Corporations next year will increase their meeting and convention budgets by an average of 5 percent, according to the annual business travel forecast of the National Business Travel Association.
The forecast, based on a wide-ranging and formal survey of the association's membership, is the first public study to predict increased corporate meeting spending in 2004, though it does not extensively elaborate on the rationale for the potential increase. However, many industry observers pointed to training meetings and group incentive travel as two areas on which corporations are likely to spend more.
"It's certainly not going to be consistent," said Dave Sonricker, senior vice president and general manager of Chicago-based WorldTravel Meetings & Incentives. "Some will remain relatively flat, and some are looking to tighten up in a few key areas. Overall, budgets will not decrease."
"In general, we're seeing a loosening in larger meetings, which is where we've seen dramatic reductions in the expenditures in the past few years," said Jay Roseman, vice president of American Express Meetings & Incentives. "More of those are being planned for next year, and I agree that corporate budgets will increase a little more for both those programs and for overall meeting spending."
WorldTravel Meetings & Incentives' Sonricker said many of his clients plan to take measures to limit spending on specific meetings, primarily by reducing the number of days of particular events, without resorting to wide-scale meeting cancellations.
Other mechanisms corporate buyers may employ to avoid spending increases include avoiding venues for meeting functions outside of the meeting site and seeking lower-cost properties. However, Sonricker said, many corporations will increase meeting expenditures, some significantly so, primarily because of a spike in training meetings spurred by increased business activity and the adoption of technology.
"In certain verticals, there's a lot of merger and acquisition activity," he said. "There's increased budgets for training and branding. There are some markets that will come out with a boatload of new products, while others may not have that. You can't say there's one trend across the board."
Despite the likely inconsistency of his clients' meetings activity, Sonricker nevertheless believes 2004 will be solid. "We are not pessimistic at all," he said. "The same holds true on the incentive side, which looks very strong. Recognition travel programs are very strong, and companies are reluctant not to offer them. Some companies are seeing incentive travel in a totally different perspective, and they know the bar needs to be raised."
Carol Muldoon, director of meeting services at Montvale, N.J.-based KPMG, said her company's meetings spending is likely to be similar to 2003 levels, with some cost-saving initiatives balanced by potentially increased training meeting activity. However, given that a very high percentage of KPMG meetings are held with less than 90 days of lead time (Meetings Today, April 24, 2000),
anticipating spending levels can be difficult.
"It's a little too early for us to project, given how many of our meetings are on short notice," Muldoon said. She added that 2003 meeting spending was roughly flat compared with 2002, though transient travel has increased. The company significantly cut meeting expenditures in 2002, with about a 20 percent reduction over 2001.
That said, KPMG plans some moves to limit some spending. The company is encouraging the use of internal meeting space and its conference center as a site for small meetings previously held offsite, Muldoon said. "We want to fill our own space whenever possible, but that likely won't have a tremendous impact," she said. The company also will hold its largest meeting, a 2,000-attendee partner event, every other year instead of annually, with 2004 as the first off-year. However, Muldoon said it is possible the company will replace it with new regional events.
KPMG also manages meetings for McLean, Va.-based consultancy BearingPoint Inc., which until 2002 was known as KPMG Consulting and which split off from KPMG in 2001. BearingPoint has renewed its commitment to employee training, particularly overseas, Muldoon said, and it's quite possible its spending could be higher next year. KPMG also has indicated it will not reduce training events.
New York-based PricewaterhouseCoopers LLP likely will see higher meeting expenditures in 2004, driven by new training events dedicated to changes within the financial services industry, specifically the impact on auditing and financial reporting controls mandated by the federal Sarbanes-Oxley legislation, said assistant director of meeting management services Barbara Cummins. "Our largest clients are learning and education, and they are focused on more training," Cummins said. "There have been a lot of Sarbanes-Oxley programs, and there will continue to be. We're also looking at an increase in client programs, as similar programs have been successful in the past and partners want to expand upon them."
Though smaller meetings are harder to predict at PwC as well, Cummins said many internal departments have created budgets that account for such activity. "It has to be done," she said.
Incentive travel, particularly to international destinations, suffered greatly in the wake of the 2001 terrorist attacks, but some anticipate increases as corporations seek to spur sales.
Meeting expenditures at direct-selling giant Amway Corp. of Ada, Mich., are inexorably tied to the company's financial performance, with much of its meetings activity related to qualifying sellers' incentive travel.
"It's been very positive," said Amway director of special events Craig Ardis. "Our business is growing, which means more qualifiers and more programs." He added that particular growth is expected to occur in Europe and Asia.
Amway currently has no new policies or directives to curb meeting spending. "None at all," Ardis acknowledged. "We went through that a few years ago when things weren't good. Now we're maintaining the cost of meetings, but those costs go up because more people are qualifying to attend them, so we try to maintain the level of spending per individual."
Though optimism about increased meeting activity centers around larger events and training sessions, some noted an increase in short-term meetings to be held before the end of 2003. This bodes well, they said, for next year's prospects.
"We're seeing some across-the-board increases," said Steve O'Malley, vice president of operations for Maritz Travel Co. "Clients have called us with urgent needs. Things have popped up in the first part of December. It happened very quickly, and it's a good sign of economic pickup."
The NBTA survey (BTN, Oct. 20),
however, expects that the cost of overall travel management will rise by 6 percent in 2004, spurred by a 5 percent increase in corporate air rates, a 3 percent increase in hotel rates and a 2 percent increase in car rental rates. Though all of those numbers encompass meeting and group travel, the study does not specifically project meeting and group travel costs.
American Express Meetings & Incentives' Roseman noted that Amex and Meeting Professionals International will release its projections for 2004 meeting spending in January as part of its now-annual FutureWatch research study.