Corporate meeting buyers this year face continued pressure from their companies to book meetings with short lead times, according to a new Meetings Today survey. However, buyers said hotel rates are rising rapidly and competition for rooms is heating up. To keep costs down, some buyers have been pushing to expedite the planning process, either by signing multi-meeting contracts with preferred vendors or cutting services they used to offer.
Meeting consultants said buyers face dual pressure from their companies to shorten lead times and from hotels to lengthen them. As such, strategies such as consolidation, cultivating preferred vendors, control over site selection and the deployment data-tracking technology have become even more valuable to the sourcing process.
This year, 75 percent of respondents said lead times for their meetings of less than 100 attendees averaged less than 90 days, which showed that lead times have lengthened since a Meetings Monitor survey in March 2004 showed that 83 percent of such meetings were short-term (Meetings Today, March 29, 2004).
However, many buyers said lead times continue to be too short and that their companies have become accustomed to planning events at the last minute. The majority of respondents, 84 percent, said they didn't expect lead times to change much this year, but 10 percent predicted their lead times would shorten.
Stephanie Ravensdale, director of corporate programs and events for Longmont, Colo.-based Intrado Inc., an integrated data and telecommunications solutions provider, said she tries to plan most of her meetings one year in advance, but receives "uncountable" requests for last-minute meetings, sometimes with only a few weeks' notice.
"Most planners today work in a firefighting mode. Certainly, I do," Ravensdale said. "Whatever comes along, it's my job, so I have to find a way to do it."
Ravensdale said she has seen higher rates and tougher negotiations in the past few months, depending on the property. Five-star hotels in popular destinations predictably are less willing to negotiate. "You have to be realistic. It's more expensive, but it doesn't come as a surprise to me," she said.
"There's pressure to increase the lead times from the hotels and then there's pressure from the businesses for a shorter lead-time requirement just because of the way they're operating today," said Peter Moen, vice president of business development for Carlson Marketing Group. During the past few years, many corporations have opted for a consolidated, enterprisewide approach to meetings management, Moen said, and advancements in technology have made budget forecasting and sourcing easier. The result is that corporate buyers have the ability to complete logistics for their meetings faster than ever before. However, the seller's market has pushed buyers to strive for longer lead times as hotels raise rates for meetings planned with less than 90 days in advance, he said.
Jan Hennessey, manager of meeting and conference services for Oakland, Calif.-based Kaiser Permanente, said her department continues to receive meeting requests on very short notice. "Lead times just keep getting shorter," she said. Hotel rates are "absolutely climbing" for short-term meetings, she said.
"We're trying to push on our clients and say that you can't have it all. If you want the date then you're probably not going to get the rate," Hennessey said. Kaiser Permanente is going through internal changes, she said, which has resulted in shorter lead times for meetings.
"For the meetings that we can, we plan ahead," Hennessey said. "Not only are the hotels wanting us to do that, but we're also trying to get better about looking at the big picture and trying to bundle things up."
Hennessey said her department also is pushing for more control over site selection to keep hotel rates down, but most of the company's meetings are held in California, and moving a meeting out of Los Angeles or San Francisco to a secondary market usually isn't feasible.
Kaiser Permanente's meeting services department has been forced to take "a million shortcuts" to expedite meeting planning due to the huge number of last-minute requests, Hennessey said. The department uses templates for online registration to speed up attendee management and copies specification requirements for similar meetings when approaching hotels. Hennessey also has developed strong relationships with preferred vendors, so negotiations are conducted more smoothly. Sometimes, there is not enough time to do everything, she said.
"We adopted an abbreviated meeting planning process," she said. "We have to jump over steps and do things much more quickly."
Many companies have adopted internal processes to expedite meeting planning in response to shortened lead times, according to the Meetings Monitor survey. In 2004, 26 percent of buyers said their companies already had adopted such strategies. This year, 43 percent of buyers said they have adopted short-term strategies and another 9 percent said they plan to do so in 2005.
Lead times continue to be a problem for both buyers and hotels, according to Meeting Professionals International and American Express in their annual FutureWatch report, released Jan. 11 (Meetings Today, Jan. 17).
According to the survey, 56 percent of supplier respondents asked for more lead time and flexibility from corporate meeting buyers. However, 58 percent of buyer respondents asked suppliers for faster responses to requests and inquiries.
"It's becoming more valuable to have a coordinated procurement process for meeting destination selection," Moen said. "You have to be much more sophisticated and smart from a buying process than before, mainly because of the seller's market."
However, corporate meeting buyers are better prepared to work with the sellers' market than they were in the past, he said. Buyers can identify which markets are softer than others and use that to their advantage in site selection.
During the past 18 months, Moen said, corporate meeting buyers have become much more flexible in their destination choices because they have realized that location "has a big impact on price." The influence of procurement and cost-cutting initiatives has raised scrutiny of the destination selection process and limited many event sponsors' ability to choose meeting sites.
The number of corporations that empower a meeting buyer to decide where a meeting is held has increased, according to a Meetings Monitor survey last year in which 29 percent of respondents said they had been given site selection authority in the previous 12 months (Meetings Today, Oct. 18, 2004).
However, in the same survey, 74 percent of corporate meeting buyers said they had not overruled a sponsor's choice of destination in the previous year. If corporations want to save money on meetings this year, they will be required to be flexible on where meetings are held, Moen said.
Some CMG customers already have moved their meetings to cities with softer markets, Moen said. "In fact, companies have also switched the format of their meetings, especially internal sales meetings and training meetings," he said. "They've gone to back-to-back meetings at properties and tried to negotiate that way. They save on production, setup, travel for staff and can obviously negotiate a better deal at the property."
Booking multiple and back-to-back meetings at one hotel property has been a very effective way for corporations to cut costs, Moen said, sometimes as much as 40 percent. Such collaboration requires an ability to organize meetings on an enterprisewide basis, he said, and the majority of corporations still do not have a fully consolidated approach.
Chicago-based association BlueCross BlueShield has a fully centralized approach to meetings, said Terri Carlton, manager of meeting services and corporate travel, so her department must accept a meeting request even if they have just weeks to plan. Carlton said lead times for smaller meetings have become "terrible. It's like everybody's working on a 'now' moment."
Two-thirds of the more than 300 meetings BlueCross BlueShield holds a year have less than 100 attendees, Carlton said. Although the association tried to replace some meetings with videoconferences or Webconferences in the years following the terrorist attacks of Sept. 11, 2001, the push for face-to-face meetings has returned. However, sponsors poll meeting attendees to see who can attend an event before sending the request to Carlton's department, she said, adding another time-consuming step.
"They say: 'We want to have a meeting but we're not sure who can come, so can you hold space?' Well, no, we can't hold space until you let us know for sure. It's a vicious cycle," Carlton said.
For example, Carlton said, her department had to plan for two meetings held on Jan. 14. One request was submitted Nov. 30, 2004, but the other was submitted Dec. 20, 2004. Although the department tries to follow a "first-come, first-served" approach, last-minute requests make fairness a challenge.
"You have a customer that's being loyal and faithful and doing everything by the book, and here's another one throwing it at you and saying they need an answer now," Carlton said.
As a result, Carlton said her department has been forced to be reactive instead of proactive. Additional requests, such as finding an appropriate restaurant for attendees to have dinner, have to be turned down. "You feel like you're not giving enough attention to everything, you're just going from one thing to another," she said.
Carlton's department also has been forced to advise administrative assistants to call a hotel directly if their management needs an answer right away on if a meeting can be held there. However, often an assistant will call the meetings department to complain that a hotel was not responding to a request. "Welcome to my world," she said. "You're lucky if you can get an answer in two hours, but 24 hours is pretty realistic."
Carlton said hotel rates are going up "across the board," and fees for attrition and cancellation also were becoming a problem. "We worked on lowering or getting rid of attrition and now it's back," she said. In addition, competition for space is increasing, and if the number of attendees rises above a reserved room block it has become difficult to find additional rooms, she said.
"Hotel rates are jumping, there's no rhyme or reason anymore." according to Carlton. "Hotels are going to be filled even if it's not high season, so they can scoot the rates up. You're at the mercy of what's available."
Moen said CMG clients are strengthening preferred supplier relationships to adjust to the swing toward a sellers' market. Corporations are adopting meeting calendars and planning around volume commitments, he said, and keeping track of all requests for proposals that are sent to individual properties and hotel chains. Corporations can then show their preferred vendors the potential business in a year, and why a property didn't receive that business—whether the reason was price or availability.
"A lot of preferred suppliers are anticipating a certain number of room nights, and if they fell short of that in the past, there has been very little opportunity to understand why that is," Moen said. "Now, with these databases corporations can keep track of not just volume or spend with a certain supplier but what potential volume could have been."
Even with a detailed request history to leverage potential spend in negotiations, buyers said hotels sense they can charge more for rooms this year and are less flexible on rates. With corporations now used to booking or changing their room blocks on short notice without penalty, Carlton said she doesn't expect lead times to become longer, which may mean a higher hotel spend this year.
"I'm looking at what we have and I don't think things are going to get better," Carlton said. "These smaller meetings now have taken the shortcuts and are booking with less lead time."