MPI Forecasts 7 Percent Increase In Mtgs. Spending
Corporate and government meeting planners expect both the number of and expenditures on events held by their organizations to increase by 7 percent this year, according to the fourth annual FutureWatch survey, released this month by Meeting Professionals International and American Express. However, concerns over travel costs and the economy make 2006 a year of "cautious optimism," said MPI's president.
High fuel costs have sparked fears about rising travel costs, said Colin Rorrie, MPI president and CEO. In addition, the meetings industry has voiced concern about global security and health threats such as avian flu, he said.
"On the one hand, the number of meetings is growing and the support of meetings is growing but there are these factors out there that cause people to reflect a bit," Rorrie said.
According to the survey, the top five external trends expected by respondents to impact the industry were the economy, travel costs, oil prices, changes in technology and increasing globalization.
Overall, MPI projects a strong year for the industry. Among corporate meeting planner respondents, 42 percent said that they expect to get a larger share of their company's budget this year than in 2005, 46 percent said the proportion would remain the same and 13 percent said it would decrease.
"The economy continues to grow and people are very enthusiastic because the end result is there are more dollars made available for meetings," Rorrie said. "That face-to-face communication is probably the most effective way to execute a business plan."
Demand for meeting space and accommodations may outpace supply in 2006, according to the online survey of 1,268 meeting professionals in Europe and North America, based on expected changes in lead times, hotel rates and attrition and price concessions. Meeting space lead times are expected to increase by 38 percent in 2006, from 29 weeks to 40 weeks, on average. Lead times for meeting services was projected to increase by 37 percent. Hotel rate increases were expected by 76 percent of planner respondents and 81 percent of supplier respondents. Less flexibility and a decrease in concessions were predicted by 31 percent of planners, 28 percent of intermediary third parties and 24 percent of suppliers.
"You have to be more ahead of the game to make sure you can get to where you want to go, when you want to go," Rorrie said, "but the end result is that there's some longer lead times now."
Respondents projected larger meetings in 2006, with planners expecting a 12 percent increase in the number of attendees, intermediaries expecting a 7 percent increase and suppliers expecting a 19 percent increase. The three groups also projected a slight increase in the length of meetings.
According to the survey, meeting planners still are the most active participants in the buying process for meetings. Only 13 percent of respondents said that their company's procurement division was involved in identifying, evaluating or negotiating with vendors.
"With the move towards standardized management systems, there was a perceived risk that meeting planning would become solely a cost-based purchasing decision driven solely by procurement," said Julie Hylton, director of industry development for American Express Establishment Services, in an MPI release. "In fact, today's data suggest that meeting planners lead the charge in identifying, evaluating and making the final decision regarding vendors."
Meetings can be a good indicator of the economy in general, Rorrie said.
"As companies do better they're looking at expanding a particular meeting or considering holding other meetings that they haven't held before. The purse strings tend to get relaxed and there is more money coming into the market to support those things. It's a pure case of supply and demand," Rorrie said.
The meetings market may still be rebounding with meetings that were postponed or downsized during the economic downturn. Two years ago, companies still were looking to trim as much unnecessary costs as possible and cutting back on meetings was one way to do that, Rorrie said.
"When the economy was tough and they weren't spending as much money, that was a reflection of a situation when they look at the critical essentials of where to spend the dollars they had, and meetings are an area that they took a look at," he said. "Even though they realize how valuable meetings are to their business goals, when things get tough then they start prioritizing."