Lessons from Tokyo Olympics whirlwind

The fallout from the sporting meet has events experts ruminating on the path forward for planners and destinations.

A recent ban on spectators just weeks shy of the Games has sent sponsors scrambling.
A recent ban on spectators just weeks shy of the Games has sent sponsors scrambling.

The world was watching as the Tokyo 2020 Olympics got caught in a whirlwind of disruptions, and the events industry was no exception. While stakeholders of the Games are locked in what seems like a no-win situation, events industry player in Asia ruminate on the renewed importance of public sentiment and remote engagement in a post-pandemic world.

Too big to fail

The Tokyo 2020 Olympics is too big to fail – and not just by Olympic standards.

After the event's postponement, government audits reveal the total cost of the Games would be close to US$25 billion — a jump from the initial budget of US$7.3 billion and adjusted projection of US$12.6 billion — making it the most expensive Summer Olympics to date, according to a report by GlobalData.

The GlobalData report, titled Analyzing the Potential Impact of Covid-19 on the Tokyo 2020 Olympic Games, further estimated a record amount of US$2.1 billion in sponsorship dollars from The Olympic Partner programme tied to the Pyeongchang-Tokyo cycle, in addition to US$3.3 billion from domestic sponsors.

Disruptions are not abating even in the final sprint towards the event. Recently, the decision to ban all live spectators created dilemmas when it comes to obligations to sponsors, some of whom had planned physical activations.

Sponsorship conundrums had surfaced earlier on. The event's postponement posed an issue to Allianz, which had signed an eight year deal (2021-2028) for the Beijing/Paris, Milan/Los Angeles cycles, according to GlobalData. "The postponement of the Tokyo Games has limited the extent to which Allianz can activate their sponsorship rights as the vast majority of Olympic advertising and consumer interest will revolve around Toyko rather than Beijing," the report stated.

The scale of sponsorships far surpasses anything that the business events industry has seen. Still, such contractual conundrums are sending a strong message to event planners about the importance of insurance and contingency plans.

“More than ever, event cancellation insurance is one of the main features of planning and budgeting,” said Sumate Sudasna, Treasurer, World PCO Alliance and managing director of Conference & Destination Management, Thailand.

GainingEdge's Grimmer: Tokyo 2020 Olympics tells a story about potentials of tapping into remote engagement.
GainingEdge's Grimmer: Tokyo 2020 Olympics tells a story about potentials of tapping into remote engagement.

Olympics as the original hybrid event

Holding the event behind closed doors could have an economic impact amounting to US$23 billion, according to Kansai University estimates. This includes US$800 million in projected ticket sales, on top of related visitor expenditure on airlines, lodging and retail, as well as long-term economic opportunity from repeat visitation.

But looking past tourism benefits, Gary Grimmer, Executive Chairman of event consultancy GainingEdge, said the Olympics can be seen as the original hybrid event, with Tokyo 2020 serving as a timely case study for planners and destinations as they move into a new paradigm of broadcast-friendly events.

"When you think about it, the Olympics has always been what we in the industry call a hybrid event. Some of the audience is live, but with the Olympics, most of the audience is participating remotely. Yet, countries like Japan have always been willing to pour vast sums of money into hosting this massive hybrid event,” he observed.

"To me this Olympics is a case study that relates to a destination seeking and supporting hybrid and virtual events. Even though it's hard to compare an Olympics to conventions and meetings in terms of scale, it still tells a story. You can leverage a remote audience for almost anything other than having them actually in your destination spending money during the event.”

For instance, broadcast events can help destinations "promote their culture, appeal, as well as creative and organisational capabilities".

According to GlobalData, a large majority (73%) of the US$5.7 billion in revenues from the previous Olympic cycle was from selling broadcasting rights.

While Grimmer's takeaway for destinations is to be strategic about remote engagement, the same lesson applies to organisers.

A week from the opening ceremony, the International Olympic Committee (IOC) swiftly ramped up a campaign for virtual engagement. Along with the International Paralympic Committee and partner Airbnb, it unveiled more than 200 Olympian and Paralympian Online Experiences on Airbnb. For example Yusra Mardini, a Syria-born Olympic swimmer and UNHCR Goodwill Ambassador, will share about her journey to the Olympic Games Tokyo 2020 as part of the IOC Refugee Olympic Team.

"With spectatorship looking different this year, audiences are searching for new ways to support Olympic and Paralympic athletes during Tokyo 2020,” said Catherine Powell, Airbnb Global Head of Hosting. "Olympian and Paralympian Online Experiences allow fans to feel closer to their heroes than ever before. These interactive activities will provide an intimate window into the Games, made possible by the 200+ athletes joining our hosting community this summer.”

Private sector must consider public sentiment

The public backlash on the decision to proceed with the Games had also forced some sponsors to rein in their marketing to avoid alienating customers.

While the IOC is a not-for-profit association, the spillover of public sentiment into its position with sponsors is still sending out a message to the events industry: public opinion has weight even in the private sector. If event organisers want to be in good standing with partners, they must make socially sensitive business decisions.

PCOs "will always have to factor in public sentiment and social impact", but also the reputational effects the event will have on multiple stakeholders including sponsors and governments, according to Nancy Tan, President, World PCO Alliance.

"Even if all internal stakeholders and key partners have decided to proceed with the physical/hybrid event [after discussing what the social implications might be], we’ll still need to consult our CVB," Tan continued.

Now, considerations revolve around public health and safety.
Tan pointed out: "All B2B event stakeholders — PCOs, venues, government, healthcare providers, immigrations and other suppliers — will need to work together to ensure that events are done in a proper manner, making sure that safe management measures and regulations are followed diligently."

Tan's words ring loud at a time when Tokyo Olympic athletes are testing positive for Covid-19, fanning fears about a potential outbreak.

Going into the future, the focus will likely become even more rooted in socioeconomic significance rather than just the sheer size of the event, Grimmer added.

"For the meetings industry I think that event legacy will become the most important factor. If events are just about getting lots of visitors to a destination, then our industry can't command a lot of community support. If events actually drive important community legacies, like better health care, sustainability, improved quality of life and economic transformation, and our communities understand that, then we can achieve very positive support."

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