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 Double-Edged Sword
Corporate meetings lead times shorten on small programs; lengthen on others
By MARSHALL KRANTZ
When it comes to lead times for booking corporate functions, meeting planners seem to be of two minds. They’re booking larger meetings on longer lead times but the far more numerous smaller meetings are being done on short lead times of 90 days or less. Both methods, though, take the bottom line into account.
Diana Marinos, senior project manager on the event team of Boston Scientific, exemplifies the dual strategy that many planners are deploying.
At present, Marinos has booked the medical technology company’s annual national sales meeting for 2,000 people on a two-year lead time, through 2014. But this summer, she expects to receive approval to book the event with an extra year of lead time, or even possibly through 2017.
“It’s getting more competitive to find availability for our national sales meeting,” she said.
At the same time, Marinos continues to book internal training meetings for up to 200 people with lead times of just three or four months.
For events requiring relatively limited meeting space and sleeping rooms, there’s sufficient availability at competitive rates, she explained. So senior managers, still wary of economic volatility, don’t see a need to commit money before absolutely necessary.
Marinos’ experience is borne out by data compiled by Pegasus Solutions, the giant global distribution system for lodging that processes billions of room reservations monthly and represents 90,000 properties worldwide.
Hotel-reservation lead times in February for business travelers in North America exceeded the lead times of February last year by more than 11 percent, according to the company. Significantly, the lead times also exceeded pre-recession levels; nearly 23 days this past February versus just over 19 days in February 2007—the most recent pre-recession data available.
Lead times for leisure bookings are also rising—about 6.5 percent this February over last—contributing to the tightened availability.
While Pegasus reported that overall hotel bookings by corporations remained relatively flat through April compared to last year, the company said in the following statement: “Opportunity lies in the group and meetings market, where increased activity is helping drive rate growth.”
Carlson Wagonlit, the big, Minneapolis-based corporate travel agency, has seen lead times for all kinds of corporate meetings extend to 80 to 90 days this year as compared with 60-70 days last year, according to Nikki McLain, global program manager at the company.
“Most clients have the budgets, so they’re going ahead with their meetings,” McLain said. “We’re not seeing a lot of pushback from clients who want to wait before committing.”
Still, the increase falls within what is traditionally considered a short-term booking window.
The site-selection company HelmsBriscoe, which booked some 4.5 million room nights on behalf of corporate clients last year, is seeing post-recession changes.
“The lead time for booking corporate meetings has shortened dramatically in the last few years, and this continues to be the trend,” said Greg Malark, COO. “The uncertainty in the business climate still seems to have many clients waiting until the last minute to commit.”
However, there are exceptions.
“Groups that need a great deal of space or lack flexibility in the dates of their meeting need to book further out,” Malark said.
With the buyer-seller balance tilting toward hoteliers, HelmsBriscoe is advising clients to book further in advance not only for availability but also to stem rising rates. HelmsBriscoe tends to handle meetings that average about 150 room nights; small enough for many of those events to be booked on relatively short lead times.
“There has not been a significant premium paid by groups over the last few years for short-term buys,” Malark said. “The group may not be going into its preferred destination, but we have been successful in matching short-term buys with properties that have availability.
“This is becoming more difficult as demand is catching up to supply,” he continued, “and we are working with our clients to commit further out to ensure they can get the space they require at a reasonable price.”
Boston Scientific meeting planner Diana Marinos, echoed Malark’s comment about tightened supply, citing a dearth of new hotel construction for the larger properties she needs to hold her company’s national sales meeting.
“We haven’t seen new properties keeping up with demand,” Marinos said.
Hyatt Hotels & Resorts, in reporting its first-quarter earnings in early May, also saw a lot a corporate wariness despite a measureable increase in group business.
“In terms of [booking] windows, it’s still fairly short,” said Hyatt chief executive Mark Hoplamazian during an investor conference to discuss the report. “Many meetings have been booked within 90 days.”
Group bookings in the quarter—for events held in the quarter—rose 20 percent over last year while bookings in the quarter for the year rose 13 percent, according to Hoplamazian. Overall, he said the booking pace of group business—as measured by dollar volume—is up four percent over the same period last year. He attributed two-thirds of the increase to demand and one-third to rate increases of about six percent.
“The strength we saw in the group business in the quarter primarily came from corporate business,” Hoplamazian said. “And in terms of sectors, consulting technology and IT (information technology) were the prime drivers of the group business growth that we saw in the quarter.”
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Gov. Travel Budgets Headed for Whopping Cuts
In the wake of the GSA scandal, the U.S. Office of Management and Budget late Friday, May 11, issued a memorandum that proposed cutting travel budgets for government agencies by 30 percent every year through 2016.
Other parts of the memo allow federal travel to continue to take place but with added oversight and internal controls. These include requiring deputy secretaries to review any conference where the agency spending could exceed $100,000; prohibiting agencies from spending over $500,000 on a conference unless the agency’s Secretary approves a waiver; and require agencies to post publicly each January on the prior year’s conference spending, including descriptions of agency conferences that cost more than $100,000.
The new monitoring is consistent with a U.S. Travel proposal—issued just a few days before the OMB announcement—which suggested requiring federal agencies to report all conference-related expenditures and conference contracting procedures to the Inspector General at the end of each fiscal year; and the permanent eliminatation of the blacklisting of American cities for government conferences and meetings.
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