Can the shuttered events industry restructure to not just survive but thrive?
While many organisations are facing an urgent need to restructure to survive the COVID-19 led financial crisis, those most acutely affected are in the major event, hospitality, tourism, festival and sporting businesses. Social isolation and the severe curtailment of most travel has effectively shut down many of these industries.
Organisations that react successfully are likely to have designed, developed and implemented major restructuring and downsizing to address the effect of the sudden curtailment of all, or nearly all, of their revenue lines – particularly those organisations operating in the sectors referred to above. The successful organisations moved very rapidly (a two – three week period) to address their situation and minimise losses.
Critical commercial areas to consider
Unlike retail businesses, many in the event and hospitality space do not have an online retail offering or products that can be sold to bolster sales.
Hard and confronting decisions are needed and action taken quickly across the business, including in the following key areas:
- Unit shut downs – consideration as to cash flows and timing of expenses and receipts;
- Staffing management – consideration to new conditions of employment and stand downs, which will need to be reviewed with applicable contract terms, awards and EBAs, and what the risk is to employees and the workplace;
- Staffing support and welfare – consideration to the feasibility of staff being able to effectively and safely work from home and management staff morale, and how this can be effectively managed;
- Supply contracts and stock management – review of key supply terms and contacting suppliers to negotiate deferral of services and stock delivery or the return of now surplus stock as well as force majeure and change of law provision, and on supply chains and the impact on Incoterms;
- Long term income contracts – examination of the potential effect of this crisis on income expected to have been derived from these contracts, recalibrating cash flows and profit derivation;
- Insurance cover – reviewing policies for what is covered in following event cancellations in pandemic situations;
- Banking facilities and cash flow arrangements;
- State, territory and federal government relations; and
- Public relations and media management.
With an evolving environment (and almost daily closures) events organisations are also dealing with varying state responses. Adding further complexity is the uncertainty as to when any major events, hospitality and tourism activities are likely to recommence.
These are never before encountered circumstances but, if well handled, provide the opportunity to re-set a business for the future that is leaner and more focused on its core business.
In addition, plans needed to be made now which provide for the ability to rapidly re-activate the organisation once the crisis has passed. This is the time for businesses to contemplate how they will re-enter the market and how, if a phased re-entry is required, it can be activated quickly and efficiently.
Contact us for advice on how manage these challenges.