2009 Large Market Benchmarking Report: Embracing Meetings Management Practices

Large market buyers are following the largest travel buyers in embracing meetings management best practices, with a majority capturing data for their meetings and leveraging hotel negotiations with their transient volumes. Consultants also said the economic downturn has spurred more large market buyers to step up demand management policies for their meetings programs and centralize meetings management functions.

Business Travel News research showed that just over half of the large market respondents reported that they captured data for most meetings during 2008. Meetings industry consultants said that percentage undoubtedly grew this year, as meetings buyers faced internal and external pressure to control meetings spending.

"I'm surprised the number is that low," said George Odom, senior director of business development for BCD Travel consulting division Advito. "There's no question that there's much more interest in meeting spend than in the past, and people are collecting that information."

A slightly stronger majority, 60 percent, of Corporate Travel 100 buyers reported having thorough meeting data collection capabilities in 2008. Such capabilities came from investing in technology to capture data and register all meetings, according to Kevin Iwamoto, vice president of enterprise strategy for meetings management technology supplier StarCite. Large market buyers have little choice to follow suit, he said.

"If they haven't made that investment, they're still scratching in the dark," Iwamoto said. "They have to scrape information from the corporate card, general ledger and other places and then assume what is meeting spend and what isn't meeting spend, so they just have hypothetical data."

A good grasp on meetings data is just as important for risk mitigation purposes as it is for cost control, Iwamoto said. If an incident happens at a certain hotel in a certain city, buyers can quickly determine whether they have transient travelers staying at the property, but could miss out on corporate events there if they cannot access the data, he said.

"A lot of meetings that take place aren't booked through the usual travel channels," according to Iwamoto. "You might have all the necessary processes in place to deal with catastrophic or weather-related events, but unless you have a program in place, you'll have no access to those meetings. It can give you a false sense of security."

The increased need for data correlates with more large market companies centralizing meetings with purchasing functions. In 2008, 46 percent of large market buyers reported that the two units were centrally consolidated. This also is growing, however, if Corporate Travel 100 benchmarking is any indication, as consolidation for those companies crossed the 50 percent threshold in 2008.

In a non-consolidated environment, meetings costs often are spread across numerous units, including training, marketing and travel, Advito's Odom said. While this allows meetings to fly under the radar in prosperous times, the economic downturn has spurred senior management to take a sharper interest in what the company is spending on group travel.

"When profits are smaller, companies are going to be more interested in controlling more of their expenses," according to Odom. "With the economy the way it's been, they're looking at all spending items. They've already cut down travel, so the next step is meetings."

This level of senior management involvement might even be greater at large market companies compared with Corporate Travel 100 companies, Odom said. For some on the smaller end of the large market, CEOs or CFOs might now be taking a direct interest in the meetings bottom line, as opposed to divisional executives or vice presidents in larger companies.

As such, more large market companies are employing demand management practices with meetings. Part of this is reducing internal meetings, meeting closer to home and conducting meetings on company campuses rather than hotels, StarCite's Iwamoto said. Some buyers configure online booking tools to challenge travelers at the point of sale about whether meetings travel is necessary or could be accomplished by other means. This shift in some cases had as much to do with perception as with savings, following public scrutiny of a few corporate events conducted by companies receiving federal Troubled Asset Relief Program bailout money.

Remote conferencing technology also increasingly is becoming a part of large market travel buyers' meetings programs, Iwamoto said. The high cost of such technology has been a barrier of entry in the past for large market buyers, and while that has begun to change, the urgency of getting meeting costs under control has tipped the balance, he said.

"The price has come down a little bit, but there are a lot of efficiencies to having those virtual technologies put in place," he said. "If they've identified that they do a lot of internal meetings, and those meetings do not generate revenue, then they will want to invest in that."

Additionally, the availability of the technology through third-party networks gives large market buyers a lower cost of entry, said Christa Manning, research director for American Express Business Travel Global Advisory Services. Meanwhile, two multibrand hotel companies, Marriott International and Starwood Hotels & Resorts Worldwide, each announced initiatives to equip some properties in major cities with the technology for corporate group use.

Large market buyers also have been able to curtail group travel by using less expensive technology, Odom said.

"Everybody thinks it's got to be video, but the amount of audioconferencing and Webexes has really exploded," he said. "Those are virtual meetings, in a way, and they go on all the time."

Most large market buyers are employing the strategy of leveraging meetings and transient travel. BTN's research found that 59 percent of large market respondents did so for their 2009 hotel negotiations.

Consolidation doesn't always work when negotiating with hotels on an individual basis, Odom said. A large convention hotel, for example, might serve no transient purposes. Buyers, however, can gain savings when they take smaller meetings into consideration, he said.

"If you use your definition of meetings as 10 or 20 people, then your transient rates would usually be lower than what your meeting rate would be," Odom said. "If it fits with your numbers, you can get that same transient rate for small meetings."

According to American Express' Manning, that strategy already has found more traction overseas. "We hear of that in Europe more so than in the United States," Manning said. "European hotel companies have been much more cautious in lowering rates and focusing on increasing occupancy, so they're more open to it."

On the flip side, hotels seeking occupancy boosts often will court buyers for transient business if they hosted a company's conference or business event.

With cost-saving controls in place and demand management policies enacted, consultants said they did not expect to see large market buyers make further substantial cuts in their meetings programs in 2010. "A lot will depend on the overall economy, but we think it will be relatively flat," according to Advito's Odom. "We see meetings mirroring what's going on in the overall hotel marketplace."

Hotels have reported slight recovery for group business as well as an uptick in advance group bookings for a year or two ahead. Many hotels have put together group packages with slashed rates and attractive terms and conditions, so buyers are looking to take advantage now before occupancy and demand begin to recover.

Even after the recovery, however, large market companies are unlikely to loosen the tethers controlling group demand and spending. "A lot of our customers are saying we have a new norm, and what we're spending now is the new baseline," Iwamoto said. "The supplier market is going to have to realize that, and it's going to be a bitter pill to swallow."