Boomtown or Busttown?

With less than four months until the Boomtown festival was due to take place in Winchester (Hampshire), the organisers announced it would be postponed until August 2022.  This comes 12 months since the 2020 gathering was postponed.  With lockdown easing why are these events still being postponed and what does it mean for the events industry as a whole?

What funding has been made available?

Since the first lockdown in March 2020 the government has announced a raft of funding to assist those companies affected by the lockdown restrictions.  Mass events being one of the industry’s worst affected.

As well as the furlough scheme, government backed loans and reduced VAT for tourism and hospitality firms , the Arts Council England has more recently also provided funding through the Cultural Recovery Fund.

So why is this not enough for some?

Boomtown explained that the grant received from the cultural recovery fund represented under 10% of the cost of creating the five-day arts, music and theatrical festival, which had already been postponed once resulting in significant lost income and costs.  Whilst the grant may plug a gap, the organisers’ main concern has been around a lack of government backed insurance fund.  They are not alone.  MPs are now stepping in to attempt to get the government to support an insurance policy against a late cancellation which is out of the organiser’s control.

Boomtown postponed

Is this insurance not already available?

Companies may have business interruption insurance; however, this has not covered everything that business owners expected.  There was such uproar on the lack of any pay out from this insurance when Covid lockdowns first hit that a large and very expensive test case was brought through the courts.  Whilst the court found against the insurers in some part, the insurance does not cover everything, it all comes down to the wording of the policy.

Covid specific cancellation insurance does not currently exist.  For large scale events this poses a significant risk, the cost of putting on an event can be very high, and these are incurred months and weeks leading up to the event.  Without insurance in place, if restrictions come in which prevent the event going ahead the organisers would be left with a significant bill that they may well not be able to pay.  This would not just affect the organisers themselves but could be felt throughout the supply chain.

What does this mean for others in the industry?

For Boomtown, if they were to cancel the event at the last minute, they project that their losses would run into millions, but it is not just the big companies impacted, the affects will be felt throughout the industry.

When the Euros and VE Day celebrations were cancelled last year, it had a major effect on local businesses.  These major events would usually bring people into pubs, local party businesses already held the stock in preparation for these events.  The cancellation and delays also impact upon the local caterers, smaller performers, passing trade coming through the town to the event is missed, busses and taxis will not see the footfall from these events, the list goes on and on.  The postponement of one major event can have impacts for so many local businesses, not just the event organiser.

What is the future for these businesses?

Diversification has been key to survival since the first lockdown for some businesses.  Caterers, for example, who relied on festivals for their income started to offer home meals and meal kits, taking advantage of the demand when pubs and restaurants were closed.  With some people still not keen to eat out these ‘cook at home takeaway’ companies are still seeing a good trade.  Smaller breweries who supplied to smaller festivals opened their doors to the customer direct, some for the first time.  Rather than relying on a few large events each year they are now relying on a steady stream of small orders.  A big change, but for some it was the only means to survive.

Whilst there have been some inspiring success stories there are unfortunately those that could not find a way through.  A local large party store was an early casualty of the cancellation of events.  With significant stock held for St Patricks day and Euro’s that did not go ahead, the company could not afford to continue whilst everything was in lockdown.  A small festival company also had to close as it did not have the funds available to offer refunds for those who were unwilling to defer.  Both ended up in liquidation due to the cancellations.

What is the future for the industry?

With lockdown easing, it will down to each organiser to weigh up the risks of going ahead, Glastonbury went ‘online’ with the news broken in January that there would be no 2021 festival.  Whilst this appeared to be a good idea ‘Glastonbury at Home’ was not a success, charging £20 for a five-hour stream it seemed to be a win-win for all involved, however, after the system crashed the organisers faced backlash and issued a free link.

Isle of Wight festival has been more optimistic, moving their event from June to September 2021, they seem confident the event will go ahead.  Several other large-scale events are due to take place from August onwards.  If they do go ahead, you would expect that the income from the bars and outlets will be higher than ever.  The test will be whether everyone involved to get the event going have enough in the bank to get things up and running in uncertain times.

It will be important for all to have prepared cashflows, based on different scenarios, to establish at what point they move from being able to trade to the business no longer being viable if numbers are limited or events are delayed yet again.

AUTHOR: Nicola Layland (Director)

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