Average cost per attendee at meetings in North America will rise
only 1 percent in 2019 to $234, despite strong demand growth drastically
outpacing new supply, CWT Meetings & Events has predicted.
CWT's Meetings & Events Future Trends report also forecast that
the average airfare to fly to meetings in the region will rise 1.8 percent,
while sleeping room rates for meetings will climb 2.8 percent. Globally, CWT
expects meetings demand to climb 5 percent to 10 percent thanks to economic
growth and to businesses allocating a greater proportion of their marketing
budgets to events. Worldwide, airfares will rise 2.6 percent and hotel rates
3.7 percent.
Questioned about the low attendee cost growth projection for North
America, CWT M&E VP for the Americas and South Pacific Tony Wagner said: "If
you had asked me four months ago, I would have predicted 3 to 4 percent, maybe
even 5 percent, but the supplier community is not seeing pricing power gains."
There are exceptions. Sky-high real estate prices will push meetings
costs up another 8 percent to 9 percent in the Bay Area in 2019, Wagner
predicted. One crucial reason for the modest regionwide projection, Wagner
said, is that attendee numbers are increasing as companies invest more in
events. CWT forecast a 14 percent increase in average group size to 88 for
North America in 2019, leading to more negotiating leverage for buyers.
Other reasons cited by Wagner are supplier apprehension about potential
fallout from escalating trade disputes embroiling the U.S., as well as the
effect of group sales commission cuts in the U.S. and Canada by dominant hotel
chains Marriott, Hilton and IHG. "They are a little nervous because they
want to make sure they don't lose market share to independents" that didn't
cut commissions, said Wagner.
According to the CWT report, "the reduction in commission means
organizations now face the prospect of higher costs for their meetings and
events programs." Wagner said this is because, in many cases,
intermediaries either rebate the commission they receive to corporate clients
or charge no fee, earning their revenue from the commission instead. In the
latter case, depending on their mix of business, said Wagner, intermediaries have
imposed fees for booking hotels that have reduced commission, especially for
smaller meetings of 30 room nights or fewer.
The solution? Taking away business, according to the CWT report. It
quoted CWT M&E global director for solutions and analytics Rachel
Lunderborg: "Organizations have to refocus their volume and spend to those
suppliers who have not cut commissions." Lunderborg also advocated "negotiating
hard over terms and conditions."
One less surprising consequence of the supply/demand imbalance in
the meetings market is that CWT sees lead time, the time between when a meeting
is booked and takes place, to lengthen after years of heading in the opposite
direction. "It was very frustrating, but clients have now got that message
and the ones with better planning are really benefiting," said CWT M&E
EMEA VP Ian Cummings.
According to CWT, the ideal minimum lead time to secure desired
venues and dates in North America is four to six months for events of 100-plus
delegates, six to nine months for groups of 400 to 500 and over a year for
conventions. CWT forecast Las Vegas will become the most popular meetings
destination in the region in 2019, up from a projected 10th place in 2018. New
York City will remain at No. 2, while high prices will help drop San Francisco
from first place to eighth. Cities to watch based on rapidly accelerating
booking numbers for 2018 and 2019 are San Diego, Toronto and Nashville.
In EMEA, CWT predicted that cost per attendee
will rise much more sharply, up 6 percent, the same as has been the case so far
in 2018. London has been the region's most popular city in 2018 and will be so
again next year, thanks partly to the pound sterling's plunge after the Brexit
referendum in 2016. However, Cummings warned that London could quickly lose
business to continental European rivals if border control delays worsen after
the U.K. leaves the European Union in March 2019.