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Facebook is the latest to pull out of a major industry conference as coronavirus fears batter travel industry

Medical team members of the Second Hospital of Shangdong University prepare to leave for Hubei Province in Jinan, capital of east China’s Shandong Province, Feb. 9, 2020.

Zhu Zheng | Xinhua | Getty Images

Organizers of the Mobile World Congress pulled the plug on the show — and the 100,000 visitors it normally draws — less than two weeks before it was set to start Monday in Barcelona, marking a turning point for companies in the global battle against a new virus that’s killed more than 2,100 in China over the last seven weeks.

Since the disease, named COVID-19, emerged from the city of Wuhan in late December, U.S. airlines have cut service to much of China and Hong Kong and dozens of trade exhibitions and conferences have been canceled or postponed. Major corporations have pulled their executives from attending conferences across the globe, including major trade shows in the U.S., as fears of a possible pandemic spread of the virus gripped the world meeting market.

Last week, Facebook canceled its annual Global Marketing Summit scheduled for March 9 to March 12 in San Francisco “out of an abundance of caution” over the virus. The event was expected to see over 4,000 participants. On Thursday, the social media company said it was also pulling out of a developer conference there next month. 

The Beijing Auto Show originally scheduled for late April was postponed earlier this week to an undetermined date to prevent the disease’s spread, according to the event’s website.

Shanghai Fashion Week, which was scheduled for March 26 to April 2 and attracts over 1,200 fashion brands, was postponed last week in order to prevent the spread of the disease, according to the event’s organizers.

The organizers of Mobile World Congress, GSMA, announced the cancellation last week after exhibitors and speakers canceled their travel plans en masse. The four-day conference is the world’s largest trade show for the mobile phone industry and featured key note speakers from AT&T, Airbus, Google and other titans of industry. The cancellation foreshadows more pain to come for the meeting and tourism industry. 

‘Difficult decision’

“With due regard to the safe and healthy environment in Barcelona and the host country today, the GSMA has canceled MWC Barcelona 2020 because the global concern regarding the coronavirus outbreak, travel concern and other circumstances, make it impossible for the GSMA to hold the event,” GSMA said in a statement.

LG Electronics, Amazon, Ericsson, Cisco, Facebook, AT&T, Sony, Nvidia and other companies pulled out of Mobile World Congress (MWC) prior to the cancellation.

“It was a difficult decision,” said Frank Lee, director of public relations at LG MobileComm USA. “LG wanted to minimize international travel.”

The event is usually a major “coming-out party” for the year’s new products on a global scale, according to Lee. Now, LG will focus on doing product announcements at the regional level.

Amazon also canceled its attendance at MWC because of concerns about the virus, a spokesperson for Amazon Web Services told CNBC. Ericsson had similar fears.

“Over the last couple of weeks, we have followed instructions and recommendations from authorities in different countries,” said Mikaela Idermark, corporate communications manager at Ericsson, in a statement to CNBC. “After an extensive internal risk assessment, we concluded that this is the most responsible decision.”

The fast-spreading virus has infected more than 75,700 people — up from 282 cases as of Jan. 20 — and spread from four countries to more than two dozen in that time frame.

The cancellation of trade events around the world cuts across the hotel, airline, entertainment and other industries.

$2.5 trillion industry

“We will not know the economic impact until later this year, but it is substantial,” said Cathy Breden, CEO of the Center for Exhibition Industry Research.

The global business events industry generated $2.5 trillion worth of business sales in 2017, according to the latest research from the Events Industry Council and Oxford Economics. It also contributed $1.5 trillion to global GDP and employed 26 million people worldwide in 2017.

China in particular is an important hub for trade events and the exhibition industry is an “economic engine” for the country, according to Breden. However, with more than 75,700 cases of the virus and at least 2,130 deaths, event organizers say postponing conferences is necessary. Some convention centers have even been converted into temporary hospitals.

Marine Money Shanghai, a conference for shipping financiers, was planned for March 3 to 4, but was postponed because of the virus’ growing severity and concerns from attendees.

“First in our minds was and will always be the health and safety not only of our community, friends and clients, but of everyone engaged in resolving the current challenge,” wrote Andrew Oates, business development manager for Marine Money Asia, in an email to CNBC.

Serious financial issues

Rescheduling can pose serious financial issues for event organizers, according to Breden. They may not be able to get the same venue for their new date and can lose money they’ve spent on the event space and other services like catering and conference management.

Exhibitors and attendees also face challenges when events are canceled or when they choose not to attend, such as eating the costs of booth deposits, event registration and travel arrangements.

Most importantly, they miss the opportunity of making potentially lucrative business connections, according to Sherrif Karamat, president and CEO of the Professional Convention Management Association.

“There’s a tremendous amount of commerce that happens when we meet face to face that can’t happen online,” said Karamat.

Concerns over the coronavirus have also affected trade events outside of China. The Food&HotelAsia-Hotel (sic) Restaurant and Cafe expo, referred to as FHA-HoReCa in Singapore has been moved from March to July. The event was postponed because of the outbreak, wrote Martyn Cox, the event’s director, in an email to CNBC.

The expo’s sister event, FHA-Food & Beverage, was initially still scheduled for the end of March in Singapore. Its organizers planned to offer masks and hand sanitizer on-site to attendees. The expo was eventually cancelled on Feb. 14.

However, the virus isn’t scaring off all event planners.

‘No-contact policy

The Singapore Airshow took place last week, even after the Pentagon reduced its delegation and U.S. defense firm Lockheed Martin completely pulled out.

The aerospace and defense show instituted safety measures such as a “no-contact policy” for attendees. The event’s official Twitter account posted a video showing its lion mascots demonstrating “alternative greetings” like bows and hand waves.

“The Singapore Airshow organizers are doing a good job of working with experts, following all prescribed protocols and thoroughly communicating the best guidance to minimize the risk,” said Chris Meyer, director of marketing and communications at Kallman Worldwide, which organizes the U.S. presence at the event.

At the UFI CEO Summit in Rome earlier this month, business leaders in the events industry were concerned about the impact of the virus on future tradeshows and conferences, according to attendee David Audrian, executive director of the Society of Independent Show Organizers.

“They’re basically assuming all shows through March will be cancelled [in China],” Audrian said.

Business leaders are also fearful of traveling to shows that have high Chinese participation and are considering not going to them even if they are in the U.S. or Europe, Audrian added.

“This will start to impact a significant number of shows that have Chinese exhibitors or Chinese attendees,” he said.

Facebook said Thursday it was pulling out of next month’s Game Developers Conference in San Francisco due to on-going concerns with the coronavirus outbreak.

Chinese vendors face travel restrictions

U.S. exhibitions are already seeing lower numbers of participants from China. At Sourcing@MAGIC, an apparel manufacturing tradeshow that took place in Las Vegas earlier this month, only half of the Chinese vendors were able to attend because of the U.S. travel ban on foreign nationals who had recently been in China, according to Tom Nastos, chief commercial officer for Informa Markets, the show’s organizer.

“The other 50% were already in the country or other countries prior to the travel ban,” Nastos said.

American companies have also been hesitant to attend domestic trade events because of the outbreak. Sony PlayStation canceled its participation at PAX East 2020, a major video games convention scheduled Feb. 27 to March 1 in Boston, where there has been a confirmed case of the virus.

“We are disappointed to cancel our participation in this event, but the health and safety of our global workforce is our highest concern,” PlayStation said in an announcement posted on its website. The company declined to comment further on the matter to CNBC.

The convention’s organizers were saddened by Sony’s decision to pull out of PAX East 2020, according to the event’s director, Kyle Marsden-Kish.

Marsden-Kish said PAX East 2020 will still go on, but with “enhanced cleaning and sanitization across the show, including adhering to the recommendations set forth in the U.S. EPA’s Emerging Pathogen Policy regarding cleaning disinfectants effective against the COVID-19 virus.”

The U.S. events industry has been sharing information and using its experience with past crises to manage the outbreak, said Amy Calvert, CEO of the Events Industry Council. People feel more prepared today than they did with the SARS epidemic, she added.

“We want to try and remain calm,” she said. “It’s important to come from an informed place rather than one of fear.”

CNBC’s Noah Higgins-Dunn and William Feuer contributed to this article.

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