Tech giants reel in millions per year through big conferences, but COVID-19 has dramatically changed the global business event industry. As a result, business gatherings are going virtual. While industry experts are unsure whether or not the era of big conferences has ended, many have begun to embrace the concept of virtual summits. In fact, experts predict that video – including web conferencing – will account for over 80% of all Internet traffic by 2021. The remaining question is: what will the future of business gatherings look like post-COVID?

The global event industry is worth $1.5 billion; and businesses typically generate more than $1 trillion in direct spending each year. This includes airfare, hotel stays, dining, and transportation. However, canceled and rescheduled conferences are causing businesses to lose heaping amounts of cash. The lost attendance fees for those who haven’t gone virtual is one thing to take into account, but businesses are also losing money they’ve spent to put on their events.

For example, a business event’s budget is typically broken down into 4 categories. On average, businesses allocate 20% of their budget for venue coverage, 20% of their budget for catering, another 20% for equipment, and less than 5% for speaker fees and program creation. All of this money goes down the drain when a conference is canceled. Here’s how that looks on a financial level.

When Google canceled its annual Mountain View, CA I/O conference, they lost $20 million of current assets. The I/0 conference is streamed to 530 events worldwide, and welcomed 7,000 in-person guests in 2019. When the 2020 Electronic Entertainment Expo (E3) was canceled because of COVID-19, the Entertainment Software Association lost $75 million in direct assets. In 2019, the gaming organization welcomed 66,100 attendees, and the exhibition typically takes place in Los Angeles, CA.

On a larger scale, South by Southwest (SXSW) lost $350 million in sitting reserves. The annual conglomeration is held in Austin, Texas, and met with a crowd of 280,000 in 2019. By the same token, $480 million was lost after the Mobile World Congress  (MWC) was canceled out of protection from COVID-19. The annual trade show welcomed 109,700 in 2019 and is held in Barcelona, Spain.

On a smaller scale, ILostMyGig.com has verified $4,285,037 in losses across local businesses as a result of canceled conferences and events. The website began tracking local business losses after SXSW’s massive loss went viral. The services fueling these numbers include caterers, photographers, musicians, film crews, and more. However, these numbers don’t include losses related to: profits for the business’ hosting each event, attendees’ spending at local shops and attractions, or business generated from networking at events.

Even when the massive losses are taken into account, organizations have an alternative with virtual conferences. In fact, attendees are seeming to enjoy virtual conferences. 40% of Americans were unable to cover an unexpected charge of $400, so traveling to conferences and events is often challenging for attendees. Virtual summits eliminate travel costs, lodging, and the price of admission.

Saying this, it’s still unknown if virtual summits will thrive after the pandemic is over. Local conferences could provide a better alternative. For more information on the future of virtual conferences, read more below.