Meeting budgets should remain steady in 2008 even as costs rise, particularly in the hotel industry, requiring buyers to be flexible and creative to keep spending under tight control, consultants said. Although most corporations have not shown much interest in large-scale meeting cutbacks, buyers are exploring limiting the number of attendees, shortening event length, deploying remote conferencing tools and creative hotel negotiations.
"There's pressure on cost savings for internal meetings," said Peter Moen, vice president of global business development for Carlson Marketing Worldwide. "Companies are trying to have maybe fewer, smaller employee meetings."
Budgets in general are not expanding, said Paul Salvatore, president of events and meetings management and loyalty programs at HRG North America, but neither does he see any pullback in events his firm already has contracted or is researching.
"We're in a stay-the-same mode," said Scott Graf, president of meetings management firm BCD Meetings & Incentives. "BCD does not see a decrease in the number of meetings. There is as much of a need now as ever to get people together. We're being challenged to do more with less."
Doing more with less for many buyers entails a level of strategic planning beyond negotiating better deals with hotels and other meeting suppliers. "Meetings volume isn't going up too much, but because costs are going up, we're seeing other ways to cut costs, like potentially decreasing the duration of event or limiting the number of attendees," said Christina Wilkes, advisory services practice leader for American Express Business Travel. She added that one way to consolidate meeting expenditures is to look at local meetings to minimize airfare, although others said that the culture of a company dictates whether regional or national meetings will be more cost-effective.
"If you have six regional meetings and you're shifting to one national meeting, you don't have six different places to hire entertainment. You only have one," HRG's Salvatore said. "Yet, there's a need for regional meetings as well. People don't have a sales meeting just to have a sales meeting; there's a need there. The companies we deal with recognize the need to do these meetings. The six-region meeting may take precedence because they don't want to put money into an air budget, and they had people drive to their destination. It just depends on the culture of the company."
Rather than cutting the overall number of meetings in 2008, TMC executives said buyers should look into other options, including decreasing the amount of people attending meetings and deploying remote conferencing.
"They're using Webconferences, they're shortening the length of the meeting and how many people go to the meeting," Carlson's Moen said.
"Adjusting the type of event you plan or the duration of the event can help offset the cost," BCD's Graf said.
In many cases, the largest part of a meeting budget is for hotel rooms and services, but there is disagreement over whether the hotel industry will continue to be a seller's market in 2008 or whether a shift will occur in the buyers' favor.
"We're seeing a bit of softening in the markets. There is new product coming online which will help," said Carlson's Moen, reiterating his statements made during a session at July's NBTA International Conference and Exposition in Boston
(Meetings Today, Aug. 13).BCD's Graf pointed to an increase in the supply of hotels that can host corporate meetings as a reason for at least cautious optimism. "I still think '08 will be a seller's market, but as the year progresses, there will be a better balance between a buyer's and seller's market," he said. "Maybe by the latter half of '08, we might be able to say there is a shift taking place to a buyer's market."
However, others dismissed the idea that the years-long seller's market is softening. Greg Malark, COO of Scottsdale, Ariz.-based site selection firm HelmsBriscoe, said that he anticipates "rates continuing to increase in the top markets, somewhere in the 5 to 7 percent range. We don't see the supply exceeding the demand. We don't think that is going to have any negative pricing impacts across the board for the hotel companies."
Amex's Wilkes said "all indications" are toward a continued seller's market in the hotel industry
http://www.btnonline.com/businesstravelnews/headlines/frontpage_display.jsp?vnu_content_id=1003636947(see story). "We expect that the hotel industry is going to continue to drive up the cost of doing meetings," she said.
Regardless of whether the hotel industry seller's market eases, TMC executives said that buyer flexibility also could pull down prices to meet budgetary goals. For example, BCD's Graf pointed to seasonality.
"We push our clients to look at more off-peak periods than they might have before and look at more basic things, like just changing the day of the week patterns," Graf said. "Little things like that, while they appear to be little, can make a big difference in the budget."
HRG's Salvatore said he sees more interest in multiyear contracts, both with individual properties and with a single hotel chain. Shortened lead times can negatively impact a budget, he said.
"Whereas we used to see several months of lead time for smaller programs, we're now seeing lead times on those meetings of a matter of weeks," Salvatore said. "It leaves you less room to negotiate."