Smaller Co. Economic Woes

<B>Smaller Co. Economic Woes</B>
<I>Midsize, Smaller Mtgs. Buyers Feel Pinch</I>

By Chris Davis

The unsettled economic climate that has led to declining stock prices and thousands of layoffs, as well as massive cuts in meeting and travel costs at large technology companies, is beginning to affect some smaller and midsize companies as well, though not with the unanimity of the tech giants.

While major companies largely have canceled any meetings that don't include direct contact with customers (Meetings Today, April 23), many smaller and midsize corporations have chosen other methods of meeting cost reductions, including switching event destinations to avoid airfares, eliminating leisure activities and reducing the number of attendees.

Until Corporate America feels it's on more solid financial ground, however, it seems that meetings programs will be targeted as a source of cost savings--regardless of the company's size or business--even as some corporations and group travel management firms note there have been few cutbacks at many corporations.

"Since the beginning of the year, we haven't been holding many meetings outside of Rhode Island," said Gail Rubenstein, director of corporate travel and meeting services for Pawtucket, R.I.-based Hasbro Inc. Hasbro has laid off about 850 employees, including the meeting planner that served under Rubenstein.

In addition to cutting down on travel costs for the meetings, which includes a heavier reliance on bus and rail transportation, Hasbro has cut significantly the number of meetings it plans to hold. "We usually have 125 to 150 meetings per year, but right now we have six scheduled for the rest of the year," Rubenstein said.

Hasbro also is holding more meetings at its headquarters, using local hotels for accommodations for attendees but skipping food and beverage and meeting space expenses.

The company still sends attendees to some of the larger industry trade shows Hasbro frequents, but has diminished the scope of its own exhibition, inviting fewer attendees and for shorter stays.

"It's the environment," Rubenstein said. "People have been laid off throughout the industry, and that impacts us as well. We'll see how our stock does and how the market is before anything can change."

Hasbro's actions may be somewhat more severe compared with other midsize and smaller companies. In fact, some insiders said the impact of the economy on meetings has been largely negligible.

"There has not been a noteworthy slowdown right now in the number of business meetings," said Jay Roseman, vice president of meetings and incentives at Mt. Laurel, N.J.-based American Express One, which counts smaller and midsize companies as the bulk of its meeting management clients. "We haven't seen a lot of air cancellations. When the economy was good, there were many special events held, and there is a drop-off in that, but not so with group incentives."

According to Roseman, because of financial pressures, some companies are moving more speedily to meetings consolidation initiatives.

"Those that were thinking about it now want to do it and those that were doing it want to do it more," Roseman said. "Corporations are focusing on tools for more efficient ways of handling data and for better procurement of hotel space."

McCord Travel Management of Chicago also has not seen major cutbacks in its clients' programs, said national director of operations Julie Carroll. "They, and we, have been fortunate," Carroll said. "All our clients are analyzing their needs, but after their strategy sessions they've decided that incentives are still worthwhile and business meetings will still go on. Our client roster, though, has many more insurance and manufacturing corporations than technological firms. Even so, I'm surprised there hasn't been more cuts. It is something we are watching for the future."

It seems that many midsize companies--unlike large technological companies that have cut meeting spending by as much as half--have not directed huge levels of cuts throughout their programs.

The senior management of Woodland Hills, Calif.-based Health Net has not mandated deep cuts in meeting spending, but director of meetings and events Tom Smith nevertheless has worked with internal sponsors to curtail the number of flights and room nights necessary for corporate meetings.

"There's been no specific directive, but we've been asked to be aware of savings opportunities and our meetings department meets weekly to discuss that," Smith said. "We've worked with internal groups to manage resources and, lately, we've moved meetings closer to the origination points of most of the attendees to avoid airfares."

Choosing nearby locations also enables Health Net to hold day-long meetings and avoid all hotel guest room costs. Given that the company includes meeting expenses in each department's individual budget, Smith said internal sponsors have been flexible regarding cost-reduction strategies. The initiatives have paid off, Smith said.

"We report to senior management monthly and keep a running list of how these initiatives have led to avoidance and savings," he said. "Every little bit helps."

Other companies report softer cost-saving measures, including eliminating leisure activities and replacing them with more meeting content. "We're cutting some leisure activities, like half-days of golf, and trying to condense meetings to cover more business topics in a shorter time," said Rhonda Thomas, meeting and events coordinator for Muscatine, Iowa-based tire tread manufacturer Bandag Inc.

Those moves cut extra room nights and the costs of leisure activities from meeting budgets, Thomas said, and Bandag saves further by holding events at headquarters, allowing the company to pay less expensive room rates at nearby hotels while avoiding meeting space and F&B costs.

"The rates around here are usually less than $100 per night," Thomas said. "We do sometimes have to bus attendees in when the local hotels run out of space, but we do save a lot of money that way."

While the cost-saving initiatives originated with senior management, a mandate to cancel events entirely has not, Thomas said. "We haven't done that," she said. "We and our sales division know what we're up against, so we do what we can.