[Asia Approach] Barcelona Hit by 'COVID-19'... 600 Billion Won Lost

At the Fira Barcelona Montju?c exhibition center in Barcelona, Spain, where the 'Mobile World Congress (MWC) 2020' was scheduled to be held, on-site staff are removing the welcome banner posted in front of the exhibition hall. [Image source=EPA Yonhap News]

[Asia Economy Lee Kyungho, Head of Editorial Planning Team] 500 million euros, equivalent to 641.3 billion KRW.

Barcelona, Spain estimated this as the expected loss due to the cancellation of the Mobile World Congress (MWC) caused by the novel coronavirus disease (COVID-19). According to the organizers and local media, since MWC was first held in Barcelona in 2006, it has attracted over 110,000 visitors annually and about 3,000 companies worldwide, generating an economic ripple effect of approximately 5.3 billion euros, equivalent to 6.7982 trillion KRW, and creating employment for 128,000 people.

The cancellation of MWC alone caused a sales loss of 492 million euros, of which about 100 million euros were losses in the hotel sector. The Catalonia Small and Medium Enterprise Business Association (PIMEC), located in Barcelona, estimated that losses for small and medium enterprises would exceed 200 million euros. The taxi sector, which transports visitors, is also expected to see a revenue decrease of about 30%.

Spanish Barcelona’s Economy Shaken by MWC Cancellation
Accumulated Economic Effect Since 2006 Reaches 6.8 Trillion KRW
Revenue Declines Across Companies, Hotels, Taxis, and Other Sectors

The World Travel & Tourism Council (WTTC) expressed concerns that COVID-19 could cause economic damage to the global travel and tourism sector. Analysis of major viral epidemics before COVID-19 shows that visitor numbers typically take about 19 months to recover, and even with very effective responses, it takes around 10 months.

The H1N1 influenza, which began in Mexico in 2009, caused an economic loss of 55 billion USD (equivalent to 65.12 trillion KRW at current exchange rates) worldwide, with Mexico’s tourism industry suffering losses of 5 billion USD (about 5.932 trillion KRW at current exchange rates). After the SARS outbreak in 2003, similar economic impacts were felt in China, Hong Kong, Singapore, and Canada, with global travel losses ranging from 30 billion to 50 billion USD. In China alone, tourism revenue dropped by 25%, and 2.8 million jobs were lost.

Due to COVID-19, governments, companies, institutions, and private sectors have been canceling events one after another, causing damage to the MICE industry, a "smokestack-free industry." MICE stands for Meetings, Incentives Travel, Conventions, and Exhibitions/Events.

According to the "2017 Economic Ripple Effect Analysis of the MICE Industry," published last year by the Korea Tourism Organization commissioned to Kyung Hee University Industry-Academic Cooperation Foundation, the total economic ripple effect of the MICE industry in 2017 was approximately 19.7337 trillion KRW in production inducement effect, about 3.9933 trillion KRW in income inducement effect, and about 2.1122 trillion KRW in import inducement effect. Additionally, the value-added inducement effect was about 8.5852 trillion KRW, indirect tax inducement effect about 137.9 billion KRW, employment inducement effect 202,395 people, and job inducement effect 119,965 people.

At the "China Yiyongtang (溢涌堂) 2020 Korea Banquet" held at Songdo Convensia on January 9, employees of the Chinese Yiyongtang company are seen.

Major Domestic and International Events Also Canceled or Postponed One After Another
Meeting, Enjoying, Playing, Watching?MICE Industry Takes a Direct Hit
MICE Industry is a Smokestack-Free Factory, Annual Economic Effect in Korea is 25 Trillion KRW

In 2017, there were 224,465 MICE-related events held, with meetings accounting for the highest number at 208,013 events (92.7%), followed by incentive travel (11,202 events, 5.0%), conventions (4,361 events, 1.9%), and exhibitions/events (889 events, 0.4%). Corporate-hosted MICE events were the most frequent at 87,735 events (39.1%), followed by associations (33,250 events, 14.8%) and public institutions (29,302 events, 13.1%). The total number of participants was 38.267 million, of which 36.863 million were domestic participants and 1.404 million were foreign participants.

The total sales of the MICE industry in 2017 amounted to about 5 trillion KRW. The facility sector recorded the highest sales at 2.7626 trillion KRW (55.0%), followed by international conference planning at 1.3148 trillion KRW (26.2%), exhibition planning at 702.4 billion KRW (14.0%), and incentive travel at 238.9 billion KRW (4.8%). The number of employees in the MICE industry was 23,000, with 12,000 (50.5%) working in the facility sector, followed by 6,000 (27.9%) in international conference planning, 3,000 (13.0%) in exhibition planning, and 2,000 (8.5%) in incentive travel.

Last January, 5,000 employees of a health functional food company headquartered in Shenyang, Liaoning Province, China, completed a 5-night, 6-day corporate meeting and incentive travel. Chinese President Xi Jinping’s planned visit to Korea in the first half of the year also raised expectations for the MICE industry. However, as the trajectory of COVID-19 remains unpredictable, concerns are emerging domestically that the "Barcelona nightmare" could be repeated.