<B>Downturn Decreases Mtgs.</B>
By Chris Davis
Several of the largest tech corporations in the country drastically have slashed their meetings programs--in some cases, reducing the total number by half--representing millions of dollars of meeting spending cut because of economic conditions.
Hewlett-Packard, Motorola and Nortel Networks, all members of BTN's Corporate Travel 100 list of the largest spenders and all beset by layoffs and declining profits and stock prices, have mandated that any meeting held must involve some sort of revenue-generating purpose, be it customer interaction or sales promotion. Other technology companies are right on their heels and are preparing to issue similar decrees, and the trend may spread to non-technology companies as well.
"This is happening around the industry," said Evelyn Laxgang, director of strategic programs and events at Schaumburg, Ill.-based Motorola and chairman of the board of Meeting Professionals International. "We're making decisions on a case-by-case basis, but if it's not an event that's customer-driven and is only internal, it won't go through unless the validated return on investment is critical to the company."
Laxgang said Motorola has not issued a ban on internal events nor have they mandated a specific level of cutbacks in meeting expenditure. Given the current climate and Motorola's recent announcements of 22,000 pending layoffs, however, there is increased awareness of determining the necessity of meeting spending.
"Meetings need to be customer-driven, and sponsors need to know what they want to achieve and if there's a better way to go about it," Laxgang said. "The goals for each event may be different, but it's important that they are identified and that we're looking at the right venues and other ways to leverage the message."
All that said, Laxgang stressed that the downturn has provided meeting buyers and managers with a chance to prove their worth to their corporations. "There is an opportunity here," she said. "You can increase your visibility if you're asking the right questions and there is a strategic plan."
Bob Lichtman, principal of Incline Village, Nev.-based consultancy Corporate Solutions Group, said he expects the rest of the industry to follow the technology companies in instituting major cutbacks, particularly financial services and manufacturing corporations.
"There's a very significant move to eliminate unnecessary meetings or to bring meetings at other sites in-house," Lichtman said. "The reduction has been most dramatic in technological companies, but some of our other accounts are reducing, though by not as much. Until we see the market turn around and see that enthusiasm, which is probably a year away, we will see corporations continue to tighten their belts in terms of meetings and travel."
Hewlett-Packard Co. has banned all meetings that do not include direct interaction with customers or are related to overall cost reduction, representing about half of all events, said meeting program manager Rich Del Colle.
"We have canceled meetings," Del Colle said. "It's quite simple: All meetings must be associated with revenue generation, which means that there must be meetings with customers. The Hewlett-Packard face-to-face meetings are not happening."
Del Colle said there has been a "minor let-up on the controls" that expanded permissible meetings to those dedicated to pursuing cost-cutting measures, but even those must be approved by a Hewlett-Packard general manager, which is a new qualification.
The new procedures have cost Hewlett-Packard in cancellation fees paid to hotels, a process that has necessitated Del Colle's team to review every contract of every scuttled meeting.
"If they were negotiated right, we pay the fee," Del Colle said. "If not, and the cancellation fee is based on the full revenue of the meeting and not lost profit, then we negotiate with the hotel, which has been successful."
Nortel Networks also is cutting meetings and has laid off 9,000 workers this year. "We've cut meetings in half," said David Cegelski, Richardson, Texas-based senior manager of integrated marketing at Nortel. "We went back and looked at all our programs and made the decision based on business need. All executives were involved in that decision."
Cegelski said that several existing, booked events were canceled and that he doesn't anticipate any change in the company's new meetings policies in the immediate future.
One newer technology company beginning to feel the pinch is Palm Inc. of Santa Clara, Calif., which has canceled only a few small meetings up to this point but likely will restrict more meetings in the immediate future, said manager of global travel and meeting services Vickie Smith. A decision to stage only those meetings deemed by management to be "business critical" is likely to be made in short order, she said.
"We're currently putting together a cost-control strategy and looking very closely at meetings," Smith said. "We consider business-critical meetings to be customer-driven or sales-driven. We deem teambuilding, for example, very important, but right now it's not our top priority. Things like employee meetings, offsite meetings or company dinners will likely be placed on hold."
One cost-cutting trend that does not seem to be taking hold is downgrading onsite meeting services. Lichtman does not believe corporations will seek to hold meetings stripped of all amenities.
"We're not seeing a huge shift to downgrade venues," Lichtman said. "Senior management has realized that you don't save money by reducing the services that attendees enjoy. You see far more savings by reducing the number of meetings."
The reduction of meetings trend is beginning to be felt by hotels, particularly those that count technology company meetings as a key base of business.
"We have not seen a major up-tick in cancellations and lead generation is still healthy, but we have heard that the technology sector will trim costs in the second and third quarters," said David Johnson, executive vice president of sales and marketing for Wyndham International. "Technology companies will be very hard hit and they're big providers of meetings, especially high-end ones. We don't see these types do edicts in other sectors, though.