Coronavirus shut down the “experience economy.” Can it come back?
A quandary is lurking at the heart of the efforts to revive the economy.
In recent decades, a growing share of job growth and gross domestic product has come from the business of getting people together — from college sports and music festivals such as Coachella to ax-throwing bars and ice cream museums. Yet given the infectious nature of the coronavirus, these events will be among the last to return.
“Any place people want to gather is a place no one wants to be right now,” said Joe Pine, a co-author of “The Experience Economy.”
That bleak truth has profound implications for businesses large and small. And with most largescale gatherings on hold for the foreseeable future, the dearth of live events is already taking a psychological toll, not only on those in the industry but on society at large.
“Human contact is really what our business is built on,” said Roland Swenson, chief executive of South by Southwest, the music, film and technology festival in Austin, Texas, which was canceled in March. “If that is lost, then the world will be a poorer place.”
The economy’s reliance on live events has been growing for years. When Disneyland opened in 1955, it sparked a boom in the theme park business. In recent decades, the Wizarding World of Harry Potter, Great Wolf Lodge water parks and more have emerged to compete for the attention — and money — of American families.
As live sports became lucrative television properties, leagues such as the WNBA and Major League Soccer were born, expensive stadiums with state-of-theart amenities were built and the sheer number of games grew. When the record business faltered, concerts became the profit centers for musical acts. Many media companies found that hosting conferences was more profitable than publishing magazines. Lately, escape rooms and pop-up
experiences such as the Color Factory and Candytopia have proliferated.
Even the boom in restaurants was about atmospherics as much as it was about food. Starbucks succeeded by creating not just a latte with a nice profit margin but a place outside the home and office where people wanted to linger.
“Surround coffee with an experience and you can charge $5 a cup,” Pine said.
The economic output associated with such diversions has ballooned. GDP attributable to arts, entertainment, recreation, accommodations and food services was nearly $1.6 trillion last year, up from $979 billion a decade ago, according to the Bureau of Economic Analysis.
All those new experiences created jobs, and over the same period, employment in the leisure and hospitality industries grew about 30%, reaching a high of nearly 17 million early this year, according to the Bureau of Labor Statistics.
Yet it turns out that an economy that depends on gathering is especially vulnerable to disruption by a virus.
Movie theaters, sports venues and the vast majority of tourist attractions remain closed, and many may not open for months. Gov. Gavin Newsom of California suggested that fans might not be able to attend games in person until there is a vaccine, a breakthrough that isn’t expected until next year at the earliest.
“It’s difficult to imagine a stadium that’s filled until we have immunity and until we have a vaccine,” Newsom said.
If his assessment is correct, that’s bad news for Major League Baseball ($10.7 billion in revenue last year), the NBA (about $8 billion in annual revenue) and the NFL ($15 billion or more in annual revenue).
Beyond the immediate hardships created by sweeping job losses and stagnant businesses, the standstill in gatherings is already having a deeper impact on the national psyche. The business of events, however commercial it might be, is also central to our identities.
“If you go to the World Cup or a rock concert, it’s not just a commercial transaction,” said Priya Parker, author of “The Art of Gathering.” “It’s also an expression of identity.”
Those in the events industry are left wondering what the future will hold.
Catherine Powell, head of experiences at Airbnb and a former Disney executive who oversaw theme parks, expressed optimism that when it was safe to gather again, the crowds would return.
“When lockdown lifts, there will be an incredible pent-up demand to want to connect,” she said.