “As the industry comes back, I think we’re going to see local and regional events being the first to come back. And that’s what we are seeing.”
The inflationary costs associated with high oil prices will compound these difficulties, requiring event professionals to keep their margins razor thin. It may also affect another important stream of revenue: sponsorships. “Rising fuel costs impacts absolutely everything. Someone exhibiting, they have to fly there, they have to transport their booth — and the courier shipping is already through the roof,” said Taylor. “Imagine what it’s going to be here in six months due to these field prices. There’s going to be less dollars for sponsorships because of the other parts of the budgeting of organizations when they do their events.”
What About in the Long-Term?
In some ways, the mid-term outlook is quite bleak for the event industry. However, it’s worth noting that many of the companies still standing after the last 18 months may be equipped to weather the storm and become even stronger once this, too, has passed. And there may be other eventual benefits to the hard times ahead, said Will Curran, the founder of Endless Events.
For one thing, the fact that these price jumps are coinciding with a return to in-person events means that there are second-tier cities that are eagerly promoting themselves as ideal destinations for events. They are, in some sense, the budget destinations.
Curran thinks that as planners and attendees reckon with the increasing cost of transportation, they may be able to offset that by choosing a less pricey locale. Costs like heads-in-beds, catering, and legal representation may be significantly less in a city like Bozeman, Montana.
Further, the destination that’s closest may end up being the ultimate deciding factor. “They’re going to come to the production side of things and say, ‘My normal company that I work with is out of Seattle. That $2000 trucking cost is now $3000,’” said Curran. “So I think we might see some offsets and shifting around of savings there.”
How Rising Fuel Costs Might Indirectly Benefit Sustainability
Curran also sees another opportunity emerging to do things differently. “Pre-Covid, sustainability was one of the biggest trends. With rising trucking costs, maybe what we’ll see is people starting to make their events smaller and utilizing smaller, more local venues to reduce trucking costs and carbon footprint for that end as well,” said Curran.
In turn, this impetus could have benefits in terms of brand reputation. Being required by circumstances to actually reduce carbon consumption — as opposed to relying on the purchase of carbon offsets to achieve net zero — could enhance an event organizer’s reputation for taking the climate crisis seriously. And, Curran said, “If there’s one thing I’ve learned, I think about people’s perception of a brand, as it relates to CSR, is that they’re only going to get smarter.” Having a strong nudge towards carbon reduction will benefit the companies that accept the challenge in the long-term, both in terms of overall brand and in their ability to recruit and retain a talented team.
Will Rising Flight Costs Further Drive Demand Up for Hybrid Events?
One of the factors pushing event organizers towards hybrid event formats has been the difficulty associated with international travel during the height of the pandemic. Will higher fuel prices driving up airline ticket prices have a similar impact?
Despite being an innovator in creating hybrid events, Will Curran is not certain that the cost of airfare will necessarily result in a rapid transition to the event tech-powered, hybrid hub-and-spoke model that many event professionals have been getting excited about. “I think what’s going to end up happening is that for a short period of time, people are just going to try to go back to 2019.”
Curran believes that the idea will catch on once larger conferences like C2 and Dream Force invest in developing and budgeting for events using this model, with one main location and concurrent satellite events hosted regionally. “Attendees don’t want virtual. So I think that there has to be this idea that to do a hybrid event, you need to do it right,” said Curran. “It needs to let people get that physical interaction so that they can experience what it’s like to do those smaller groups.”
If that does become a trend, it could also enhance the overall sustainability of an event, over and above the push to reduce carbon costs as much as possible because they’re so pricey right now. In the long run, these market pressures could create an event industry that is ultimately more efficient, with the possibility of higher profits and better sustainability much further down the road. “That’s all I hope for in the future — I just want to come out of the pandemic and be able to say, ‘We’ve learned something.’”