Persistent safety concerns, refueled by a March terrorist attack in Spain, have impeded a strong rebound in U.S. demand for European meeting sites. Though improving general corporate performance and pent-up demand following years of avoiding the continent in favor of North American destinations have attracted some companies overseas, many still are wary enough to remain stateside.
To a lesser extent, some corporations have been dissuaded from European meetings because of the exchange rate between the American dollar and the euro. Though the dollar has rebounded from its all-time lows against the euro, reached in February, it remains far weaker than in previous years—particularly noticeable when weighing the dollar's strength against other North American currencies, specifically the Canadian dollar.
On the other hand, as corporations slowly raise their meeting spending
(see story), some buyers, incentive travel buyers in particular, are considering Europe as a potentially invigorating alternative to nearby meeting sites often used in the past three years. The result is a varied market that seems to simultaneously attract and repel U.S. corporate meeting buyers.
"We're seeing a lot more activity to Ireland and Spain, though not Madrid," said Bill Boyd, president and CEO of Irving, Texas-based Sunbelt Motivation & Travel. "People are looking at Costa del Sol. They're staying away from Paris, London, Rome and all of the other downtown areas due to security concerns. It's all incentive, which is pretty encouraging."
The weak dollar is a concern, though, Boyd said, particularly when comparing its buying power in Europe with that in Canada or Mexico. However, he said, the exchange rate itself rarely is enough to deter corporations interested in European group incentives.
"They'll say that the dollar isn't going to get any worse, so if the proposed program is able to fit in their budget anyway, then they'll do it in Europe," Boyd said. "There's a lot of pent-up demand, and they'll damn the torpedoes. Mexico, Canada, the Caribbean, it's all been done."
Also, Boyd added, the suppliers in Europe—nearly universally interested in drawing the business of American corporations—still are quite flexible in negotiations, more so than their stateside counterparts.
"If a group wants to go to Europe, the suppliers will work all day long to get them there," Boyd said. "They want that mix of business, and they want the American dollar back. Not so in the United States; Phoenix, Scottsdale, California and Florida are maxed out."
"I have four conference calls today with U.S.-based planners from financial and accounting firms. One is looking at Asia/Pacific, and the other three are looking to meet in Europe," said Jim VanDevender, director of global sales for Le Meridien Hotels & Resorts. "American planners are looking outside of North America more aggressively than they were 12 months ago."
That is not a very high bar to clear, as 12 months ago international meetings business was decimated by concerns over war and disease
(Meetings Today, May 12, 2003).Yet, VanDevender said, the first step of a true rebound will be when corporations gain the necessary confidence to explore and book international sites for their meetings.
"Meeting planners have to make sure the attendees will feel comfortable, and their confidence is building that those attendees will be comfortable outside of the United States," according to VanDevender.
Though he acknowledged the unfavorable dollar exchange rate was a hurdle to overcome in enticing U.S. corporations to meet in Europe, and noted that increased demand has led to higher meeting costs in some overseas locations, VanDevender said cost, on the whole, has not limited corporate meeting business.
"We don't approach it in those terms," VanDevender said. "People aren't seeing increases as unneeded. There are times when you can hold a meeting in London or Paris for less than you could in Chicago in the fall or New York in December, depending on the air."
Others, though, are less than convinced that any financial inducement can overcome security concerns.
"I'd like to see more overseas, but I'm just not seeing it yet," said Peter Klebanow, president of New York-based Ultramar Travel Management International. "There is some of it, and there are corporations in a position to do it, but there still is that hesitancy. It's completely a security issue."
The exchange rate is not nearly as important a factor as security concerns, Klebanow said, as even though the dollar has weakened in Europe, good buying opportunities still exist.
"Take Germany," he said. "It's a great buy right now. You could have a great meeting there at a great rate, but it's just not happening."
Klebanow attributed not only actual events of terrorism, particularly the March 11 train bombing in Madrid, but also a stream of alerts and warnings from the federal government to what he called a feeling among corporations that European meetings simply are not worth the risk.
"Every time you hear something, or every time the government gets something out there, it's anti-travel," Klebanow said. "Seasoned business travelers know the risk is not much higher now, but any business principal organizing meetings where other people attend is responsible for that, and they're cognizant of that. If they're risk-averse in any way, they will look for a safer outcome."