The terrorist attacks of Sept. 11 have injected uncertainty and confusion into the U.S. corporate meetings marketplace because there is no precedent with which to predict the attacks' continuing aftereffects. There are, however, some preliminary signs that corporations not only are proceeding as planned with a significant number of events and rescheduling meetings canceled in September, but are booking new meetings at paces not tremendously slower than before the attacks.
Poor financial performance by some corporations and the general economy prior to the attacks already had driven many corporations to cut costs from their meetings and travel budgets. Adding to the uncertainty is overt U.S. military actions that began Oct. 7.
Nevertheless, buyers, hoteliers and airline suppliers are moving forward, and most report deliberate efforts to return to some semblance of normalcy. Deals abound for buyers with the time, inclination and wherewithal to find them, as suppliers continue to compete for a depleted number of meetings.
"There will be a different negotiating landscape and amazing rates through the end of the year, unfortunately for me, because all of our meeting programs are already booked," said Jan Hennessey, director of meetings and travel management for Fireman's Fund Insurance Co. of Novato, Calif. "But by February, they have to get back to business and maintain their rate integrity. We have not banned travel, but we are encouraging people not to travel for nonessential business. But travel already had been dropping significantly, and we would have done this anyway. We've canceled several meetings and rebooked some."
Hennessey said one policy change likely to emerge from the disaster is a formal prohibition of highest-level executives flying on the same airplane. "We'll stress that to our agents," she said. "Most companies, if they didn't have that policy already, will look into that."
"We canceled every meeting two weeks out from the 11th, but we'll try to reschedule all of them, and not one single hotel charged us a cancellation fee," said Suzanne Fletcher, director of travel and meetings at Weyerhaeuser Co. of Federal Way, Wash. "I'm amazed by that." Weyerhaeuser on Sept. 13 instituted a policy that required senior management approval for all international travel. That policy remains, and there is no timetable for any change, Fletcher said. There are no restrictions on domestic travel, and the company now is issuing about 80 percent of the tickets it normally would have.
Planners, however, still are planning and staging meetings, Fletcher said, and the company particularly will be scrupulous in dealing with their financially distressed hotel partners. "We have to be good to the hotels," Fletcher said. "We're not going after them just because some will be offering the ability to hold our meetings for less. We're not doing it; I would have a hard time with that."
Hennessey agreed with the positive assessment of the hotels' performance during the aftermath. "For the most part, the hotels have taken the higher ground," she said. "We canceled a board of directors meeting in New York City, and the hotel waived all fees. Generally, that wouldn't have worked out that way before this happened."
Most hoteliers reported that a significant majority of the meetings canceled in the wake of the attacks have been or are expected to be rebooked. "We don't have hard numbers, but I'll estimate that 75 percent of those meetings canceled will rebook, either with the intent to hold that meeting later or hold a different meeting at that property," said Mike Beardsley, Marriott International senior vice president of field sales for the United States and Canada. "A lot of companies lifted their travel restrictions at the end of September, so we're seeing a burst of business—not to the levels that it once was, but still increased traffic."
The impact on Marriott's negotiating strategies will be significant. "This will be a competitive marketplace, and we'll negotiate more aggressively," Beardsley said. "We'll put fair offers on the table. We've never seen this before."
Unlike other hotel chains, Wyndham International never implemented a timeframe in which it waived all cancellation fees, though it did just that for transient stays. "Each lodging company is handling this differently," said Dave Johnson, Wyndham executive vice president of sales and marketing. "We all have our own policies. We're handling this on a case-by-case basis because the reasons that buyers have for canceling are different. But we've stepped down from our traditional stance, and are looking to rebook most by the fourth quarter." About 95 percent of the meetings that will be canceled have been so already, Johnson said late last month.
"We will take an aggressive stance to capture the business," he said, noting declines in the meeting booking space before Sept. 11. "Given that we were shut down for basically two weeks, it's very encouraging. To meet levels of business immediately before Sept. 11 would be very encouraging."
Others are less certain of a short-term buyer's market. "I don't think there will be wholesale rate cutting," said Fred Shea, Hyatt Hotels & Resorts vice president of sales operations. "Meeting decisions are not based on room rate, usually. They're business decisions."
Another consideration for buyers and suppliers alike in these unparalleled times, given the latitude many employers have allowed their employees concerning corporate travel, is whether planners will be able to successfully fill room blocks for rebooked corporate meetings. "Nobody's quite clear on that yet," Shea said. "We'll handle pickup case by case."
The timing of the attacks, at the onset of the negotiating season for 2002, poses other questions for buyers and suppliers negotiating rates for multi-meeting or combined transient and meeting contracts.
"Volume agreements have become really complex, especially since now is the time when we negotiate volume deals for 2002," said Shea late last month. "We're not in a situation where there will be a lot of rate increases, but there won't be a lot of significant discounting either. Perhaps this will make the economy bottom out and subsequently rebound faster. Or maybe this is a start of a major downturn that will keep us down. I don't think the latter will happen."
Airlines have lost revenue from every market segment, with corporate meetings no exception. Even before the attacks, some majors had taken steps to ameliorate previously declining meeting revenue by waiving some restrictions on meeting-specific or zone fares. Most had no comment on plans regarding meeting fare strategies following the Sept. 11 terrorist attacks.
American Airlines has used its proprietary group evaluation model to set prices for corporate groups, especially those flying less heavily trafficked routes. "The current logic takes into account load factors and also reads historical data," said George Coyle, AA product manager for group and meeting sales. "Each market is maintained by a revenue management analyst, who uses unique market expertise to adjust levels. We also can introduce blanket adjustments for quick pricing updates."
"All meeting requests that are outside the box are being reviewed on an individual basis, as we are making every effort to pursue all revenue opportunities in the meetings arena," added Bob McNally, Delta Air Lines general manager of meeting, association and incentive sales. "As we get further beyond 9/11, we've noticed an upswing in booking new meeting business and the rescheduling of canceled meetings."