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Corporations globally spend more than $357 billion or 55 percent of an estimated $650 billion global meetings and events market, yet few companies have implemented a global meetings and event strategy or policy necessary to drive savings, according to a new study from Carlson Wagonlit Travel's Travel Management Institute. Adopting a global strategy, policy and other best practices detailed in the study over three years could deliver to the average corporation savings of 10 percent to 25 percent.
The bulk of the savings, 8.5 percent, would come from sourcing, with 5 percent derived from improved processes and 4 percent from policy and compliance, according to the study.
On average, meetings and events spending represents 0.5 percent to 1.5 percent of company revenues. Such industry sectors as pharmaceutical spend as much as 4 percent of revenues on meetings and events, according to the CWT Institute. In the survey of 222 meeting and event planners, "only half are able to estimate their M&E spend, arriving at 2.3 percent of revenues." Compared with business travel spend, the Institute found that some companies spend as little as 35 percent on meetings and events, while others spend as much as 65 percent.
In its latest research endeavor, the CWT Institute studied the meetings and events space for the past year in an attempt to clarify the size and type of meetings, help companies evaluate meeting and event budgets, identify key performance indicators and detail best practices to optimize management, according to CWT Travel Management Institute senior manager Grégoire Lair. The Institute interviewed more than 40 experts, analyzed diagnostic data from 988 companies and conducted surveys from September through March, one with 222 meeting buyers and planners from more than 16 countries and nearly 90 different companies, and a second with more than 2,300 meeting attendees from six countries.
Of the total market, the CWT Institute found that 40 percent of meetings and events are held in North America, 35 percent in Europe, Middle East and Africa, and 25 percent in Asia-Pacific.
While several other market-sizing studies conducted during the past 20 years have stated that associations drive two-thirds of meetings while corporations drive one-third, the Institute said corporations represent 55 percent of all meetings, with non-corporate the other 45 percent. Corporate meetings likely have been undercounted in prior surveys, said CWT North America meetings and events director Terry Sloan. "Up until recently--the last couple of years--corporates really didn't know their spend. It was fragmented between different profit and loss statements within a company," he said. "The whole centralization of meetings and events helps to support that."
Five Major Meeting Types
The CWT study identified five major meeting types:
Corporations primarily focus on the first three types of meetings, while associations and others plan the larger events. Of the first three meeting types, simple events typically represent about half of a company's meeting expenditures; the other two types each represent 25 percent. Within those meeting types, the study identified average spending on accommodations/meeting space, transportation, food and beverage and other typical meeting line items. Accommodation/meeting spaces typically cost 30 percent of a meeting budget for the two larger meetings, but 60 percent for the smallest.
To effectively manage meetings and events, CWT said companies should follow an eight-step process to first analyze spend and then set up the right M&E organization, design a strategy and policy, create a budget and calendar, select and negotiate with suppliers, establish a formal planning process, implement efficient attendee registration, handle payment and reimbursement and evaluate M&E performance and compliance.
Few Global M&E Policies
Looking at "diagnostic data" from 49 companies, the Institute said only 28 percent had a global M&E strategy. Only 8 percent of 988 companies had a global M&E policy, while 5 percent had a regional policy and 20 percent had country policies. The vast majority--67 percent--had no M&E policy.
"It is very important for companies to provide a few guidelines," Lair said.
Only one-third of companies managed meetings centrally, the study noted, with more mature meeting and event programs in the banking/finance, pharmaceutical and consulting industries more likely to do so.
The study found that nearly 60 percent of 222 planners and meeting requestors leverage transient travel volumes when negotiating with airlines and hotels. However, in analyzing diagnostic data from 21 companies, the Institute found that 70 percent of meeting planners don't measure or know the compliance rate to their preferred supplier policy.
"Given the current economic times and high profile that meetings have had, I find it interesting that they still don't know that," Sloan told The Transnational.
The diagnostic data also revealed that only 10 percent of 988 companies used dedicated meeting cards--which the Institute identified as a best practice--and just 29 percent had a mandatory approval process for M&E. "Again, given the economic times and media focus, I would have thought a lot more companies would have stricter mandatory vendor policies," Sloan added.
Online Registration Use Varies
Implementation of an efficient attendee registration process was another best practice identified in the study. While 89 percent of buyer respondents said they used a dedicated online registration system to manage attendee registration in North America, only 24 percent of respondents in EMEA and 39 percent of those in Asia said they used such tools. CWT noted that the U.S. adoption rate could be so high because many of the survey respondents were customers of survey sponsor StarCite. Microsoft Excel is the tool used by 51 percent of buyer respondents in EMEA, 53 percent in Asia-Pac and 80 percent in Latin America.
Given the rise in meeting cancellations during the economic downturn, CWT asked planners and requestors if they incurred cancellation penalties during the past year. Of 175 corporate respondents, 40 percent said they had incurred cancellation penalties. "On average, it was 20 percent of the cost of the event, but could go as high as 50 percent when the meeting was canceled at the last minute," Lair said. Maintaining an annual meeting and event calendar, he added, could help companies avoid such penalties if they are able to replace a canceled meeting with another.
While the study highlights the challenges that lie ahead for many corporations to more efficiently manage meetings and events, Sloan noted that "there's definitely been progress, but probably slower than some people want. Meetings and events are very personal, so there's been a great protection of that territory."
"We're starting to see now that procurement is definitely getting involved in meetings, and that will change those percentages going forward," Sloan added. The eight steps should take a company three to 12 months to implement, depending on the level of executive sponsorship, he said.
Lair noted that the global meetings and events market grew steadily by an annual rate of 4 percent to 5 percent prior to 2008, or about 1.8 times the gross domestic product rate from 2003-2007. "In 2008-09, M&E revenues suffered a drop of 20 percent to 30 percent in advanced economies and 30 percent to 40 percent in emerging economies," he added. "The market has since resumed growth and is likely to recover fully by the end of 2010 in the Middle East, 2010-2011 in Asia-Pacific and 2011-2012 in Europe and North America. By 2011-2014, annual growth rates should reach 3 percent to 4 percent in advanced economies and 15 percent to 18 percent in emerging economies."
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