Shrinking Lead Times Prompt Corps. To Take Action
Nearly half of all corporations in the past two years either have instituted specific policies or procedures to address the effects of consistently dwindling lead times for small corporate meetings or plan to so do this year, new research reveals.
The reported activity by corporations regarding such meetings comes at a time when average lead time is shorter than it has been at any point in the past five years, according to an exclusive Meetings Monitor survey of 195 corporate meeting buyers. Respondents said that 83 percent of corporate meetings with less than 100 attendees were planned with 90 days or less lead time, compared with 67 percent in the six months prior to March 2003 and 53 percent in the six months following Sept. 11, 2001. Additionally, 72 percent of small meetings were staged with 60 days lead time within the past six months, dwarfing percentages from prior surveys.
The perpetually shrinking lead times have caused many corporations to take action, with many respondents reporting specific strategies to mitigate the effects of short-term meetings. Typically, these moves can include requiring meeting registration with a meetings department, the implementation of technology to speed the meeting planning process or expanded hotel deals to pre-negotiate contracts for future small meetings.
About 26 percent of responding corporations indicated that some internal procedures have been implemented to expedite the meeting planning process within the past two years. An additional 22 percent of survey respondents indicated that they have not done so, but plan to this year.
The Monitor survey found that a significant minority, at least, of corporations have come to the realization that the consistent lack of lead time for corporate meetings is a real trend and can have adverse effects, necessitating the moves to expedite the planning process. Beyond that, though, many corporations and third parties have their own opinions on what precipitates short-term meetings and what steps should be taken to ameliorate them.
For many, problems begin at the level of the meeting sponsor or the employee who has decided a meeting is necessary and begins the effort to stage it.
Minneapolis-based financial firm ING Americas has embarked upon an extensive communications program to educate internal meeting sponsors of the effects of short lead times on hotel costs for a given meeting and how that lack of lead time affects the company's meetings management philosophies, which center on centralized meetings purchasing and supplier sourcing.
"We can't do what we want to do in terms of centralized sourcing with short lead times," said ING Americas travel, meetings and promotions sourcing specialist Kari Knoll Kesler. "Now, we have designed a set of strategies and communications to help educate business and meeting owners of the impact of changing their minds or waiting until the last minute."
That education will center on ING's meetings management process and the benefits of strategic sourcing, as well as the added benefits of strategic sourcing with enough lead time to fully conduct the process. "Senior management understands, or planners understand, but the meeting owners don't necessarily understand," Kesler said. "There are always going to be pop-up meetings, but they cannot be the norm."
Kesler's solution surrounds internal processes, but other corporations have looked externally for solutions. Some buyers have turned to their roster of preferred hotels to pre-negotiate contracts for small, simple events without extensive entertainment options as a way to book applicable meetings quickly.
"Lead time is an internal challenge, and one of our best practices says that there will be better hotel rates the more lead time you have," said Tracey Wilt, purchasing consultant for Stamford, Conn.-based Xerox Corp., where the average lead time for small meetings is 29 days. "Through our use of multiple suppliers, further planning leads to further savings."
To ameliorate the effect of shorter lead times, the meetings department, following extensive destination analysis, has developed a roster of primary destinations and hotels at which fixed meeting rates have been negotiated. If one of these hotels has the availability and space to accommodate a Xerox short-term meeting, the property will accept the booking at the pre-negotiated rate. "It's fixed, so we can sneak a last-minute meeting in there," Wilt said. "It has simplified the process."
Many American Express Corporate Meeting Solutions clients average between 30 days and 35 days of lead time for their small meetings, said vice president Jay Roseman. One method of potentially limiting the expenses incurred in short-term meetings and lower costs for the entire travel and meeting management program, he said, is to align overall meeting site selection more closely with preferred properties with the transient program. "Short-term meetings have changed the business model of hotels as they get all these bookings at the last minute, and the benefit can be that they can move space they thought would go empty," Roseman said. "By placing that meetings business in preferred hotels, when corporate travel levels drop off, those meetings can help hold the line on total volume. Those meetings can be used to an advantage."
Despite moves to expedite meetings, though, few buyers believe they will have more lead time for small meetings this year: According to the Monitor, about 89 percent of respondents said lead time will remain about the same for the remainder of 2004 as it has for the prior six months, with 8 percent indicating meetings will be even shorter term. The remaining 3 percent believe there will be some lengthening in lead times.
"That data is consistent with what we have seen," said Julie Carroll, national director of strategic partnerships and industry relations at WorldTravel Meetings & Incentives. "From what we see at sea level, the philosophy behind the short-term meeting trend is that given that meeting spend is one of the largest line items in an overall corporate budget and corporations are hesitant to increase that spend, they will find the money for a meeting when they see a need to hold a meeting, but they do not want to commit that money a long time in advance. So you'll see the meetings planned 30 days to 90 days out."
Carroll, however, said shrinking lead time is not necessarily a phenomenon that needs to be reversed and that it can be beneficial to the corporate bottom line. "If there's a hole in a hotel, you can be in a great place," she said. "We've partnered pretty successfully with our hotel contacts, and they let us know when they have that availability. We have a lot of customers who can fill those holes at favorable rates and terms. We have clients who have worked to figure out the destinations where they do the most meeting business and look at their transient hotels in a parallel fashion. They have tried to consolidate that."
Though some of her clients have created policies that address short-term meetings management, Carroll said, creating a policy that effectively handles short-term meetings is not necessarily the same thing. "There are those corporations that have created policy and issued mandates, but even when that mandate is issued, adoption and compliance is still a work in progress," she said.
Though midmarket San Francisco-based technology firm Macromedia Inc. has not instituted procedures specifically to address its typical small meeting lead time of two months, the company has implemented some policies that have had an auxiliary effect on short-term meetings management.
Macromedia has consolidated much of its travel and meeting volume in San Francisco and Boston with Starwood Hotels & Resorts Worldwide and Marriott International, respectively, said travel manager Yasuo Sonoda. "We have enough leverage and volume at those properties to be able to get good rates for meetings and seminars," Sonoda said. "We'll combine transient and group volumes at those hotels, look at the history of group business there and combine all of it to use as leverage. Other hotels, two months out, will try to get as much as they can."
Sonoda's department is able to influence the site selection of internal meetings through a new policy that mandates that any group travel—there is no minimum number of attendees—must be registered through the travel department. "Anything offsite must come through us," Sonoda said. "If it's small enough, we may tell them that they can arrange it themselves, but they have to consult us first."
Macromedia's travel department will research other hotels in Boston and/or San Francisco if the internal meeting sponsor prefers, but Sonoda said the cost of using a preferred property typically is lower, prompting the sponsor to hold the meeting there. "Within two months, small meetings are just like airfares: Shorter term equals higher cost," Sonoda said. "It's nicer for us to get it sooner, but it's not bad if it doesn't happen."