Despite rising hotel rates and some air travel costs, a new survey indicates that some companies are holding more meetings and sending more employees to conferences. Although some buyers said a spike in meetings activity was due to pent-up demand for employee training, the overall increase in expenditures indicated a healthy year for the meetings industry, according to analysts.
According to an exclusive Meetings Monitor survey of 189 corporate buyers, more than one-third of respondents said their companies have increased meeting spending in the past six months. Among respondents who reported a higher spend, 58 percent attributed the increase to higher hotel rates and airfares, an issue that has taken greater importance as the lodging industry in particular has begun to shift to a seller's market
(Meetings Today, March 21).However, 42 percent of those respondents said the increase was due to their companies holding more meetings and 36 percent said they are accommodating more attendees—indicating that the meetings industry has continued to grow under the shift to a seller's market. Respondents were allowed to choose more than one answer.
Higher air and hotel costs have greatly contributed to a higher meetings spend at Maryland-based United Communications Group, but the increase is mainly due to higher attendance rates and more meetings, said Julie Upton, director of meetings and corporate travel. UCG, a business-to-business information provider, has increased spending on corporate meetings by about 15 percent in the past six months, she said.
"We're definitely holding more meetings," Upton said. "There's just more opportunity now, and what we're finding through our surveys is that people have been on hold on travel and conferences, and now they're actually going out."
Upton said there is pent-up demand for meetings, especially for employee training conferences.
"Everyone is allowed to travel again," she said.
Upton expects meetings spend to level off as the company settles in to a more normal demand for meetings and conferences.
"Now that we've spent the money and it's done, we have a sense that expenditures won't go continually up. It will probably stay where it is," Upton said. "I don't see it going down."
Aramark Harrison Lodging has predicted that pent-up demand for training conferences would lead to an increase in meetings activity this year
(Meetings Today, Feb. 7). Mike Fahner, vice president of development for Aramark, said he also has seen many financial services companies increase the number of meetings they hold to train employees on Sarbanes-Oxley regulations.
Meetings Professional International and American Express predicted a strong year for the meetings industry in their annual FutureWatch report
(Meetings Today, Jan. 17). According to the report, meeting planners at corporations, associations and independent planning companies forecasted a 5 percent budget increase in 2005.
The spike in meetings activity does not apply across the industry. Although 34 percent of respondents to the meetings monitor survey said they had increased meetings spend in the past six months, 53 percent said expenditures have remained steady and 13 percent said their companies have spent less on meetings.
Among those who said group travel expenditures have dropped, 61 percent said it was because their companies were holding fewer meetings.
The survey showed a continued trend from 2004 in how supply costs and meetings activity affects expenditures. In the same survey last year, 37 percent of respondents had spent more on meetings in the comparable timeframe and 18 percent had spent less. Higher hotel and air costs, and an increase in meetings activity were named as top reasons for increasing expenditures
(Meetings Today, July 19, 2004).Some companies actually have reduced meeting expenditures in the past six months in the face of rising hotel rates and airfares. Kari Knoll Kesler, manager of meeting and events at Honeywell Inc., said that overall hotel expenditures—for both transient and corporate group travel—have actually decreased year over year through aggressive negotiations.
"Against all odds, our program has a net reduction in average daily rates, year over year, of between 1 percent and 3 percent," Kesler said. "It's amazing, because on average rates were supposed to go up 3 percent to 5 percent."
According to Kesler, Honeywell is currently gathering data to support its meeting management program and does not yet have comparable data for meetings spend.
However, the company aggressively negotiates air and hotel contracts so they are protected somewhat from market forces, she said.
"As a company, we're doing better in terms of overall air costs only because we're managing it better, not because of anything the market is doing," she said.
Kesler, who also serves as co-chair of the National Business Travel Association's groups and meetings committee, said she has heard from other buyers that meeting expenditures are on the rise. NBTA members have contacted the committee for help in bidding for meeting services, she said.
"The kinds of requests that are coming to the committee are not that normal for NBTA," Kesler said. "That's been very recent and very interesting."