During the Covid pandemic, it is important to examine how industries are evolving and changing to ensure a bright future despite current challenges. Join host Gene Cunningham as he sits down with David Peckinpaugh to discuss the economic impact of the pandemic in the global events industry, and how Maritz is weathering the storm.
A 30+ year champion of the events industry, David Peckinpaugh is President of Maritz Global Events and ensures the consistent design and delivery of exceptional experiences to clients and their guests. David joins host Gene Cunningham, current faculty member in the Chaifetz School of Business at Saint Louis University and retired Aerospace Executive with a 41-year career in International Business, Strategy, and Operations.
Special thanks to Novus International for sponsoring this episode.
During the Covid pandemic, it is important to examine how industries are evolving and changing to ensure a bright future despite current challenges. Join host Gene Cunningham as he sits down with David Peckinpaugh to discuss the economic impact of the pandemic in the global events industry, and how Maritz is weathering the storm.
A 30+ year champion of the events industry, David Peckinpaugh is President of Maritz Global Events and ensures the consistent design and delivery of exceptional experiences to clients and their guests. David joins host Gene Cunningham, current faculty member in the Chaifetz School of Business at Saint Louis University and retired Aerospace Executive with a 41-year career in International Business, Strategy, and Operations.
Special thanks to Novus International for sponsoring this episode.
SLU International Business Now: Conversations That Matter is a podcast developed by the Boeing Institute of International Business in Saint Louis University's Chaifetz School of Business established in 1984. The Boeing Institute of International Business offers a breadth of global business resources for the university community and beyond with nationally ranked academic programs and extensive corporate partnerships. The Boeing Institute today stands as the premier academic institution for the teaching and practice of international business. This podcast series is an extension of the Institute's mission, bringing together critical thought leaders from around the world to address current key global business topics. Our aim is to promote future discussion among our listeners and encourage community action based around those international business conversations that matter. Special thanks to founder Dr. Seung Kim, for his grant to support the launch of this podcast.
Gene Cunningham:A warm welcome to all of our listeners. Joining this podcast from the Saint Louis University, Boeing Institute of International Business. I'm your host, Gene Cunningham, bringing you conversations that matter. Today, we're going to examine the global events industry and how it's been impacted by the COVID pandemic. We'll look at how Maritz, a leader and innovator in the events industry, responded to this crisis and even created new market opportunities. Our sponsor for this episode is Novus international. Novus is a leader in scientifically developing skillfully manufacturing and strategically commercializing nutrition and health solutions for the animal agriculture industry. Novus feed additives and feed supplements for poultry, livestock and aquaculture help producers optimize animal performance and the sustainability of their operations, as well as reduce environmental impacts and antibiotic use. By providing health through nutrition, Novus is helping feed the world. Learn more at novusint.com. My guest is David Peckinpaugh, a 30 plus year champion of the events industry. David is president of Maritz Global Events where he provides strategic oversight for Maritz and he insures Maritz's teams design and deliver exceptional customer and client experiences. David's award-winning leadership has been recognized by the MPI Rise awards, the joint meetings industry council and the incentive travel council. David also has been recognized by Successful Meetings as one of their 25 most influential people. David welcome, and thank you for joining us today.
David Peckinpaugh:Thank you very much, Gene. It is my pleasure to be with you.
Gene Cunningham:Thanks, David. Let's chat about the global events industry to get us started. Can you give our listeners a high level view of the global events industry and the companies in this marketplace?
David Peckinpaugh:You know, the global events industry, we would probably even create a broader category, and that would be travel and hospitality. And if you think of the key players that everyone would be aware of, obviously the hotel community is critically important in that; the airlines, restaurants, all kinds of venues, convention centers, meeting facilities and transportation companies. So I would really paint it with a broader brush with travel and hospitality and all those different players, that come in to be a factor when trying to identify what this industry really is.
Gene Cunningham:Certainly is a large marketplace, when you describe it as all the travel and hospitality industry.
David Peckinpaugh:Well, it is, especially when you get into international business, all those players play a key role in anybody conducting international business. So absolutely, it's the entire spectrum of participants.
Gene Cunningham:When you look at the wide variety of participants in this marketplace, can you give us a little more insight into the size and dollar value of the market prior to COVID, and then how the market was impacted by the pandemic and pandemic related restrictions?
David Peckinpaugh:Yeah, that's a big question. So I will try to give you some pre-COVID impact, and this would go back probably to February, March of 2019. And this is now trying to narrow it down from that travel and hospitality sort of broad spectrum into really the meetings and incentive space and the, the best data that we've been able to put together. And this is through the U S travel association, as well as an organization called the Meetings Mean Business coalition is the spending is about$136 billion. Payroll of our industry's about$36 billion. It's over 1.1 million jobs. And if you look at sort of local tax receipts and the economic impact on local communities, it's about$22.4 billion. So we're talking about an enormous industry that drives incredible employment, incredible growth and prosperity, not just in the U S but across the world. So it's a major, major industry, and we've been who you look at, but you know, most of us would say that we're probably in the top three of, of employment creators of all industries across the board. Yet we are probably the least well understood or recognized employer. And that is, I think it's a constant challenge that we have is how do we continue to drive awareness of our industry and the impact it has. And I think, you know, frankly, if you look at, and I'm sure we'll get into this, one of the potential benefits that we find in COVID is the fact that people finally did realize the importance of hotels, the importance of restaurants, the importance of gathering and getting people together. So part of your question was what's the impact of COVID and, and it has been enormous. The best fact we have facts that we have in data we have is about a$1.1 trillion negative impact to the U S economy. And if you think of employment in our sector, we lost almost, and it's pretty staggering, 65% of employment in that travel and hospitality industry in 2020. So the economic impact that they've sort of the personal and individual devastation that occurred is just enormous. And I think everyone saw it right. You saw hotels closing, and mothballing many now reopening, Las Vegas came back to life in June. So we are definitely on the road to recovery, but there's no doubt that the impact, the negative impact that COVID had on our industry, we were in the bullseye, right? The center of the, of the target, unfortunately. And when you're in the business of gathering people and gathering people 50 or more as a primary business like Maritz is it's pretty tough to navigate those waters because basically our business was outlawed and many businesses were outlawed like the hotel business and restaurants and convention centers and meeting venues, et cetera. We went right in the center of the storm. So it was, it was a very devastating and very difficult time for our industry. And we're still very early stages of digging out from that and recovering.
Gene Cunningham:David, as you describe it, this$136 billion industry simply stopped operating. COVID shut you down. Your customers, companies, and associations, your partners, hotels, airlines, the travel industry in general, simply couldn't continue to operate. What did your customers do? They couldn't hold corporate events. They couldn't hold conferences, product launches, award incentive travel. Did they stop operating, or did they try to do something different?
David Peckinpaugh:Well trade shows I would throw in there as well. And yeah, it all came to a screeching halt. I don't think anyone had experienced a hundred mile an hour to zero almost impact. And that's exactly what happened. I mean, by the time I can't remember the exact date, it was around March 15th of last year when the guidelines came out, restricting gatherings of 50 or more. And then in many instances of 10 or more, that brought pretty much all face-to-face gatherings to an end. And there were a few stragglers based on local regulations and conditions, but for the most part, the entire industry screeched to a halt. And, you know, the interesting thing going back in time, we all thought it was going to be a relatively short stint, right? We thought 60 maybe 90 days. And I'm putting my frame, my, my frame of reference in end of March, early April, we thought by September, we'd be recovering and roaring back. And obviously we got that horribly wrong as most everyone. So we really underestimated that impact, but you go back and look at what the options were for organizations. They still needed to do things that built their brands. They still needed to talk to customers. They still needed to launch new products and solutions. They still needed to sell product. I mean, the list goes on and on and on. So the interesting sort of crossing of technology and business needs happened front and center in our industry. And if you think of the advent of zoom and teams, you know, we had technologies for many years that provided, a digital meeting environment, but it became front and center, obviously, as of, let's just say April one of last year. And so that was the option is as people add to almost immediately pivot and swing their events and their gatherings and their brand building and their customer communications and everything else to a digital environment. And that was quite a challenge for the technology companies, quite a challenge for companies like us and for our clients, because while they may have dabbled in it, no one was doing it to the extent that they've now been forced to do it over the last year.
Gene Cunningham:So David pre-COVID, you had companies using virtual technologies to expand their reach to customers, partners, employees, but when COVID hit, there was this explosive use in virtual meetings because it was the only way to meet. People became more comfortable. I know I did with the virtual environment. Do you expect virtual technologies to continue with the events industry?
David Peckinpaugh:We do. I think, you know, what we at Maritz sort of came up with this phrase that it helped fill the gap, but not the void. And there's a huge void of human connection. And as good as the technology is, and as fun as it is seeing each other in little boxes, it does not create and fill the void of the need for human connections, but we're also not stupid. We didn't understand that the technology has evolved our industry and has created opportunities now to engage in different ways. And like I said, the technology has been out there for 10 plus years. This just forced the hand of many of the organizers and companies like ours to really embrace it. And so we now see it as part of the mix. There are events that absolutely makes sense to do in a hundred percent digital environment. There are events that make sense to do a hundred percent in a face-to-face environment and they're events that are a hybrid of those two. I think what we've discovered and are now experiencing, and there's all kinds of articles and discussions around, you know, zoom fatigue and online digital event and meeting fatigue, because it is exhausting, whatever the dynamics and realities are, why that is, it is now I'm working remote in the next two weeks. I'll be exhausted at the end of those two weeks because I'm not getting that energy back from talking to people live and being there and in person. So yeah, I think the platforms are there to stay. We've embraced them. We've created a digital practice. We did that within 30 days. We've got a great pipeline of activity within that, but we already see that slowing down and we see the desire for people to get back and meet face-to-face to have live events, live trade shows, get back to incentive travel. The pent up demand is really significant, which makes the recovery process even more challenging. But to answer your original question, yeah, the platforms are there. Digital technology is going to be part of the events industry now, and I think forever, and that technology will continue to evolve, right? Hologram technology, and many other pretty spectacular options to get people, at least in a digital environment together, will continue to grow and we're embracing that, but it's not going to replace at the end of the day that I think the key question does it replace face to face? And it absolutely does not. And will not.
Gene Cunningham:The key phrase is fill the gap, not the void-- where the void is that real time personal interaction..
David Peckinpaugh:Absolutely. So an example is we hosted a town hall for our Frederick, Maryland employees last week. The first time many of them have seen each other in really since last February. And we had planned the event to go from about 3:30 to 6:00, we were still there almost to eight o'clock that evening. The energy, the passion for people to see each other and to, and to just get caught up was palpable and really powerful. And I think that's a microcosm of what's happening all around the world. As people rediscover the power of being there in person.
Gene Cunningham:As you move forward, you see a mix of in-person activities with the use of virtual technologies to expand the reach of these events. Very interesting as you look at the technology industry, you've got Google and Apple out there in the car industry; you've got Netflix moving into movie production. Do you expect virtual technology industries to try and move into the events marketplace? You've mentioned that there are other technologies out there that will change what things look like going forward.
David Peckinpaugh:Yes. And I think that's already happening to some degree and many of them, if not all of the customers or the companies you just mentioned, are customers of ours. So we do business with them. I think, you know, on one hand, the companies are realizing that. And I think the pandemic taught us that you need to focus on what your core competencies are. And we're seeing a lot of companies that got distracted by many other alternatives to sort of refocus. And whether they're selling spinning off, getting involved in M& A activity, or just simply shutting down some areas-- that's happening across the board. I think, you know I welcome that involvement because it's only going to make us as an industry stronger. But I think, you know, at the end of the day they're technology companies, they provide a technology tool that helps facilitate human gatherings, but they don't want to get into our line of business where we're very labor intensive, right? They're mostly technology, they're SAS solutions. That's where their value is. And that's where their focus is. They will help us as organizers do a better job of engaging more and more people in more and more powerful ways. But I really doubt they want to get into the labor side of the business. So we will use them as a tool, as part of our toolkit and how we create events that really make a powerful business impact. And that's really what we do at the end of the day.
Gene Cunningham:I understand it. Sounds like there's a partnership with the virtual technology companies to develop what will be needed for the future.
David Peckinpaugh:And, and it's a two way partnership, but we, you know, several of the companies you mentioned, we are doing a lot of design work with on the future of their events. Some involves their technology, some involves outside of technology. And some is just the basic core work that we do, uh, around event planning. So it's a great, exciting environment to be in.
Gene Cunningham:So a little bit more detail on how Maritz was able to weather the COVID storm. Can you give us some insight on some of the things you had to do to navigate this challenge? Do you feel these changes have made Maritz a stronger company and better able to provide your award-winning performance?
David Peckinpaugh:Yeah. So I'll deal with that in, in two parts sort of what we had to do and then what the, I think the longer term impacts are. To your point, we had to survive. And you know, the interesting thing about Maritz, it's a holdings company. I run the events business, but there are other parts of the business that didn't suffer the same consequences that we did. So if you look at our motivation company that does a lot of employee recognition reward and motivation work, not travel-related, you look into our Maritz automotive business sector-- automotive went crazy. They had an incredibly successful year. As you, if you read about that industry all time record sales, it was a boom year for them, which if you'd ask them in March, if they thought that was going to occur, I think they would have said, you're crazy. By early May, that industry was roaring back. You know, they did really well. So that allowed us to have a little more balanced approach where we weren't a hundred percent dependent on Maritz Global Events in our business. Well, over 85% of our revenue disappeared in that, you know, within a 30 day period, we had to furlough and then ultimately terminate a large number of employees. And that's just incredibly painful. You know, our culture is really important and it's always been people-centered and it's all about people empowerment. And to have to go through something like that was devastating, but we didn't have any choice. You know, high, high percentage of our costs are in our people. They're our assets, they're the ones that walk in and out our doors every day. We're not selling widgets or products, so it's really that professional services solutions that we bring to market. So, you know, we had to do those just difficult things, but I, our people were obviously enormously impacted. Uh, but I think also enormously understanding that's the, the overwhelming feedback that I've gotten, not a hundred percent, but certainly overwhelming that they knew we didn't have a choice. And now that we're in recovery mode, we're doing everything we can to get our people back. You know, it's encouraging to see the number of folks that either waited and were able to wait until the, they got the call back or went off to other jobs. And as soon as we were able to call them, they are willing to come back. So those are the things we had to do and we had to do to survive and to really help the overall Maritz enterprise get through this. But now we have a really exciting future ahead of us. And I'm very excited, not only for our industry, but all of Maritz's opportunities. I think the second part of your question is kind of what have we learned? And we are, are we going to be a different, better, more efficient company moving forward? And the answer is absolutely. If we're not, then we really wasted a crisis. You know, there there's that old saying, you hate to wait to waste a good crisis. And, and we made sure, and I was one of my areas of main primary focus is to have a balanced approach where on one hand we had to survive and sort of you're in that bunker mentality of doing what you have to do to survive. But I made sure that we left. We kept our eyes in the front windshield, right. Looking forward. And so we didn't cut back on innovation in our innovation work. Uh, we kept our design studio team fully engaged because that work was instrumental for helping our clients make the transformation in the near term to a digital environment. And so those are some of the basics things that we did, but now looking forward, we got our teams together last fall and said, look, we have to evolve. We have to be a different company coming out of this. And so we spent two days, uh, sort of in a war room. And we came out of that with our, what we call our guideposts for recovery. And they are our tenants of recovery that we are using as, and I'll use an analogy that I've overused, but it's the, if you go to an, a bowling alley and you, and you bowl with children, they put pumpers down the alley. So you can't throw gutter balls. The one thing we couldn't afford is throwing gutter balls as we recover. So these guideposts are our bumpers. They are keeping us on the alley and on track. And, and hopefully heading towards that, uh, the ultimate strike that really overused the bowling analogy. Sorry about that. But I think it's, it's a visual that makes sense. So those six guideposts are going to drive the evolution of our business. It's around the evolution of our professional services solutions. It's about the evolution of our customer base around intentional growth. It's around simplifying our systems and processes around smart simplicity. It's around our technology buying where we can building only where we have to. And then it's around our people, tenants around organizational health and really rebuilding and restoring our culture that took a big hit during the crisis. So yes, we will be a different and I think better, more efficient organization coming out of this. And if we're not then shame on us, if we wasted a crisis,
Gene Cunningham:Thank you for sharing that. Clearly these are good lessons learned for the global events industry, but much of what you've discussed applies to global business in general, specifically the issues in dealing with employees, David, one last question. If you were faced with another industry wide crisis, are there things you do differently? How would you approach your customers, your partners, your workforce, even government agencies, as you look at this are the things you'd say we could have done better, or we should have done differently.
David Peckinpaugh:Yeah, absolutely. And I, you know, we started holding weekly Tom halls at the end of February. Uh, when we knew this crisis was something we really had to pay attention to. We've continued that now what, 16 months later. So the one thing we've done is tried to communicate and over communicate and be transparent with our people. But from day one, I said, we're going to make mistakes. No one has a game plan or a playbook for a global pandemic and how it's going to affect the event affect the events industry. So asked for a little bit of forgiveness and understanding as we went through this, but we knew we were going to make mistakes, but we were also going to acknowledge those mistakes and fix them to the best ability that we had. You know, I was introduced years ago to the Stockdale paradox. And, uh, I don't know if you're familiar with that, but Admiral Stockdale and, you know, he's a prisoner of war and he was asked, who survived and why did they survive and who didn't and why didn't they? And, and he really came up with a very basic approach, which is you've got to face the really hard cold facts head on and make rapid decisions. And I would say one of the things I would look back on as saying, we probably, as I mentioned earlier, we were thinking this was a 60, 90 day window. If, and we'll look, we weren't the only ones, right. I think most of the world thought that was going to be the case. So I give us a little, a little, but I would have probably faced the hard cold facts a little sooner and done what we had to do quicker. So faster decisions facing brutal facts, not really trying to either justify or make up scenarios that perhaps weren't supported by the real facts, because we were, we're optimistic where people centered and, you know, all those things sort of played against us as, as we were making those decisions. So that would be one thing is I think is really making sure that we knew the cold, hard facts and we're making decisions a little faster and more expedient than we did. And I would say the other real learning that I think came out of this is doing a better job of taking care of our people that were impacted by the pandemic. And, you know, we did some good things. We, we extended benefits for as long as we could. We created a newsletter for those employees that were furloughed and ultimately terminated, but I think we could have done more frankly. And, and I look back and I think we did a decent job of keeping in touch with all, you know, and we had a lot of people that were impacted by this, but we could have done a better job. And I look back and say, okay, that's something we need to learn from. And next time, what can we do better? How can we communicate as we went through, in our instance, 13, I think 13 different waves of furloughs and not only how, how we handled that, but then more importantly, how we kept in touch with our folks and encourage them to come back to the company when we were recovering. So, but I'm sure there are many more lessons in there understanding cashflow and the realities of cashflow in our business. We learned a lot. Uh, and so there are a lot of lessons learned there and things that will serve as well into the future. But I, I go back to the Stockdale paradox and really say to me, that's the key learning as it makes get, do everything you can to get the brutal facts and then make quick efficient decisions from those.
Gene Cunningham:And the other point that you made early on was as much as you want this to be a shorter term crisis project, that it's going to be longer and then plan accordingly, but plan quickly.
David Peckinpaugh:It did. And it took us honestly, a couple of months to get to that realization. Then when we did, then I think we were on the right track, but we, we did delay and there's no doubt about it. And that was because I think of that overall optimism as you point out.
Gene Cunningham:You're probably not alone across all industry in that approach. So understand.
David Peckinpaugh:Yeah, definitely. No, we were not alone. That's exactly true.
Gene Cunningham:Well, David, it's been a real pleasure chatting with you today. You've really given us exceptional insight into the global events industry. You've helped frame it in terms of the size of the industry, as well as give us a good perspective on what the impact has been from the COVID pandemic. So thank you for that. Also appreciate your real personal perspective of what it's been to be at the helm of the Maritz global events portion of the company and all of the decisions and challenges that you've had facing you. So before we close, do you have any other thoughts for our listeners?
David Peckinpaugh:Yeah, I think, you know, the, the thing we always anchor back on because we are a people-centered, uh, company and something that's, uh, an organization that is focused on people and performance is technology is great re huge investors in technology. But I think, you know, from my perspective, I'm an event sky, that's really my background. There's nothing that replaces, uh, in hand person conversation, nothing that replaces and then hand in person handshake or embrace or hug or whatever cultural norms allow. And we can't lose sight of that. And I think that is one of the big advantages and lessons that we learned that came out of this pandemic is I think people realize thatthe pent up demand for travel is incredible right now. Future demand is, is superb. Our business looks incredibly strong starting in 2022 and beyond, and really strong in this short term recovery. But I think that really shows that the desire for human connection exists, that all the work that we've done around understanding human behavior, neuroscience, et cetera at merits is paying off because we understand what motivates people. We understand what gets people out and drives their passions, which for our business customers drives business results and exceptional business results. So to me, it's that last encouragement of we're embracing technology. It makes sense it's going to make our lives more efficient, but nothing replaces that ability to get together in person. And that's what I'm excited about is what those new events, new gatherings are going to look like and how we can help design those and make them more impactful.
Gene Cunningham:Thank you again for your insights and your view to the future of the global events industry for our listeners. We hope you've enjoyed this conversation with David Peckinpaugh, president of Maritz Global Events. As we discuss the global events marketplace and the challenges and opportunities his industry faced during the COVID pandemic, we invite you to join us for our next podcast where we'll explore how industries are addressing sustainability to create competitive advantages across international markets. This is your host, Gene Cunningham, having conversations that matter. Good day,
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