EXHIBITIONS, HOTELS, CATERING: WHO WILL GO BANKRUPT BECAUSE OF THE CORONAVIRUS?

For today, the industry has already suffered from the losses due to the cancellation of four mass events valued at over 15 billion rubles. The only thing left to the participants still is the decision of the authorities of the capital region not to impose a complete ban on the organization of pavilions.

Major events in Moscow and Moscow Region are still limited by the number of possible participants at 5,000 people, but how the organizers will put this solution into practice is a mystery, taking into account that they face such a situation for the first time.

The capital area, where large forums are still not abolished, traditionally accumulates about 75% of the market, which helps to prevent a possible collapse. The cancellation of economic forums in Krasnoyarsk and Yalta is not the most painful blow to the market taking into account that last year they were awarded with the commercial contracts for 800 billion rubles (the amount is not critical in comparison with Moscow). The last year forums of St. Petersburg and Sochi brought even less, about 3.3 trillion rubles. However, in the current situation, it would hardly be necessary to wait for the previous number of participants (20 thousand) from almost one hundred and fifty countries from all over the world the.

The Russian Investment Forum in Sochi was canceled as well, but before it was planned for February, 12-14. A couple of days before, the same thing happened to IEF (International economic forum in St. Petersburg). It was scheduled for June, 3-6.

Thus, the Russian government actually recognized that it is not waiting for the completion of the coronavirus pandemic by the beginning of summer.

Yalta and Krasnoyarsk cities did not even wait for the decision of the federal authorities and canceled events at the local level.

The main financial burden from the cancellation of events is assumed by the exhibition developers. The experts predict massive bankruptcies of companies that will not be able to return the funds, spent on the construction of exhibition stands. Design work is financed on a postpaid basis as a rule, which means that companies will have to pay for materials, projects, and stands from their own funds, not from the customer’s funds.

The experts predict serious losses in the hotel business and catering industry that traditionally accompany large-scale events.

Only in St. Petersburg, the hotel business is likely to lose about 2 billion rubles. And this is if the sporting events of this summer are not canceled. However, whether the football fans will come to matches from Europe, if they are not cancelled, no one can say for sure now.

The loss of the exhibition and hotel industry will result in losses in the form of tax revenues - St. Petersburg, for example, might lose 2.5 billion rubles in taxes in the budget. In general, bankruptcy, like the current pandemic, can have a viral effect - exhibitions and entertainment are interdependent. As a result, we run the risk of getting into a situation, where the shocking forecasts of the experts can be quite optimistic, while the real situation will develop according to the more severe scenario.