The event management industry is highly sensitive to economic and political risks. The more volatile the economy, the less likely people are to attend events. Whether they’re major sporting championships or local festivals. When it comes to political risk, a country’s stability can have a significant impact on its ability to host international events.
The World Economic Forum (WEF) recently published a Global Competitiveness Index 2022. They analyzed 144 economies based on 14 pillars measuring performance in areas such as infrastructure, health and primary education. They also included input from over 5500 business leaders across all industries worldwide. The report states that economic growth requires:
- Stable institutions
- Good policymaking
- Access to financial markets
- Quality infrastructure
- High levels of labor market efficiency
- Availability of skilled labor force
These factor would allow a country to successfully host high profile global events. For instance, a country could host the Olympics Games or FIFA World Cup™.
Economic and political stability can heavily influence the success of events.
The average person might not think about how economic factors affect events, but they absolutely do. When planning an event, it’s important to consider your venue location and funding available. Events taking place in expensive locations or requiring large sums of money are often canceled. In general, they don’t provide enough return on investment (ROI).
In other words, the higher your cost, the more attendees you need to be fully profitable. For instance, an event with huge food expenses will need enough attendees to cover the costs.
Economic factors can be detrimental when planning an event. If people aren’t making enough money from their jobs due to inflation, they will spend less. Travel expenses and large meals will be the first expenses to slow down. In turn, companies will make less money from live events. It creates a strong need to diversify product revenue.
Economical impact on event management
The reality is economic factors can strongly influence the success of events. For example, a country can experience an economic downturn resulting in lower attendance at a sporting event or high-profile concert. Your event would have to increase its budget for security, supplies and other resources.
You can manage economic factors by developing contingency plans and considering alternative venues if your planned location experiences economic uncertainty. You can also work with vendors who have good track records of providing quality services at more reasonable prices. Using an event management software like Eventtia can be a great way to mitigate your risks.
Political impact on event management
Political stability is a key factor in the success of event management, and it affects your industry in many ways. As an event manager, you are probably wondering how political stability impacts your business. Let’s explore the impact of political stability on the event industry first.
- Political instability can lead to increased tourism: When there are concerns about safety or security, tourists may stay away from an area. In reality, they don’t want their trip ruined by an accident or terrorist attack. When a country is stable and its people are happy about their government’s policies (or at least not upset), tourism is safe.
- Political stability can lead to more interest in events: A healthy economy increases consumer confidence; therefore, consumers tend to spend more money on entertainment like concerts or sporting events than if they weren’t feeling financially secure enough themselves. As a result, businesses related to these types of activities will benefit from increased revenue due to higher demand. Those consumers will want fun things without worrying about where their next paycheck will come from.
- Political instability can lead to decreased interest: Some governments use fear tactics against citizens so they won’t revolt against them. However, these tactics tend not only cause discontent but also lead some individuals away from participating altogether. They fear getting hurt themselves either physically or mentally.
Be a proactive event manager
In conclusion, economic and political stability affect the event management industry in many ways. For instance, the spending power of a country has an impact of your event management strategy. The political stability of a country shouldn’t stop you but rather should be included in your plan. We recommend doing a thorough research on your destination to truly plan your cost and logistics. Knowledge is power when it comes to event management.