After coronavirus, businesses will be looking for better ways to shield themselves“from adversity in the future. While many owners have insurance for this purpose, the current?crisis“has shown how “acts of God” can kill businesses in their tracks.
While some have been able to successfully adapt to the COVID-19 lockdown conditions, such as online retailers and delivery friendly caterers, there are sectors that have been able unable to pivot themselves in this uncertain climate the UK’s festival industry is one of them.
In 2018, 7.5% of the UK population went to a music festival
The fallout the industry is experiencing from coronavirus is significant as pre-COVID-19, it was one of the UK’s most lucrative sectors;?
In 2018, 5m people went to a festival in the UK which means out of 66.27m people living in the country that year, the equivalent of 7.5% of the population attended music festivals.
In 2019, the sector’s value grew again, reaching £2.6bn and festival attendance hit a four year high. Pre COVID-19, they attracted a wide range of customers across the generations; including 49% of Generation Z, 43% of Millennials, and 19% of Generation X, (who said they attended a festival in 2019), according to a study by market research firm, Mintel.
These statistics were manna from heaven for budding festival entrepreneurs. However, the Government’s COVID-19 social distancing laws have dealt the industry a shocking blow, with a number of high profile festivals including Glastonbury Festival announcing cancellations.
The festival fallout
While bigger festivals, such as Glastonbury had cancelled their events earlier, (presumably because they are too big to be imbrued in a health scandal and can count on extensive insurance payouts), what are the smaller festivals with smaller budgets doing about coronavirus?
Some are offering customers a full refund should the event get cancelled while others are pursuing a rollout policy where customers can hold onto their tickets for next year’s festival. However, if the Government’s social distancing measures continue into the summer and consumers seek refunds over a rollover, many could fall into insolvency.
Smaller festivals face ruin
The festival industry body, the Association of Independent festivals, (AIF), says the financial impact of event cancellations and postponements will be significant, where smaller festivals could be forced to shut down if they have to refund their often thousands of ticket holders.
AIF boss Paul Reed says festivals will find their insurance won’t cover a contagious disease such as coronavirus, meaning many may not survive.
The festival industry may have been lucrative pre-coronavirus, but they were always a financial risk for festivals without big budgets and sponsors;?
Organisers usually make their big investments throughout the year on things like artists deposits, marketing and staff costs?long before the festival begins. If these festivals don’t happen when they’re meant to, or don’t happen at all, they will face severe cash flow problems.
Considering that smaller festivals are financially reliant on delivering a festival to pay their suppliers and hopefully turn a profit, if they have to cancel this year, many may never open again.
There’s little hope during lockdown
As opposed to other businesses, festivals are unique as they rely on providing a community based experience. This also means they’re not on the top of the Government’s coronavirus support list due to the social distancing measures that are currently in place.
According to the BBC, the Government has reiterated that it will support festivals when it’s safe to do so, including providing the necessary “support packages for businesses and workers”. But for now, their priority is to ensure people “stay at home” during the outbreak.