Spate Of Corp. Meeting Cancellations May Have Hit Peak

Corporate and association meeting expenditure cuts may have reached their bottom, but they will not be reversed anytime soon, according to research by BTN sister publication MeetingNews and several industry experts.

A June MeetingNews survey of 250 corporate, association and independent meeting planners showed 60 percent further cut meetings spending in the previous six months. Almost half cut such spending by more than 20 percent.

"We've downsized, renegotiated and changed the model to make it more regional to get to our customers," said Patricia Carlin, purchasing manager for global card and travel for Dublin, Calif.-based Sybase. "Our meeting department has seen decreases of 10 percent. Where we go as exhibitors, we see declines of at least 40 percent. The customers aren't coming."

Cancellations also have run high. The survey indicated 37 percent of all—and 43 percent of corporate meeting planner—respondents have had to cancel a contracted meeting or event during that past six months. George Odom, senior director of business development for Advito, BCD Travel's consulting division, said that number would be even higher if it looked at a broader period than six months.

"Almost everybody I've talked to has had one situation where they had to cancel a meeting in the last 12 to 18 months," he said. "Meetings are getting short-term. The process of having meetings that have been on the books for a year is in the past."

The outlook for the next six months, however, is a little more optimistic. More than half the respondents in MeetingNews' survey said they expected expenditures to stay about the same in the next six months, and only about one-third said they expect further decreases.

This perspective is corroborated by a Smith Travel Research report that, year-to-date as of May, group occupancy dropped 20.6 percent compared with the same period of last year, but those occupancy levels are beginning to stabilize. "It seems to us that the 20 percent decline in group demand might be the new bottom," said Smith Travel Research vice president of global development Jan Freitag.

Michael Dominguez, vice president of global sales at Loews Hotels, said the rate of cancellations began to slow down about three months ago and that scheduled meetings, for the most part, are moving forward. "We've talked to a lot of corporations that have canceled their meeting this year, and they're still not sure if it's going to come back next year, but things are starting to go in the right direction. We're cautiously optimistic."

Meetings management technology supplier StarCite surveyed 28 clients at its Global Leadership Symposium conducted recently in Phoenix, and found three-quarters planned to spend the same or more on meetings in the second half of this year compared with what they spent in the first half. The establishment of regulations for the Troubled Asset Relief Program boosted the buyers' optimism, removing some of the uncertainty that had swirled around meetings budgets, said Kevin Iwamoto, StarCite's vice president of enterprise strategy.

"There was a knee-jerk reaction to cut expenditures, cut costs and cut meetings," Iwamoto said. "Meeting planners recognized this was a hot potato and did a really good job in being creative and cost-conscious to keep meetings going, so the confidence level is pretty high."

The true test will be in 2010, Advito's Odom said. Many meeting planners, however, already have reached the bone in their budgets, he said.

"Folks can't cut their budgets too much more," according to Odom. "There's not enough left to cut that would let them still be able to meet their corporate requirements."

Hotels are continuing to sweeten offers to spur a rebound in meetings spending. In negotiations, some are offering attractive attrition clauses—some even offer no attrition penalties.

"This is a brand-new phenomenon," Odom said. "You can call it a shell game, but they're trying to keep their rate integrity."

Sybase's Carlin said her company probably has seen the worst of its meetings spending cuts, but she didn't expect the budgets to bounce back to post-decline levels anytime soon. Odom said tight controls enacted around policies—including shorter and more regional meetings and the use of telepresence technology to cut down on travel needs—would stay regardless of economic conditions.

In StarCite's survey, 70 percent of the company's clients listed moving meetings closer to home office locations as one of their top three tactics to reduce meeting costs. As a result, big meeting cities like Las Vegas and Honolulu remain in fairly dire straits, while such smaller cities as Oklahoma City and Indianapolis are faring better, Iwamoto said.

Almost 20 percent of planners in the MeetingNews survey said they've moved a scheduled meeting to a lower-tier venue in the past six months. Not surprisingly, the luxury tier has seen the biggest year-over-year drop in group occupancy through the end of May, down 26.7 percent, according to Smith Travel Research.

While Advito's Odom said luxury properties could see a rebound if sales incentive trips come back in 2010, StarCite's Iwamoto said group business would be reticent to return to luxury hotels.

"There's a new baseline being formed now, and it's foolish for those hotels to think it will come back when things turn around," he said.