Economic recovery, an accelerated pace of change, new technologies and generational shifts are among the challenges that meeting and travel professionals face in 2010, executives from hotel companies, an office services company and association told the Professional Convention Management Association here last month in a wide-ranging session about future trends in meetings and travel.
Compared with 2009, "all we have to do is have a tepid year in 2010 and it's going to feel great," said Starwood Hotels & Resorts Worldwide president and CEO Frits van Paasschen.
"What we're preaching to our hotels is to be very agile in 2010. Learn what's happening, see the trends and be ahead of competitors as demand improves," Host Hotels & Resorts executive vice president of asset management Minaz Abji said. One of the largest owners of luxury and upscale hotels, Host owns 111 properties that operate under various flags. Meetings make up 40 percent of its business. "Secondly, we're asking our hotels to get closer to their top customers--meeting planners or top accounts--so we can offer the right solutions. Changes are happening too fast. The change business is going to continue; we're not going to be what we used to be."
A "new culture of impatience" that has prompted demand for "faster food, faster [computer] boot-ups, faster sex and faster downloads" also demands faster meetings, said Peter Yesawich, chairman and CEO of marketing firm Ypartnership. "It's all about convenience and travel time," he said of research that indicated a desire to compress both leisure and business travel due to both cost and productivity concerns. "How easily can I get there, and how quickly can I get home?"
American College of Healthcare Executives president and CEO Thomas Dolan said, "It's all about ROT, return on time." To meet the needs of its 30,000 members who lead hospitals and healthcare systems, Dolan said ACHE starts its meetings at 7 a.m. and ends most at 1:30 p.m. to allow them to work in the afternoon. Many consider "two days an eternity. We're going to have to do it better and faster," Dolan said of meetings in the future.
For that, Dolan said, he and other planners rely on hotel partners to help create an experience. "From the time the individual gets here to the time they leave, they have to have a total experience," no matter what the focus of the meeting. "You can only Twitter so much. Then you have to talk, learn how to sell, learn how to convince."
To create an experience or ensure that meeting objectives are met, planners need to work with hotel "professionals who understand the business" as well as, or almost as well as, planners, said Fairmont Hotels & Resorts president Thomas Storey. They need to "collaborate more at the start of any planning to agree on the meeting objectives, constraints, attendees," Storey said. That could require hotels to hire more professionals to "work closely with planners to ensure productivity" goals are met.
Abji is optimistic that the desire for ROI could prompt buyers to rely less on electronic requests for proposals. "It's become very price-conscious, more like a commodity rather than an experience," Abji said of RFPs that prevent suppliers from talking to buyers. "I'm hoping that the trend of creating the experience" will likewise prompt a return to "working as partners to solve a problem, make my meeting so great that my attendees have return on time, return on investment."
FedEx Office (formerly Kinko's) president and CEO Brian Philips noted that another new dimension that attendees face is "performance anxiety." Bosses are telling their employees, "I'm going to send you to this meeting, but you better get something done, have something to show for it."
As a provider, "we're seeing it because we provide an inordinate amount of print to people who participate in these meetings," Philips said. "When you look at the content of what they're printing, there's an intensity there that we haven't seen up to this point; less fluff and a whole lot more work."
Planners and hoteliers also are challenged to design properties and meeting space that appeal to the growing numbers of millennial and Gen Ys, which combined number 75 million, slightly less than the 78 million Baby Boomers.
"Since we have 16 brands, I can tell you everybody is looking at this," Abji said of hotel brands. Bandwidth and lobbies that allow them to "eat, drink and work" are important.
"They don't want these boring meetings with panelists speaking for three hours," Abji said. "Baby Boomers are used to going to a meeting, getting a data dump that is basically a one-way communication. Gen Y wants collaboration, they want to network, they expect your PowerPoint presentation in advance so they can ask you questions," he said. As for meeting rooms, "they want a lounge kind of setup" that allows them to "stand if they want to stand, pay attention when they want to" and multitask on laptops or mobile phones.
To reinforce the importance of meetings, Dolan said, associations "better wow them [attendees] in 2010. We're putting more into our annual meeting than we ever did because I want them to say I made a mistake in not coming in 2009."
Many associations have "jumped on the distance education bandwagon and think we can do everything with webinars, which is certainly cheap," Dolan said. "No matter how good the webinar is, you really don't learn interpersonal skills that way. Success in life is really based on interpersonal skills."
Keynoter Kjell Nordstrom during the conference even went so far as to say that face-to-face meetings, collaboration, "getting together" are the "only way to transfer tacit knowledge," the stuff that humans know but can't always express in writing. Many people believe that tacit knowledge is the only way to "create competitive advantage" in the years ahead, said Nordstrom, a business professor and author. In contrast, articulate knowledge can be transferred in a paper, taught at a university or read in a book. "The bad news is that the commercial value of articulate knowledge is approaching zero," he added. Nordstrom said this desire for tacit knowledge is why so many people find the time to meet despite the crises they have all just been through in Europe and the United States.
Transient, Meetings Rebound Starts
Although it canceled its annual general managers' meeting for 250 people last year, Abji said Host executives decided to hold the event in 2010. "We need to communicate with them. We need to make sure we communicate how we're going to get out of this, do better and outperform. I think you’re going to see corporations start sending people to association meetings. Forget about the cost cutting, which we've now done. Let's talk about revenue building."
Hotel executives said they've seen signs of recovery in both transient and meeting bookings. Abji said transient travel started to rebound in September and by December was flat compared with a year earlier. "It will be slow to come back to levels we were used to in 2007 and 2008, but I think we're on our way so that's a very, very good sign." Drivers of business travel and meetings, Abji said are “gross domestic product growth, employment growth and nonresidential fixed investment growth."
Abji added that "in the second quarter, we'll see more small meetings, with large meetings coming in the third quarter. There isn't the pricing power today because occupancies are still lower."
Starwood's van Paasschen shared Abji's "cautious optimism," he said. "We started to see the business transient consumer come back in the fall. Sequentially, week by week since September, our group business has continued to improve. Just to put a cap on it, we were close to a record occupancy for New York in December. There are still plenty of things that should concern us about the world economy today, but I feel very good about where we are today."
Fairmont Hotels & Resorts also "turned the corner" in September and reported "year-on-year flat occupancy," according to Storey. "Group business from a booking pace standpoint is picking up now versus 2008." As soon as the economy starts to rebound, Storey expects "a lot of short-term meetings." The challenge "is going to be that the operators are not fully staffed for that. To shift gears again away from the leisure transient, that is driving the bus, back to group is going to be the challenge."
Food and beverage revenues for meetings are down about 40 percent, Storey noted. Fewer meetings and banquets, reduced budgets and a trend to have attendees put more meal costs on individual credit cards are among the causes, he said. F&B and room revenues are a hotel's major sources of profits so reductions typically mean lower profits and ability to provide the staffing and services that guests expect. Asked how Fairmont has dealt with that, Storey said, "We make the owners suck it up. You have to make a decision as a company and as a brand how important this industry is to you. We made a decision that this industry is critical to the long-term success and viability of our brand and the assets of our owners. We do lose margin, but we can't afford to lose our service offering for our long-term critical partners."
As both a travel and meeting buyer and convention industry supplier, FedEx Office’s Philips said his division is "seeing our business come back earlier than the rest of our core business, which tells us that corporate America has understood that face-to-face meetings are one of the most important tactics that they have in their arsenal." FedEx Office operates in almost 50 meeting facilities and 11 of the nation's 15 largest convention centers. Parent FedEx, with more than 300,000 employees, "in 2009 way overcorrected when it came to meetings and travel and we're paying for it now," Philips said. "We're going to put our people back out on the road. We're optimistic that spend is going to go up because we know our spending is going to go up."