Buyers To See Flat Mtg. Budgets As Airlines Eat More Of Pie
Meeting buyers can anticipate flat budgets in the upcoming year, but should expect to spend more of their budget on airfare, and are looking to reduce hotel expenditures or cut the number of meetings planned to offset that increase, said several industry consultants.
"Once we put an air budget proposal in front of certain customers, they're going, 'Wow,' " said Paul Salvatore, president of event and meetings management for HRG North America, adding that is especially the case in smaller cities with higher airfares.
"We're not even proposing destinations where lift has been reduced," he said. "It's taken a big effect on next year's meetings."
Peter Moen, vice president of business development for Carlson Marketing, said that while he anticipated total meetings budgets remaining flat, "some of the elements will change a little bit. Some corporations are potentially moving down in hotel tier level to try to make up for the increase in airfare costs."
Mary MacGregor, vice president of marketing and business development for BCD Meetings & Incentives, added, "Proportionally, their dollars are finite and they're looking at how they allocate them. Airfare is a consideration as a percentage of the overall budget. It's a greater percentage than we've historically seen, so that means that there are some potential considerations with regards to the hotels, the destinations and some of the event inclusions that our customers are looking at to offset the increase in airline spend."
Klamath Falls, Ore.-based Jeld-Wen is losing lift in its local airport, causing employees to travel more than one hour to the next-closest airport.
"We will definitely see an increase in air cost," said Jeld-Wen meeting planner for aviation and travel services Debbie Douglas. "We are definitely advising people budgeting for meetings and travel to add the additional costs of cars and hotels."
Other buyers are trying to hold fewer meetings to cut down on meetings—and air—spending
"We'd like to consolidate some of our smaller meetings into larger events," said Patricia Carlin, purchasing manager of global card and travel for Dublin, Calif.-based Sybase. She anticipates meetings spending in her company to remain flat. "It'll have an effect in how we spend our air, because if you have a lot of little meetings for people going all over the place and you can consolidate that to one larger event that has more population, you're going to spend less money."
Travel management company executives said the news is better on the hotel side.
"It looks as if they haven't increased as much," Salvatore said. "It's not a buyers' market by any means, but it is not as tight as it was in prior years. There are some options this year."
While demand changes by city and market, "We're seeing some settling of the rates, and starting to see the beginning of a shift away from the strong seller's market," said Frank Schnur, vice president of advisory services for American Express Business Travel.
Jeld-Wen's Douglas added: "We're advising people to up their hotel only about 3 percent. I think we'll be below that."
"Our customers are looking at shoulder seasons, and nontraditional date and day-of-the-week patterns," said BCD's MacGregor. "We're seeing clients requesting more meeting space versus the number of sleeping rooms blocked, maybe looking at strategies like sharing rooms with a colleague."
However, some companies may cut meetings in order to cut costs. "Unless it's really important," said Douglas, "they're either done over the phone or with Web-based equipment, or not at all."