2006 Meeting Trends Report
Rising Costs, Shrinking Budgets Challenge Planners
While meeting professionals who responded to ConventionSouth’s annual trends survey said they’re optimistic about the future of the meetings industry, they also said higher costs, budget constraints and inflexible attrition clauses are creating a challenging environment. “The health of the meetings industry is good but, financially, our budgets are being impacted,” said Georgette Smith, director of conferences and meetings for BICSI, a professional association supporting the information transport systems industry.
Smith’s comments reflect key findings from
ConventionSouth’s 2006 Meeting Trends Report, an annual survey of professionals who plan events in the South. Conducted in partnership with Atlanta-based PKF Hospitality Research (PKF-HR), which specializes in tracking the meetings and hospitality industries, the report is designed to pinpoint various factors that influence the business of meetings and reveal the current and future health of the profession. While respondents could remain anonymous, several provided their contact information and shared their comments for this report.
The Rising Price Tag
Meeting professionals such as Chuck Cook of the independent planning firm Chuck Cook & Associates said rising costs have kept the meetings industry from bouncing back to pre-9/11 numbers. “The meetings industry is not as robust as it was during the years before 9/11. The economy, gas prices and increased costs all have been among the factors that I think will continue to slow the meetings industry for a while.”
Likewise, Sandra Oxner, program associate for the South Carolina School Boards Association, said, “I see properties becoming higher and higher in regard to room rates, food and beverage, and meeting room rental. To me, it’s a shame to pay $50 to $75 for one gallon of coffee.”
In fact, the majority of respondents, 46.1 percent, who participated in the trends survey said their per-meeting costs have risen from 2005 to 2006, while 44.1 percent said their per-meeting costs have remained the same in 2006 compared to 2005.
Respondents also said they expected their per-meeting expenditures to increase in 2007, with 51.2 percent anticipating a rise.
Robert Mandelbaum, PKF-HR’s director of research information services, said the rising costs are a key finding of the survey. “Clearly, it’s a seller’s market in the hotel industry at this time. That’s good news for hotel owners and operators, but not such good news for meeting planners.” Mandelbaum said hotel operators are seeing moderate occupancy levels but are still yielding a profit because of the dollar amount they’re charging consumers.
Of the additional costs influencing the business of meetings in 2006, nearly 24 percent of respondents said that the cost of flying has caused them to change the destination of their meetings. In 2005, 10.6 percent of respondents reported that airfare costs negatively impacted attendance rates, and in 2006, that number rose to 26 percent.
Similarly, the rising cost of fuel in 2006 was cited as having an impact on meeting attendance, with 8.8 percent pinpointing it as an influencer in 2005, a number that rose to 18.1 percent in 2006.
Lisa Burton, vice president of the independent firm Meeting Expectations, said she predicts the fuel-cost factor to continue. “The next 18 months will be greatly affected by world events and gas prices, which often have a trickle down effect on meetings.”
The Budget Squeeze
Matched with increased costs is an increased pressure to cut costs, according to the majority of respondents; 63.4 percent said they’re being asked to cut from various areas of their budgets, including off-site events (36.6 percent), food and beverage (32.1 percent), and audio/visual (24.4 percent), which were planners’ top three selections. Respondents said they’re also being asked to trim the duration of meetings and costs associated with guest rooms, meeting rooms, programming and transportation.
Cook said keeping costs down is one of his key goals for the future. “I must be more vigilant with contract negotiations and try to get the best deal for my clients as possible.”
Oxner said she hopes to “learn more tricks of the trade to negotiate contracts and lower costs” in the upcoming years. And, Milinda Harnice, executive administrative assistant for the Paxton Media Group, said the coming years will require her to hone her negotiation skills for the best hotel room rates and preferred meeting dates.
Attrition: It’s Real—Again
Along with dealing with increased costs and budget constraints, planners are also paying careful attention to attrition clauses, Oxner said. “Our numbers are increasing on attendance, but we aren’t increasing our room block because of attrition and an uncertain economy.” In fact, the majority of respondents, 57.3 percent, said attrition clauses are impacting their site-selection decisions. Cook said he’s finding attrition “difficult to negotiate” and that it “often impacts his meeting clients.”
Nancy Crowe, director of meetings and events for the Alabama Independant Insurance Agents, also said she’s increasingly frustrated with attrition clauses. “Hard-line, inflexible attrition clauses are not acceptable. It doesn’t make sense to be so inflexible that you lose future business. We’re not a large organization, so attrition charges can really affect us. I know past abuses with overbooking have brought about the need for attrition clauses, but I think the pendulum has swung too far the other way and now many meeting sites have become inflexible.” To combat attrition, Crowe said she reaches out to a preferred venue and accommodations supplier that “bends over backwards” to work with her. Likewise, Burton said she looks for venues with flexible attrition policies. “If the hotel is not flexible about the terms we feel are a must in our contracts, we will not recommend the hotel to the client,” she said.
Costs Are Changing Behaviors
Respondents said both higher costs and budget constraints are changing their site-selection decisions, while attrition costs are driving them be more skillful negotiators.
More than 72 percent of respondents said that hotel room rates are a “very important” factor in their site selection decisions. Crowe said that when it comes to choosing a meeting facility “flexibility in negotiations” is of utmost importance to her. And Cook said he makes site selection decisions based on the amount of “resort fees” charged.
Like airfare, almost 17 percent of respondents said high fuel costs have swayed them to change the location of their meetings. Moreover, 14.7 percent revealed that their meetings in 2006 were held in destinations considered more regional in nature compared to 2005.
Planners also showed that over the past two years, they have increasingly been asked to
consider second- or third-tier destinations in lieu of first-tier cities. In 2004, 31.5 percent of respondents said they were asked to consider smaller destinations. That number increased to 35.5 percent in 2005 and 40.3 percent in 2006. Kathleen Zwart, management development specialist for Blue Cross Blue Shield in Jacksonville, Fla., cited budget constraints as the reason her company is looking to smaller destinations.
Regardless of destination choice, Sheryl McLandsborough, administrator for Great Western Association Management Inc., said she is working to offset rising costs by booking meeting facilities as far in advance as possible. “I do this in order to get prices locked in, contracts rolling and conferences publicized.”
Industry Health Today & Beyond
Despite costs, budget constraints and other challenges, planners are reporting that their “sense of the industry” is that it’s steady—or even slightly growing. Mandlebaum predicted that this trend will continue into 2007 and 2008. “The outlook shows that it’s still going to be a strong market, with the meetings industry remaining steady or growing. Attendance is also rising.”
To gage the current state and the future outlook of the meetings industry, the trends report polled planners on the average number of meetings they plan and the average number of people they expect to attend.
In the way of meetings volume, 58.8 percent said the number of meetings they planned in 2006 is equal to the number in 2005, while 35.1 percent said the number of meetings they planned increased from 2005 to 2006. “We have about as much business as we can handle without employing more staff, and we’re satisfied,” Cook said.
This steady volume is being projected for 2007, with 64.6 percent saying they expect their meeting volume to hold steady, and 32.3 percent saying they expect an increase. Harnice said her expected increase in meetings in 2007 will make up for the fewer meetings she planned in 2006.
Similarly, the number of trade shows/exhibitions remained steady in 2006, with 75.4 percent of respondents reporting no change from 2005 and 86.1 percent expecting no change in 2007.
In the way of attendance, 60.2 percent said the rate of registered attendees was as they expected it to be in 2006, while 32.8 percent said the rate of attendance was better than expected. Those who said their attendance rate was as anticipated or better in 2006 than 2005 cited an improved economy, an increase in demand and the draw of the meeting locale as the reasons why. For example, Edgar Sutton, director of meeting arrangements for the American Baptist Association, said his organization met in Daytona Beach, Fla., in June and experienced a large turnout due to the destination’s appeal.
Of those who found their meeting attendance rate to have been less than expected, their
reasons included an increased cost in programs, effects of Hurricane Katrina and increased
fuel prices.
“The meetings industry remains strong and I don’t foresee anything short of another 9/11 that would change that outlook in the next 18 months, Crowe said. “The next few years will be exciting with the recently expressed recognition by our membership that our convention has a vital role to play in building a stronger association. It’s daunting and satisfying at the same time to know that the work you love has such a golden opportunity to prove its value. And, the return on investment for my department will be a larger and even more involved membership base.”
Supplier’s Insight
Hospitality industry professionals who spoke with ConventionSouth said the opportunities for planners to recieve valuable deals are there for the grabbing, including Corinne Dever, director of group sales at The Woodlands (Texas) Resort and Conference Center. “Keeping control of room rates oftentimes is a direct result of having a flexible meeting date,” Dever said. “The key to selecting a property that you want in a bullish market is to provide a piece to their puzzle. Come equipped with a handful of date options; you might be able to agree on one that helps you lower your room costs and helps them fill space. If you help them with their needs, you might just walk away with a few added incentives of your own, like complimentary room rental fees or upgrades. And, build a relationship with a property you respect.”
On The Job
Respondents to ConventionSouth’s 2006 meeting trends survey represent the scope of the industry and include association, corporate, governmental, nonprofit, independent planners and others in all regions of the country and with varying levels of experience and education.
Here are a few quick stats from the survey, reflecting what planners said about themselves and their jobs:
- 36.7 percent have 20 or more years of experience in the industry.
- 15.3 percent have earned their CMP (certified meeting professional).
- 76.3 percent said they do not formally measure ROI (return on investment).
- 78.6 percent said they use convention and visitors bureaus in some way.
- 43.7 percent said they’ve used a destination management company.
- 22 percent said they have used a site selection firm.
- 57.7 percent said they’re satisfied with the technology at meeting venues.
- 70.7 percent report high-speed Internet connectivity as very important to a meeting room’s offerings.
