<B>Short Term Grows Shorter</B>
By Chris Davis
As lead times for booking small corporate meetings continue to dwindle, hampering searches for desired hotel space and putting buyers in negotiations at a disadvantage, some meeting managers are adjusting their internal meeting program structures to coax sponsors to plan ahead to stem the negative financial effects of short-term events.
Some planners have looked to formal methods of meeting calendaring or registration to allow maximum lead time. Most, however, have chosen to address the issue more informally, preferring to communicate with internal meeting sponsors to impress the drawbacks of short lead times, including the increased likelihood that sponsors will not be able to get space in their preferred destinations or a meeting that fits into their budgets.
Still, this seems to constitute a minority of corporate meeting buyers. Most have focused their efforts externally (Meetings Today, March 20, 2000), forging better relationships with local and national hotel sales offices to better their luck at finding short-term space, involving third parties or incorporating outside technological systems to speed the process.
Very few have not been touched by the trend. According to a Meetings Today survey of 132 corporate meeting buyers, about 27 percent of all meetings of fewer than 100 attendees were planned and booked with less than one month's worth of lead time last year, up from the 20 percent that were planned in 1999 and 1998. On the other side, only 23 percent of these meetings were planned with more than three months of lead time, down from 29 percent in 1999 and 30 percent in 1998.
Even fewer see any relief in the near future: Only 8 percent of buyers think there will be more lead time to work with this year, and nobody thought there would be much more; about 20 percent think there will be less.
To be sure, there is no perfect or universal solution to the problems caused by short-term meetings. As any corporate buyer can attest, last-minute and pop-up meetings are simply part of the daily business lexicon, spurred by emergencies and late developments. They can never be eradicated, and they always will be part of the corporate meetings management tableau. A significant number of buyers choose to take the hit and do the best they can with the specifications sponsors offer. But other meeting buyers take a more active role.
"Four months prior to the commencement of the budget process, our management team goes out to canvas the COOs of each business unit to ascertain what their needs will be for the year following," said Michelle Lee, director of the internal client services group, which includes global travel, graphic services, corporate events and media services, at New York-based Credit Suisse First Boston. "They develop the relationship about that time so communication remains constant throughout the year, and they meet quarterly to keep event and conference planning at the forefront of their minds, whether they have something on the books or not. It's a process that we started back in August. We have done it quite consistently and we've seen some of the stress related to last-minute bookings go down. But what we have stressed to sponsors is that this is not about our convenience. This is about cost containment, quality of meetings and having enough lead time so they can get the right clients to attend."
Lee said this is the key to improving internal conference processes: impressing upon meeting sponsors that the drawbacks of short-term meetings will affect the quality of their meetings.
"We definitely have seen improvement in the level of communication and relationships between us and our clients," Lee said. "They understand this, as we have been able to illustrate why we have these conversations--it's to their benefit and it helps us better service their needs."
While some meeting managers are able to book quality meeting space in the extreme short term at reasonable rates at properties that are desperate to book, this seems to be the exception, and is most applicable when internal sponsors agree to a wide array of acceptable destinations. Many meeting buyers do not have the luxury of that flexibility, and feel the crunch of low availability and high prices when lead time is at its shortest.
"Our biggest frustration is that even when internal sponsors find they can't get anything close to what they wanted, it still doesn't change the amount of lead time they request," said Steve Clark, assistant vice president of conference and travel services for Madison, Wis.-based CUNA Mutual Group. "We get internal requests for meetings that are very meeting space-intensive without the guest rooms attached. It used to be that hotels would come back to us and explain why they wouldn't take that business, which would help in explaining the situation to our internal clients, but now they just reject the business without comment or ignore it. It's requiring more education and experience to be able to pull these meetings off.
"We have a few vendors that can turn it around, and I might send two or three RFPs to them," Clark added. "But I'll bypass national sales offices, because the days of sending out four or five requests to hotels and getting responses back from all in the short term are gone. If they have space, they're on it, but you'll get less than 30 percent response to faxed RFPs."
One internal maneuver that seems not to be effective universally is the implementation of a formal mandate regarding turnaround time. Standard business forces that, at times, dictate the necessity of a short-term meeting, betray the purpose of the mandate, some buyers said.
"Creating a policy that states you must contact the meetings department 60 days before the event simply doesn't work, and we've tried it, unsuccessfully," said Thomas Smith, director of meetings and events for Woodland Hills, Calif.-based Health Net, which holds about 1,000 meetings annually. "I take the approach that instead of structured rules or policy, it's better to treat communication with regular internal clients as an ongoing process, to ensure they know we want to better partner with them for more successful events that save money."
Centralized meetings departments generally have a better ability to document both savings and cost avoidance, as decentralized programs tend to have more difficulty compiling meeting expenditures across more than a few departments. Companies that charge all meeting costs to the department hosting the event also can emphasize what effect higher rates often paid in the short term has on that department's budget as a method of coaxing the maximum lead time for a given meeting.
Smith, for example, tracks savings for meetings planned with at least 30 days of lead time against shorter-term meetings, and can use that documentation when convincing Health Net employees to allow his department more time to plan. But, he acknowledged, there is only so much that can be done to increase lead time.
"The ongoing communication has helped, but it's not perfect and it's an ongoing challenge with both regular and rare clients," Smith said. "The health care industry changes so rapidly and is so very competitive that there is always a need to meet face to face quickly. We encourage internal clients to think and budget in advance and produce timelines, but more often than not we'll get a panicked e-mail and we'll have to step to the plate."
That said, not every company--or even every industry--is particularly bothered by the continuing trend toward shrinking lead time or has any plans to change internal meeting programs accordingly.
"The nature of the high-tech beast is riddled with change," said Katherine Fox-Ehlert, contracts manager for marketing and events for Sun Microsystems Inc. of Palo Alto, Calif. "It can be a mistake for us to plan meetings too far ahead, because then you're stuck with cancellation fees."
Fox-Ehlert believes that, at least in the hotels Sun patronizes, the theoretical lower rates charged by hotels receiving longer-term business would be outweighed by cancellation damages paid to those hotels when planned Sun Microsystems meetings aren't held.
"Actually, we don't see hotels charging less or discounting if you book longer out," Sun's Fox-Ehlert said. "With the current seller's market, we're paying either way, so it's better for us to wait until the last minute and not have to worry about cancellation fees. You just can't be in this industry and expect to plan everything well in advance."
Other buyers would like to implement internal changes but, ironically, are denied the time needed to create such a process due to the spate of short-term meetings that need to be sourced and booked. "Sometimes there are weeks and months of lead times, which is pretty decent for our small and medium-size meetings," said Allen Plumley, director of travel and meetings for Houston-based Conoco Inc. "Other times there's just a week or two, which not only results in a lot more overtime for our planners, but also takes more effort to find availability. If an internal meeting client makes a meeting request in that time frame, they may not get to have the meeting at their first choice of destination, and we may or may not be able to get space in the general area."
That said, the short-term issues at Conoco have not been serious enough for a concerted internal effort to lengthen lead times. "We haven't reached critical mass yet, and we haven't done anything internally, in part, because of how capped for time we are," Plumley said.
Still, others simply take what the market gives them. If hotels have space available in the extreme short term, sales managers may be more inclined to offer lower rates to ensure the property will avoid an empty block. Also, last-minute cancellations or attrition can create distressed hotel inventory, offering the buyer some leverage in negotiations, provided there is the flexibility to book a wide range of properties or destinations.
"I try to turn pop-ups into an advantage," said Shelly Fuhrman manager of corporate travel and meetings for Cherry Hill, N.J.-based Subaru of America. "You can negotiate incredible deals by working to find slots by zeroing in on a chain's national offices. They may tell us that the meeting must be in a particular city, which can be stifling depending on the season. But I've been able to save a lot of money, which then can be funneled into the programs themselves. As for air, we've been successful with zone fares."
Fuhrman also frequently contacts hotels that have a history of hosting Subaru events to find space in the short term. But those solutions have been developed in the absence of an internal program to increase lead time, a prospect about which she is pessimistic.
"We've tried to recommend the use of a corporate calendar," Fuhrman said. "But so many meetings and schedules are pushed around and changed that we simply don't have that luxury.