Buyers Methodically Cutting Costs From Executive Mtgs.

<B>Buyers Methodically Cutting Costs From Executive Mtgs.</B>

By Chris Davis

Managing executive board and corporate senior management meeting and group travel in a time when overall travel costs are being slashed can be a dicey proposition. Since these meetings very rarely can be canceled, as they often set the agenda for the corporation's business activities, the impression of frugality must be maintained.

Given that many executives have limited experience with frugal travel, many corporate meeting buyers are exploring methods of keeping these meeting costs low while concurrently offering an environment conducive to extensive and private conferences.

There are several current methods buyers are using to achieve these goals. Some corporations have reduced or limited leisure activities or spousal programs or require the executives themselves to pick up that cost.

Others are booking smaller resorts or hotels instead of five-star properties, and many are saving airfares by keeping their executives close to home.

"Executive meetings have to go forward to get business done," said Bob Lichtman, principal of the Incline Village, Nev.-based Corporate Solutions Group. "But they may use different, less high-end properties. They may avoid luxury brands in order to make the optics less luxurious."

Avoiding actual or perceived opulence is perhaps the most critical aspect of executive board meeting buying in this time of economic uncertainty, as few executives would want to give shareholders and employees that impression when quarterly profits languish and layoffs mount.

"Some clients have asked us to provide them with more site selection options, with the worst-case scenario holding the executive board meeting at headquarters," said Linda McNairy, Carmel, Ind.-based vice president of sales for the central region of Cornerstone, Navigant International's meetings and incentives arm. "They are looking to take a few steps down on the staircase, because they're concerned about statements to their organizations, particularly if there have been cuts elsewhere."

McNairy said she's only been involved with one outright cancellation of an executive board meeting during the past few months, but many are employing such cost-saving measures as eliminating or requiring attendee payment for spouse programs. But, given the level of service many of these attendees are accustomed to, she said, there is only so much that can be done.

"We try to be creative, but you can't typically bring a group of executives accustomed to the Four Seasons or luxury resorts and take them to a limited service airport property," McNairy said. "As such, we look for lodge-type resorts, or those in second-tier locations, that are tucked away but are still within driving distance of corporate headquarters."

But rarely can a corporation cancel an executive board meeting as easily as it can an internal staff event, simply because attendees at the former meeting set the direction of the company. As such, cost-cutting methods employed usually can't include cancellation.

"We're not seeing a reduction in executive board and senior management meetings because they need to be held, but corporations are looking to make them more efficient," said Mark Lauer, director of marketing for New York's Waldorf-Astoria. "The meetings are more compact--they'll be one to two days instead of two to three. They may look to adjust the accommodations, switching from suites for all attendees to deluxe rooms or smaller suites. They look for ways to contain costs at all levels, as their shareholders would expect them to."

Lauer, though, said shareholder expectations have not resulted in companies pulling their meetings from the luxury hotel setting. "They need a meeting facility that's going to be conducive and productive for their meetings, and we're creating an executive conference center that's going to be the perfect place," he said. "There are meetings that are recession-proof, and this type is one of them."

Nevertheless, some resort operators report there is a trickle-down effect in place, as corporations pull executive board meetings from one resort to a more cost-efficient locale. But, in turn, they see other meetings pulled from their own properties as well.

"We've felt some impact from the segments that have had a propensity to cancel or postpone meetings, specifically the technology sector," said Scott Gubrud, director of sales and marketing at the Vail, Colo.-based Vail Cascade Resort & Spa, which will begin a $4 million spa renovation and expansion this month. "We see parallels between the executive board meetings and other corporate events--buyers are looking at program goals and objectives and how to mitigate costs at every level."

Even though Vail Cascade is a high-end resort, Gubrud believes the location is not as synonymous with high costs as other Colorado resort locales, ensuring the property somewhat from cancellations due to perceptions of extravagance.

"There's less impact on us than on, say, a St. Regis or a Ritz-Carlton or properties in Aspen," Gubrud said. "They're so widely recognized as higher-end properties that, because executive boards feel responsibility to shareholders, they may decide it is not the best course of action. Plus, since we're not chain-affiliated, that plays to our advantage in the perception issue."

Though some corporate business overall has declined at the Tenaya Lodge at Yosemite of Fish Camp, Calif., meetings of less than 20 people, including executive board events, are up sharply over the past year, said general manager Jonathan Farrington.

Farrington attributed the rise, in part, to Tenaya's remote location and to executive boards' desire to meet about the rapidly changing business climate.

But even with the spike, corporations are taking some measures to reduce their bills.

"They still want to book leisure activities, but now they'll ask how much it costs," Farrington said. "Plus, they'll adjust the room block so that not every attendee stays every night. Instead of four nights of 20 rooms, it might be two 20-room stays bookended with 10 room nights on each end."

This is indicative of the quest for solutions meeting buyers have undertaken. The level of cost-cutting creativity demanded for these meetings is higher than that of other internal meetings, which today often are canceled without extensive exploration of alternatives (Meetings Today, April 23). Therefore, some corporations have gone to great lengths to condense the greatest amount of conferences in the smallest amount of time, which has led to some requests very atypical of the market.

"We're getting requests for one-night stays, which we've never seen before," said Nancy Devine, director of sales and marketing at the Sunriver, Ore.-based Sunriver Resort. "The cutbacks in meetings we've seen aren't in executive boards, which we're booking as fast as we did last year, but in larger incentives or sales meetings. But executive boards are sensitive to perception, and they're shortening their stays."

Devine also added that few companies have chosen to downgrade properties, choosing instead to shorten their stays or cancel outright.

Every corporation struggles with balancing the need to cut costs with the need to offer executive management premium service, however.

"We're very lucky, because our executives are pretty down to earth and not high maintenance," said Leslie Veenhuis, meetings and events manager for Ventura, Calif.-based Kinko's Inc. "We don't hold executive retreats, and they are amenable to staying in different types of properties, depending on the event, including downtown, suburban and airport hotels, and conference centers too. The meetings are short and there's no leisure activities. Basically, the executives get a decent meal and then they're gone.