New statistical evidence justifies some degree of supplier optimism about growth in corporate meeting spending this year, but a wide-ranging recovery of that business still is outside of the industry's grasp. While far more companies are growing meeting spending than are cutting it, most corporations have yet to substantially increase meetings activity.
According to an exclusive Meetings Monitor survey of 204 corporate meeting buyers, 37 percent of respondents have spent more money on meetings in 2004 than they had at the same point in 2003, while only 18 percent have spent less this year.
Though those figures certainly represent a positive trend for suppliers, which for years have scrounged for any such good news, they also are tinged with negativity. Although 84 percent of respondents with higher meeting spending indicated they have spent at least 5 percent more than they did last year, 87 percent of those that cut did so by at least 5 percent. Additionally, almost 60 percent of respondents from cost-cutting firms said their cuts exceeded 10 percent of total 2003 meetings volume.
Respondents attributed several manifestations of their higher spending: About two-thirds indicated an increase in the number of meetings their companies have held this year, and about 42 percent noted higher attendance at their events. Interestingly, those respondents who cut spending cited fewer meetings and lower attendance in similar ratios—68 percent and 42 percent, respectively.
One rationale for meeting spending increases has little to do with respondents' actual meetings activity. About one-third cited higher air costs as a factor in spending growth, and 29 percent attributed higher hotel costs to the increase.
The overall picture, then, is one of several quantifiably positive developments for the 2004 meeting industry, but one in which excessive exuberance will likely not be validated. Still, some optimism is warranted.
"Our revenue is up 21 percent this year over last," said Brian Stevens, president and CEO of Los Angeles-based meetings management firm ConferenceDirect. "The number of meetings we've booked is up about 10 percent, with the number of attendees up as well. The average hotel rate for the meetings actually is flat from 2003."
In ConferenceDirect's case, Stevens said, certain types of large events buoy the increase in meetings. "There's a resurgence in customer events, which some people put on hold for awhile," he said, "but I'm not seeing a return to training meetings. When we know the recession is over, those will come back, but there's a lot of corporations that are doing training online or not doing it at all."
Stevens said industry trends cut across all types and sizes of corporation, with their specific financial performance dictating meeting activity, with other factors far less important.
"Show me a company at which revenue per share is up, and that's where the growth is," Stevens said. "If it's flat, or declining, they're not. It's regardless of the size of the company."
Though companies aggregately are increasing meeting spending, said Peter Klebanow, president of New York-based Ultramar Travel Management International, different industries generally are employing different methods of doing so.
"Professional services and legal firms' business is rebounding, and they're bringing more people to their meetings," Klebanow said. "Financial companies are spending more money and upgrading the hotels at which they're staying. They're not holding larger meetings but there's no question they're spending more. If they're meeting in New York, where they previously may have used the Marriott, now they're using the Palace."
Educational firms, another industry segment that comprises a considerable share of Ultramar's clientele, throughout 2004 have used the same type of properties for their meetings as they previously had and are not holding larger meetings, Klebanow said, but they are holding more of them.
Ultramar's clients have increased meeting expenditures quite a bit, Klebanow said, on average between 15 percent and 20 percent over 2003 levels.
Though that performance would make Ultramar something of an outlier—according to the Monitor survey, about 24 percent of those companies that spent more on meetings did so by more than 10 percent from 2003 levels—there are corporations that have significantly stepped up meetings activity.
"Like our transient travel, our meetings volume is up about 14 percent so far this year, and we will end the year up about 10 percent to 15 percent over last year," said Joe Preimesberger, vice president and director of corporate travel for San Diego-based information systems and technology firm Science Applications International Corp. "We're holding more meetings and they have more attendees."
The increase in Science Applications International Corp. meetings and attendees largely is due to an increase in the number of customer meetings that the firm has hosted as their overall business began to improve, Preimesberger said, adding that he expects the pace of growth to continue.
"Next year, we will grow the volume by an additional 10 percent to 15 percent over this year," he said. "Our meetings will continue to get bigger. We are getting back to 1999 levels."
Other companies, though, choose to take a less aggressive path.
"On the whole, we have not seen meetings pick up, and I don't expect it to in the next six months," said Marilyn Townsend, corporate travel manager at Dallas-based media firm Belo Corp. "We have been pretty conservative as to who has been coming and going to meetings."
Townsend said meeting expenses have held steady as lower attendee air spending has offset slight increases in hotel expenditures in 2004. "Our hotel expense is up slightly, less than 5 percent," she said, "but our airfares have been better, depending on where we go. Most of our meetings are in the Dallas area."
Like many companies, Townsend said, Belo likely will need to see more evidence of an economic turnaround before gaining the necessary confidence to spend more money on events.
"I don't think that most corporations are willing to step out there yet," Townsend said. "We certainly are going to be very conservative going forward."
Meanwhile, Dayton, Ohio-based NCR Corp., which operates a fully mandated and centralized meetings program, (Meetings Today, April 28, 2003),
has seen the number of small and midsize meetings it holds increase in 2004, due to improved financial performance and pace of its business, even while it stresses cost-control initiatives.
"U.S.-based smaller and midsize meetings definitely are well ahead of where they were last year," said Julie Steible, events manager at NCR, which is a technology firm that is known for manufacturing automated teller machines. "We've held our budgets very tight on our larger meetings, though, especially sales, training and sales incentives," she said. "We are very good at fine-tuning our processes. We are part of the procurement division, and we are poised to drive costs down even as meetings pick up."