Rock-bottom room rates, relaxed or non-existent attrition policies, plummeting attendance and slashed meeting budgets. Last year was an exercise in survival for many as market forces built to hurricane force and tore through the hospitality and meetings industry.
But while the reeling economy and media and government perception problems roiled both buyer and supplier last year, many planners interviewed as part of this year’s Meetings Market Trends Survey expressed optimism that although the last year was the pits, to put it mildly, better times may be just around the bend.
Ask the Expert
Meetings Media has interviewed trend-watchers at Hendersonville, Tenn.-based hospitality industry consultancy Smith Travel Research (STR), which is hired by suppliers to provide market data, every year the study has been conducted, and the response this year was hardly muted from the supplier perspective.
"2009 sucked in terms of performance," says Lana Yoshii, vice president of STR. "It was a perfect trifecta of everything that could go wrong, and probably the most painful to the hotel industry in history. We were down 5.8 percent in demand in 2009 when compared to 2008, and we were down 1.9 percent in 2008 when compared to 2007.
"That ain’t good," Yoshii continues, "and what exacerbated that problem was supply growth. The lending institutions had money they wanted to lend to everyone and they did. In 2009 we grew supply by 3.2 percent, so supply went up and demand went down, and occupancy plummeted."
According to Yoshii, 2009 finished with a hotel occupancy rate wallowing at 55.1 percent (2008’s occupancy rate was 60.3), and while demand increased by more than a point, as reflected by December 2009 numbers, stagnation may be the scenario for this year.
"We expect occupancy to basically be very flat in 2010," Yoshii says. "We’ve seen demand increase [in December], and I think that may be a good sign, but it’s still early. The rate of decline of demand is still faster than the rate of decline of supply. There were more heads in beds in December 2009 compared to December 2008; the problem is we have more beds—we were up over 3 percent in supply."
All of this translated into a sharply reduced average daily rate (ADR), which STR said was down 8.8 percent year-over-year, with projections of a further 3.2 percent decline in 2010.
"We’re not projecting average daily rates to be in the positive range in terms of annual numbers until 2011," Yoshii says. "We think the discounting that happened in 2009 is going to bleed over into 2010, and when [hotels] start seeing positive growth, it’s going to be too late. Booking windows are shorter, [planners are] threatening to leave and go somewhere else. They’re playing chicken because they know there’s somewhere else with rooms."
But if all this sounds like meeting planners are in high clover, you may want to read on. Maybe you’ll discover something you already know.
Perceptions & Reality
Misery loved company in 2009, as while hotels and other meeting facilities suffered rock bottom occupancy rates and ADR, the job of planning meetings swam in the same dangerous current. Adding fuel to the fire was the continuing fallout of the "AIG Effect," which invoked the wrath of politicians and rocked high-profile destinations and luxury properties, challenging the very legitimacy of face-to-face meetings.
In short, perceptions became a harsh reality in 2009, resulting in major financial institutions such as Wells Fargo cutting many of its meeting programs and making planners and their organizations gun shy about where, when and how to hold meetings.
Asked for the first time in this year’s Meetings Market Trends Survey whether public perception issues affected their choice of destinations, 57.3 percent of planners across all segments responded yes (51.5%, association; 61.3% corporate; 54.5%, independent; 75.7%, government). When asked if public perception affected their choice of facilities, 59.1 percent of all planners answered in the affirmative (51.3%, association; 63.4% corporate; 59.4%, independent; 70.3%, government).
"Perception played a huge role in planning meetings in 2009," says Amanda Bigley, associate director of events & education for the National Association of Federal Credit Unions, based in Arlington, Va. "We were extremely sensitive to marketing or planning any event at a resort-style hotel. We needed to maintain a financially responsible focus for our members. The goal has been to provide quality education first and foremost. We will definitely shy away from luxury properties and resorts again this year."
Overall, 10.6 percent more planners in the survey conducted in October 2009 (when compared to the same question asked in 2008) said government regulations have made them more mindful of appearing extravagant (14.2% more, association; 7.8% more corporate; 13.2% more, independent; 1.2% more, government). Nearly 18 percent more government planners responded that they are spending less money on each event and the approval process is more strict.
Beyond tighter government regulations, the negative perception problems stemming from what many consider overly harsh, and unfounded, rhetoric from lawmakers put the brakes on upper-end and even overseas meeting programs.
"Any destination outside of the U.S., with the exception of the Caribbean, Mexico and Canada, is viewed as too extravagant right now," says Buffalo Grove, Ill.-based Karen Back, manager, meetings and travel for the American Board of Psychiatry and Neurology.
But while perception problems have caused many planners to course-correct, some that have been handed lemons made lemonade.
"We’re seeing a focus on second-tier cities, resorts that haven’t typically been considered before, etc., so there is certainly consideration being given to the perception of locations and resorts chosen," reports Scott Shellman, partner with Coeur d’Alene, Idaho-based Framework Meetings & Destinations. "On the flip side, one of our clients has taken the downturn as an opportunity to book programs in resorts that they haven’t previously been able to afford, so it has benefitted and hurt some properties based on the make-up of the group.
Budgets
Meeting planning budgets took a big hit in 2009, with 14.2 percent more planners responding that their budgets decreased more than 10 percent in the past fiscal year (14.8% more, association; 11.3% more corporate; 14.4% more, independent; 26.4% more, government), with 12.5 percent less overall saying they had no change in their budget.
For 2010, planners were less than optimistic that their budgets would not be slashed further, with 18.5 percent of all planners expecting a cut of more than 10 percent this year (19.2%, association; 16.5% corporate; 20%, independent; 21.6%, government). Twenty-three percent of all planners believe their budget will fall up to 10 percent and 42.3 percent expect it to stay the same as their 2009 number.
"The budget was definitely tighter and every expense was scrutinized more than in years past," says Jennifer Winn, owner and national event planner for Dallas-based Winn Events. "There were no excess expenses at the events this year."
But while there’s much more scrutiny in terms of budgets, meeting planners by and large still aren’t required to demonstrate the return on investment (ROI) of their programs, with 64.5 percent saying they weren’t held responsible for reporting ROI. Still, that percentage decreased 2.3 percent from the 2008 survey, led by 8.3 percent more association planners who said they have to demonstrate ROI.
Attendance & Frequency
The reduction in budgets was accompanied by a decrease in attendance last year, with 16.1 percent more planners responding that their attendance fell by more than 10 percent (20.4% more, association; 11.5% more corporate; 18.7% more, independent; 8% more, government); 13.5 percent less planners in this year’s survey said attendance stayed the same.
"In 2009, if the meeting was not canceled entirely, the attendance was reduced by 25 to 50 percent," says Heide Kraus, CMP, a Brookfield, Wis.-based global account executive for ConferenceDirect.
Dale W. Shuter, CMP, meetings & expositions manager for the St. Louis-based Electrical Apparatus Service Association, says that the economy was first in line when it came to hand out blame for her association’s drop in attendance.
"Attendance at our annual was down about 18 percent in 2009," she says. "Attendance at our seminars is about the same. We feel the lower attendance at our annual was due to the economy. Many of our members have had to lay off employees and they feel that if they had attended the meeting after laying off people it would not be good for the morale of the remaining employees. Smaller companies just did not have the money to attend."
The outlook regarding the number of meetings held in the 12 months following the survey, however, was fairly optimistic, with 45.7 percent of all planners expecting it to remain about the same (53.6%, association; 42.9% corporate; 41.8%, independent; 43.2%, government). Overall, 13.7 percent of planners believed the number of meetings they will hold in the 12 months following the survey will increase (8.4%, association; 15.5% corporate; 17.9%, independent; 8.1%, government).
Attrition & Room Rates
It seems there were two elephants in the room suppliers didn’t want to talk about last year, as the poor economy paired with decreasing attendance resulted in attrition clauses being relaxed to the point of non-existence and room rates dropping to the substructure.
Nearly 19 percent more respondents said allowance for attrition slippage increased in the year before the survey was conducted (16.5% more, association; 22.3% more, corporate; 17.8% more, independent; 8.1% more, government) and an astounding 15.8 percent more planners indicated that attrition fees were dropped all together (18.8% more, association; 18.6% more corporate; 10% more, independent; 5.4% more, government).
To get an idea of the magnitude the attrition enforcement swing, the survey conducted in 2008 found that 2.2 percent of association planners said the clause was dropped from their contracts; that number increased to 21 percent this year. Corporate planner responses to the same question went from 5.5 percent to 24.1 percent; independent planners went from 5.7 percent to 11 percent; and government planners went from 6.8 percent to 16.8 percent.
"Attrition costs hit us hard in the first and second quarters of last year. Our room blocks simply weren’t being filled and the hotels were feeling as much pain as we were," says Bigley, with the National Association of Federal Credit Unions. "Moving forward, hotels were much more inclined to present contracts that contained 80 to 85 percent attrition or no attrition at all. You can guess which properties received our business—those with zero to little attrition clauses first!"
There was little debate in this year’s post-survey interviews when it came to the negotiating strength of meeting planners regarding room rates. Last year was most definitely a buyer’s market; expect it to continue through 2010.
"Considering our small volume, we have seen a dramatic increase in our opportunities to leverage reduced rates," says Molly Marsh, director of events and programs for Lexington, Ky.-based Omicron Delta Kappa Society. "I have seen discounts of up to 35 percent on many of the properties we regularly work with, even for our very small meetings."
Jennifer Winn, from Winn Events, says 2009 has been akin to time travel when it comes to room rates.
"I have found hotels to be hungry for business and willing to lower the room rates in order to gain business," she says. "The rates have been close to what I used to get a few years back."
Socializing & Tech
Another new addition to the survey this year polled planners on what social networking websites they use for business. Although a little more than 42.2 percent indicated they don’t mix business with online social networking, business-focused LinkedIn came in first at 42.5 percent of all of the planners who use online social networks in the course of their job.
The runners up were Facebook (34.6%), Twitter (22.5%) and Plaxo (7.6%), with 2.2 percent indicating "other." Interestingly enough, Facebook was the most popular choice among association and government planners.
"Twitter, Facebook, LinkedIn. These are a great way to let others know more about your business, what programs you’re working with, as well as networking with potential clients and suppliers," says Shellman, with Framework Meetings & Destinations. "This is a networking business, so the more exposure you have, the more your name gets into the hands that can benefit your business, as well as solve their needs."
Getting hip to the communication preferences of her membership was the primary reason one planner caught the social networking bug.
"I think that social networking is vital to all organizations right now, simply based on how much information is shared through them," says Marsh, with Omicron Delta Kappa Society. "Specifically for us, it’s a necessity due to the fact that the vast majority of our 8,000 new members each year are college students, and that is one of the primary ways they communicate. We use Facebook, LinkedIn, Twitter and YouTube for a variety of different areas of our organization."
Socializing face-to-face for business is taking a big hit as the poor economy cuts into professional association and travel budgets—not to mention the hassles of air travel—and the negative perceptions that may accompany familiarization trips that may be labeled a "boondoggle."
When asked how many FAM trips they had taken in the 12 months before the survey, 67.6 percent responded "none" (71% association; 68.8% corporate; 61.6% independent; 68.4% government) and 27 percent said less than three. Overall, nearly 5 percent more planners in this year’s survey said they do not participate in FAM trips, led by a drop of 7.3 percent in the corporate planner segment.
A growing number of meeting planners have cut back on inspecting a hotel before booking a meeting, with 7.3 percent more overall responding that they check out a property less than 10 percent of the time before committing their group (8.6% more, association; 8% more, corporate; 2.7% more, independent; 13% more, government).
Career growth and continuing education presented some interesting trending information this year, with 7.7 percent more planners responding that their organizations did not support their participation in educational events (12.1% more, association; 11.4% more, corporate; .0.7% more, independent). Conversely, the trend numbers pointed very much in the positive direction for government planners, with 16.7% less this year saying their employer didn’t support their continuing professional education. Nearly 4 percent more planners said they had no training at all, led by an increase of 6.2 percent of corporate planners, 4.3 percent of association planners and 4.1 percent of independents; government planners also reversed the trend here, with 19.4 percent less saying they received no employer-financed training.
In the professional association sweepstakes, MPI came in first, with 38.4 percent of respondents saying they were members (a drop of 4.6%), followed by "other" at 35.5 percent (a drop of 9.3%), ASAE at 19.7% (a drop of 1%) and PCMA at 14.6 percent (which actually grew by 1.3% from the previous survey).
Rather than attend live educational events such as those offered by national meeting planning organizations and their local chapters, this year’s survey showed a somewhat significant jump in the number of planners who go online to get their continuing education, with 37.3 percent of planners saying they participate in webinars (a 4.2 percent rise in the number of planners who responded the same in the previous survey). This was led by corporate planners (41.2%, up 9% from the survey conducted in October 2008) and followed by government planners (40.5%, down 1.1%), association planners (39.4%, up 3.5%) and independents (29.1%, up 0.1%).
Stress & Satisfaction
When asked what the biggest challenge will be when planning meetings in the coming year, respondents overwhelmingly said "lower budget" (50.9% of the total) and "declining attendance" (31% of the total). The percentage of increase for these two responses year-over-year stood out the most, however, as 23 percent more planners answered "lower budget" this year (16.9% more, association; 27.2% more corporate; 25.2% more, independent; 20.6% more, government) and 14.4 percent more answered "declining attendance" (23.2% more, association; 7.6% more corporate; 15.5% more, independent; 10.5% more, government).
This year we again asked the rather difficult question, "What do you believe is the biggest threat to your career as a meeting planner?", and more than 27 percent of planners across the board—and 44 percent of corporate planners—responded "downsizing." All of the responses indicating downsizing were up more than 10 percent from when we asked the question in the previous survey (with the exception of independents, which were only up 0.8%), including a nearly 15 percent rise from corporate planners. Nearly all other response options were down, with the exception of low single-digit increases for the response "perceived value of profession."
On the bright, however, all of the turmoil tossing the industry hasn’t resulted in a large number of meeting planners wanting to abandon ship.
Sure, the response of "extremely satisfied" with their career choice was down 3.4 percent overall in this year’s survey (led by independent planners, of which 7.2 percent less provided this response), but more than 80 percent said they were either somewhat or extremely satisfied, with 17.4 percent settling for content. Only a miniscule 2 percent of all respondents said they were not very satisfied or not satisfied at all.
And if you happen to call yourself a meeting planner, that has to be the most important statistic in the survey, whether you knew it or not.
The 2010 Meetings Market Trends Survey is a proprietary Meetings Media online study that was distributed to 38,516 Meetings Media subscribers. As an incentive to complete the survey, respondents were offered a chance to win a $200 Visa gift card. Conducted in October 2009, the survey generated 807 complete responses.
