Buyers Seek Leverage From Short-Term Mtgs.
Regardless of the multitudes of market-changing forces that have gripped the corporate meeting industry in the past few months—from corporate cutbacks, economic slowdowns and layoffs to outsourcing and terrorism—one aspect of the industry remains constant: Corporate meeting lead times aren't getting any longer and it seems they never will. However, while short-term meetings not too long ago were widely perceived as a costly albatross around meeting buyers' necks, many now are successfully using lack of lead time as a negotiating tool.
According to a Meetings Today survey of 137 corporate meeting buyers, lead times those buyers are dealing with have held fairly constant during the past year—constant but extremely short term. About 35 percent of respondents said the average lead time for meetings of less than 100 attendees is within 60 days, a number that is consistent with the same respondents' 2000 lead time.
Yet, 2000 and 2001 were about as markedly different as can be in the corporate meetings market: The first year was in the throes of a hotel seller's market, with buyers strapped to find any space and expecting to pay a premium for it, while last year the economy slowed, corporations cut meetings, occupancies dwindled and the industry stopped cold for a few weeks in September. That sure didn't lengthen lead times.
Of course, most buyers operate on the schedules of those employees paying for meetings. If the requests come without much lead time, then that's how the meetings will be sourced, regardless of economic conditions or market forces. But while an increased pace of business forced buyers into short-term situations in 2000, where they had to pay for scarce available space, some have chosen to operate in the short term now, because bargains abound. "The negotiating table has tipped toward us because there's no demand," said certified meeting professional Jerry Schmidt, director of communications for Lake Forest, Ill.-based Trustmark Co. "I'm eager to book, and I've pitched that to internal clients. The economics help me a great deal. The lack of lead time is a positive, where it used to be a negative."
Though Trustmark, an insurance company, is part of an industry perhaps known for longer-term, larger events, Schmidt has booked plenty of short-term business and hopes to book more. "It's anywhere from 30 days to 12 months," Schmidt said. "Part of it is because tight budgets are loosening up a bit, but there's also a relaxation of the fascination with terrorism. It's not first in mind for a lot of people. Plus, economically, we're seeing responsiveness in our industry, with not as many layoffs or cutbacks. We're using short lead time as a positive, and we're getting internal responses in 10 to 15 working days. People are making decisions. Everything came to a screeching halt, but there's a lot going on now. There's still not a lot of negotiating for food and beverage, but rooms are a good value."
About 14 percent of respondents said their average small-meeting lead time is less than 30 days, a significant number but one that has not changed dramatically from 2000 among this pool of respondents. "About 38 percent of our internal, non-training meetings are sourced and planned within 31 days or less," said Gilda Caputo, director of travel and meetings for Florham Park, N.J.-based PricewaterhouseCoopers. "That's unbelievable. Before, we would usually have about three months, but now our internal clients often see how the current quarter ends, and then try to set meetings up quickly. They're waiting until the last minute. But we've continued to hold meetings, where others have canceled for months on end."
Hoteliers are well aware of the short-term nature of the marketplace, Caputo said, but will usually not try to charge a premium to buyers who need space quickly. Since there is much more space available in many cities than there has been in the past, there are more hotel holes to fill, and buyers many times only would need to make one more phone call to book requisite space.
"We're not having as much trouble finding space as we used to," Caputo said. "And we're not paying a premium for short-term meetings. That was more the case last year. There are times when you're trying to book the last room in the property and you'll pay a premium for that, but right now things are wide open." Still, Caputo doesn't think that state of affairs will last for much longer. "Things are starting to pick up," she said. "Right now, hotels are still negotiating pretty well and they'll work out a deal, but that will change."
Most buyers expect lead times to remain fairly constant throughout 2002, as indicated by 80 percent of respondents. About 13 percent thought lead times would shrink further, while the remainder felt there would be some lengthening.
However, given the lack of effect from dramatic changes that have occurred in the marketplace during the past few years, there's a growing feeling that the constant abundance of short-term meetings shouldn't be looked at as a phenomenon or even a trend, but as a simple fact of business today.
"There's been no effect, so it's as short as ever," said RoseAnn Howard, director of meeting and events at Tricon Global Restaurants in Louisville, Ky. "Our average small meeting lead time is three months. In a way, we like it, because there are great opportunities if there are cancellations, but you run the risk of not getting what you want if you're not flexible."
Tricon employs HelmsBriscoe, a large meetings management firm, to find appropriate sites for its events and Howard said the firm often looks specifically for canceled space.
Employing this sourcing method has resulted in Tricon getting good leverage in negotiations, even during the tightest supplier's market in 1999 and 2000, Howard said. "If not, we'll go back and tell internal sponsors the date or destination isn't available, but that's very, very rare and only with very small groups."
The motivations and expectations of internal meeting sponsors are key drivers of meeting lead time. Though some companies have implemented systems to improve or streamline the chain of communication between sponsor and planner, including intranet meeting pages, registration or calendaring capabilities, or strict policies mandating a specific approval process. But if the employees whose department is paying for the meeting only can give a few weeks of lead time, then that is largely unavoidable.
"There's really nothing we can do," Caputo said. "These are our internal clients. We try to set up our structure as much as we can—we have global partners, good relationships with hotels in some of the big cities—but we still have to respond to our clients' inquiries."
Buyers, especially those in companies where meeting expenses are paid from individual business units, stress the point that more lead time often equals better deals, but this also can only go so far if the demands of business dictate otherwise. "Our department accepts any meeting, even those of 10 people two weeks out," Caputo said. "We'll do what they want. We try to give them Meetings 101 whenever we can, but smaller meetings will come up."
"When someone calls us within two weeks, we tell them that we could get them more if we had more time and if there was flexibility with the date," said Springdale, Ark.-based Tyson Foods Inc. meeting services manager Cheryl Colbert-Rodgers. "With time and flexibility, I can fill a hole in a hotel or a resort. It's definitely having an impact on them."
Tyson Foods Inc., like many companies that undergo merger and acquisition activity, has seen a flurry of short-term meeting activity since its acquisition of IBP Inc. last September, Colbert-Rodgers said.
"Some of our smaller meetings of 15 to 20 people are within three weeks, but other meetings can be six months to one year," Colbert-Rodgers said. "The merger has caused a lot of people to need to get together, so they can put their new teams together. We try to do as many as we can here at headquarters or at local hotels," Colbert-Rodgers said. "They're good, there's space and some are thrilled when we book three weeks out. Basically, we look for availability and find rates though the global distribution system, but these hotels are willing to negotiate."
Short term is relative terminology, dependent on the expected lead time for the meeting. Large annual corporate meetings or group incentive events often are sourced and planned years in advance, but even these meetings have seen a knife taken to their lead times. "Even our larger meetings that we used to have 18 months of lead time for are down to about seven or eight months," Caputo said. "That's the way of the world."
About a quarter of respondents work at corporations that plan more than 100 meetings annually, with an additional 30 percent planning between 25 and 100. By far, most of those meetings are small, with about 65 percent of respondents indicating that more than half of their company's meetings have fewer than 100 attendees. Though many of the same underlying forces that drive small meeting lead time reductions—demand, internal business patterns—do so for larger meetings, larger, long-term events seem more susceptible to larger economic forces or other concerns. Additionally, the attacks of Sept. 11 and the ensuing military action have left some buyers skittish or wary of international destinations.
"Our larger meetings that used to be five years out now are only two," said Euclid Strayhorn, supervisor of conference services at Fenton, Mo.-based UniGroup. "Our smaller events have really cut to the quick. Some are even within two weeks. Sept. 11 really changed the way we all operate. There's much less booking in advance."
However, Strayhorn pointed out that cutbacks, demand and lead time all are intertwined. Late last year, UniGroup was scheduled to hold a large meeting of about 900 attendees at a Caribbean resort. After Sept. 11, the company considered canceling the event but decided to stay the course. Yet, the resort—anticipating meeting cutbacks—was not fully staffed, leaving a service level that was "not up to par," Strayhorn said. As a result, UniGroup decided against using the resort for two meeting in the near future, leaving Strayhorn's department to find appropriate space with little lead time. "You have to work smarter when lead times are shorter," Strayhorn said. "If you know your business, it shouldn't be an issue. The art of negotiating doesn't change. The average hotel has a lot of empty space five years down the line, and they'll push to fill it, but that works less well in the short term. We'll look for that space, because we have no choice. We'll give them the opportunity to fill a hole. It works for both."
Hotels have had to adjust their operations to deal with a constant stream of short-term meetings, particularly since planners often will turn elsewhere if requests for proposals aren't responded to quickly.
The Walt Disney World Swan and Dolphin in Florida is one example. Having turned to technology, it developed the capability to book online at negotiated rates, an electronic RFP capability and a dedicated meeting Web site with downloadable floor plans.
"Short-term meetings are not a problem for us," said Swan and Dolphin director of sales and marketing Dave Bagwell. "Technology is the mode by which we can drastically increase customer satisfaction and offer additional benefits to our clients. In cases where planners are pressed for time and need immediate results, we want to be in the position to deliver. These innovations allow us to do that."
Other properties are seeing short-term business swell as part of a recent uptick in demand, attributed, at least partially, to pent-up demand following a silent autumn. "We're seeing more short-term business for Anaheim, in large part, because corporations are considering Anaheim more so than in the past," said Robert Donahue, director of marketing for the Marriott Anaheim, Calif. "We've repositioned the hotel and the destination has been revitalized. It's much more attractive to corporate planners, as there are better facilities and air pickup, so we're on more RFP lists than in the past. We have more opportunities."
Despite Anaheim's growth and increase in corporate demand, "Orange County is pretty healthy," Donahue said. There is still a healthy amount of competition for corporate meetings and Donahue said Marriott will negotiate for that business. "We're always willing to negotiate on customer needs, and there is rate negotiations, but not exclusively so," Donahue said. "People are looking for the total package."