Proving a return on investment and having a written emergency/contingency plan seem to be about the furthest things from a meeting planner’s mind, at least according to the results of the 2007 Meetings Market Trends Survey, conducted by Meetings Media, the publisher of Meetings West.
Shocking as it may seem, considering all of the calamities that have heaped misery on the U.S. and the world during the last few years, nearly 60 percent of planners admit they still don’t have a written disaster plan—potentially leaving their attendees and organizations in the lurch.
And even though proving return on investment, or ROI, has been a meetings industry educational battle cry for the past who-knows-how-long, nearly 68 percent of planners are still not required to prove what they do is worth it to the folks who hold the purse strings and control their careers.
View from the Mountaintop
It’s no secret that the meetings industry has been in a sellers’ market for the past couple of years, with hotels raking in record profits after a spasm of acute pain following 9/11 and the cooling of the economy following the late-’90s boom.
The fortunes of the hospitality industry and the overall economy, of course, correlate directly with the fortunes of meeting planners and the organizations they represent, and it seems that occupancy rates and room rates in the U.S. will be on the increase at least until the end of this year or into early 2008, when additional hotel inventory will be nearing the end of the pipeline.
“Overall, hotels are in the driver’s seat for 2007,” predicts Jan Freitag, vice president of Hendersonville, Tenn.-based Smith Travel Research (STR), a leading hospitality industry consultancy. “Occupancies for the hotel industry are going to flatten out and rates are going to go up at double the rate of inflation—6.5 percent is our forecast.”
Freitag says last year STR predicted rates were going to increase 6.7 percent during 2006. So far, according to STR’s count, rates are up 7 percent through October, but should have settled down during the last quarter of 2006 to a rate slightly above its prediction.
Room rate increases in first-tier U.S. cities, however, are expected to come in substantially higher once the final numbers are tallied.
“If you look at downtown New York or downtown Boston or the Waikiki area, we’ll see double-digit increases in [2006] alone,” he predicts. “As far as downtown locations in the top 25 markets—good luck.
“If you want to meet on a Wednesday night in New York City, you’re going to pay,” he continues, “and it will probably be very close to transient rate.”
Another major meetings industry player, Orlando, Fla., may see additional room inventory affect its occupancy and room rates, however.
“We’re hearing a lot about Orlando getting new supply, while at the same time the occupancy seems to be flattening out,” Freitag says, “because a lot of leisure travelers are using alternative lodging, such as timeshares and condo-tels.”
Additional sleeping rooms coming into the market this year may be even more significant in second-tier destinations, Freitag predicts.
“The pipeline is heating up, so there will be more hotels coming into the market, especially in second-tier cites,” he says. “That will ease occupancies in the end of ’07 and beginning of ’08, which may give meeting planners more negotiating room.”
Until that time, meeting planners may be able to gain at least a little traction when negotiating by leveraging the competitive nature of the hotel business.
“Make sure that you’re aware of what the in-room amenities are—there’s a lot of good amenity upgrades going on,” he says. “What hotels call the amenity creep—the ‘Bed Wars,’ the ‘TV Wars’—consumers simply call ‘better amenities.’ Be on the lookout for whether the hotels are comparable in age and amenities, and check out how recently they’ve been renovated.”
Even though it may be difficult to negotiate on rate for most of this year, many properties may be willing to budge on adding amenities—such as free high-speed Internet access and parking—to the room rate. Additionally, meeting planners who have the luxury of booking far in advance, or who can take advantage of inventory that comes on the market on a fairly short timeframe—such as when other groups cancel—can reap an additional negotiation advantage.
“Hotels are in the driver’s seat, rates are up, the pipeline is strong, but not through the end of ’07 and ’08,” Freitag concludes. “Hotels are charging more, but they’re giving more.”
What Planners Say
Every year, Meetings Media polls its readers on a variety of questions as part of its Meetings Market Trends Survey, with the results published in the first print editions of the year, and also on MeetingsFocus.com.
Meeting planner respondents to the survey echo Freitag’s predictions, believing that prices across the board will continue to rise substantially in 2007.
“I believe 2007 will be a good year, though I do see costs, particularly for airfares and hotels, rising,” says Elizabeth Dackson, manager, continuing education and conference planning program for Tampa, Fla.-based H. Lee Moffitt Cancer Center & Research Institute. “Our budgets will have to increase as a result, but I do not feel attendance will rise significantly for my department in 2007. We are still learning more about marketing and promoting, and I hope to see us build upon that knowledge base this year, and see our knowledge pay off in 2008.”
Gloria Nelson, CSEP, owner of Winneconne, Wis.-based Gloria Nelson Event Design, also thinks suppliers will have a robust 2007.
“I think 2007 will be good for the hotel and conference/convention facilities with revenue, as it’s a sellers’ market presently,” Nelson says. “The costs of all goods and services continue to rise, yet the line for meeting and event management is cautious in trying to keep pace as we find clients want the same or more for the same or less in fees for professional services. We walk a careful line in good fiscal stewardship with all resources.”
Although Kay Bothwell, CMP, a planner for the Department of Labor and Employment/Division of Workers’ Compensation/Physicians Accreditation in Denver, agrees, she tends to see a silver lining on the increasing costs cloud.
“Yes, I believe 2007 will shape up to be a good year for the meetings industry,” she says. “Travel is becoming easier, and people are more willing to travel then they were for a while. I hate to say it, but I see costs going up…as the need increases for meeting space and services, the prices are going to go up.”
Planner Demographics
The composition of the meeting planner universe—whether they are corporate, association or independent planners—changed very little in this survey when compared to the last survey, conducted in October 2005. The number of independent planners increased 1.5 percent, corporate planners decreased 0.7 percent and association planners decreased 0.8 percent.
An overwhelming number of planners across the board don’t report to a procurement department, as only 11.7 percent of corporates, 6.5 percent of association planners and 11.7 percent of independents said they answer to the bean-counters. Trend-wise, year-to-year, corporates reporting to procurement decreased 1.3 percent and independents fell 3.6 percent.
A significant number of planners across all segments in this year’s survey responded that their organization does not support their career growth in the form of CMP/CMM training (-2.5 percent, corporate; -4 percent, association; -5 percent, independent), while the number of planners who say they receive no training also increased (2.7 percent, corporate; 0.9 percent, association; 1.1 percent, independent).Those responding that they received informal internal training decreased 9.3 percent with corporates, but increased 6.7 percent with association planners and 4.9 percent with independents.
Professional association membership responses told an interesting story this year, as the number of independent planners who said they belong to MPI decreased 6 percent when compared to the previous survey. Association planners who belong to ASAE fell 2.7 percent, and the number of association planners who pledged allegiance to PCMA dropped 3.5 percent.
When it comes to who won the meeting planner association horse race, MPI came out on top, with 43.8 percent of all respondents saying they were members, which was almost exactly the same as the previous survey’s response. Planners who said they belong to an “other” organization came in second, at 40.5 percent, ASAE claimed third place, with 21.2 percent, and PCMA grabbed fourth, with 16.1 percent of all planners saying they were members.
Anatomy of a Meeting
The median range for the duration of a typical meeting was three days across all segments in this year’s survey, which didn’t change from the previous survey. The percentage of corporate planners who responded that their typical meeting was one day in duration (13.8 percent) increased 5.5 percent this year, however, and half-day meetings decreased 2.4 percent in the corporate segment.
“There’s not been much of a change,” says Beverly Witt, CMP, a meeting planner with State Farm Mutual Automobile Insurance Company in Dallas. “Though some departments have tried to scale back on the number of overnight stays due to budget constraints.”
Jaime Barnhart, with Arlington, Va.’s Employee Assistance Professionals Association, says even though the length of her annual conference is holding steady at three days, more and more is being packed into the schedule.
“We are in a constant struggle for ‘enough time,’” Barnhart says. “At this point, those three days are packed tightly, with very little free time for attendees.”
Planning cycles have also seemed to settle when comparing this year’s survey to last year’s, with association planners booking a bit further out (the average increased from 10.8 months to 11 months), corporates basically remaining the same (6.4 months in the 2005 survey compared to 6.3 months in the 2006 survey), and independents cutting a month out of their average planning cycle (8 months in 2005; 7 months in 2006).
The most significant movement in individual segments revealed that independents who responded that their typical planning cycle is between two to three months increased from 19.9 percent in 2005 to 27 percent in 2006; association planners claiming seven to 12 months as their typical planning cycle jumped from 31.4 percent in the 2005 survey to 40 percent in this year’s edition. The most significant change in the corporate planning cycle was in the seven- to 12-month range, with 5.3 percent more in this survey responding that this is the length of their typical cycle.
The median planning cycle reported in the survey was four to six months for corporates and independents, and seven to 12 months for association planners.
Planners in general seem to be offering less activities in their programs, with casinos/gaming showing a 2.6 percent drop overall (-3.7 percent, corporate; -10.1 percent, association; 6.8 percent increase, independent).
Spousal programs fell an average of 4 percent across all segments (-2.9 percent, corporate; -4.2 percent, association; -5.3 percent, independent), while golf fell 1.2 percent with all planners, although it showed a healthy increase—9.4 percent—with corporate planners, who incorporate golf the most.
Two of the planners interviewed for this story noted that they are using more creative activity options, perhaps owing to the demands of a younger client demographic.
“We’re using less activities, but we are getting more creative in the activities we schedule,” says Brigitte Mondor, CMP, senior event manager for Montreal independent planning company EvenImage. “Thanks to shows such as The Amazing Race, scavenger hunts are getting more elaborate, requiring more teamwork and pushing delegates to new limits.”
Nelson, of Gloria Nelson Event Design, concurs.
“Activities are necessary, with 70 million Boomers postured on the doorstep of retirement, and with 80 million Gen X, Gen Y and Millennials waiting to step into their shoes,” she says. “This is an entirely different type of marketplace member…so edutainment, infotainment and high-tech general sessions and networking opportunities are not only important, but all sorts of experiential meeting and marketing tools are being pulled out of a new bag of event and meeting management tricks of the trade.”
More planners overall—4.4 percent—are using boutique hotels in this year’s survey (5.5 percent more, corporate; 3.7 percent more, association; 3.6 percent more, independent), as is the case with conference centers (2.5 percent more, overall; 7.3 percent more, corporate; 3.6 percent more, association; 5.5 percent fewer, independent). The use of independent hotels was up 4.5 percent overall (2 percent more, corporate; 5.6 percent more, association; 6 percent more, independent). Corporates also trended upward, to the tune of 8.1 percent, in their use of special venues.
Although respondents indicated rates were the primary driver in their hotel selection (86.8 percent overall indicated as such this year), it is perhaps surprising that guest room technology fell 5.3 percent in this year’s survey (-6.3 percent, corporate; -1.4 percent, association; -9.9 percent, independent). Meeting room tech held level, however, increasing a half a percentage point overall from the previous survey and, coming in at 39.8 percent.
“Naturally, this depends on the type of meeting or event,” says Terry J. Onustack, CMP, director of operations and marketing for Seattle-based Moore Presentations, about her amenities preferences. “For an incentive program, amenities at a property are key. I look for a quality spa, a variety of restaurants, top-notch service, a helpful concierge, good catering, and nice facilities—pools, beach, etc. This is less important for conventions or conferences, but it is always nice to be able to offer these services to attendees.”
Financial Trends
Attendance at meetings over the previous 12 months stayed roughly the same when comparing the 2005 numbers with this survey’s results. There was an increase of 2.2 percent of the number of corporate planners who said their attendance decreased by more than 10 percent. Five percent more association planners in the 2006 survey responded that their attendance had increased up to 10 percent during the 12 months before the survey was conducted.
The majority of respondents are bullish once again this year that the number of meetings they hold will increase, with 27.3 percent overall predicting a jump (34.3 percent, corporate; 29.6 percent, association; 36.7 percent, independent). After a similar positive showing in the October 2005 survey, this can only mean that the outlook is good for the meetings business—up, up, up.
Planners also reported getting larger budgets in the past fiscal year, with 28.3 percent overall allowed to work with more monetary resources for meetings (24.7 percent, corporate; 22 percent, association; 27.1 percent, independent); 21.3 percent said they were given less funds (25 percent, corporate; 16.2 percent, association; 23 percent, independent).
Respondents were even more optimistic about their budgets rising during the next fiscal year, with 30.3 percent overall expecting a budget boost (24.2 percent, corporate; 33 percent, association; 35 percent, independent). Only 12.2 percent of all planners expected to get less budget money next year (13 percent, corporate; 10.4 percent, association; 13.8 percent, independent).
Taking it as a given that room rates are increasing, 63.9 percent of planners overall said they have pared down a portion of their meeting program to counter higher prices, with 35.4 percent using less-expensive properties and 25.1 percent cutting back on their catering budgets; 20.8 percent are compressing their meeting and event schedules, while 19.5 percent are planning meetings and events that are shorter in duration.
Proving ROI, it seems, is hardly a do-or-die issue in the minds of meeting planners, according to the results of the survey: 67.6 percent say they are not required to prove a return on investment. Of this number, a rather shocking 73.8 percent of corporate planners say they aren’t required to demonstrate ROI—the highest percentage of any segment, as 65.8 percent of association planners and 61.7 percent of independents responded the same.
The message that meeting planners should have an emergency/contingency plan still hasn’t sunk in, either, with 57.8 percent overall admitting they don’t have a written plan (60.2 percent, corporate; 61.1 percent, association; 50.2 percent independent).
