An Analysis of the Economy

We’re all feeling the crunch of the economy. I thought this article gave a good overview of some of the changes that we’re all experiencing and putting into motion. I think we can all relate – whether we’re corporate planners, association planners, or 3rd party planners.
Enjoy the article!
Jeanne

An Analysis of the Economy’s Impact on Meetings and Incentives - an excerpt taken from Corporate Meetings & Incentives Magazine, 12/2008

There is no way to sugarcoat the news about cancellations and cutbacks in the meetings and incentives industry, but there are trends that can—and should—be treated as opportunities for planners and suppliers.

Greater percentages of planners said they are canceling more meetings than incentives; of course far more meetings than incentive programs are held every year, so in terms of absolute numbers, there will still be more meetings than incentives. Going by the wayside are true or “pure” incentives—those luxury programs that are travel rewards with no education or training included. (Also out the door are hosted spa treatments and high-ticket celebrities and speakers.) While incentive planners still spend far more per head on incentive programs than on meetings, both meeting and incentive expenses will be scaled back, as much for perception as for budget reasons. Those programs that might have been headed outside the U.S. will book closer to home or to more regional locations that are easier to get to.

According to Smith Travel Research, convention hotels, which represent 12 percent of the U.S. room supply, have trended lower than other types of hotels in both average daily rate and revenue per available room. STR sees this as an opportunity for smaller-market convention hotels that are less expensive since planners are far more price sensitive.

STR also cautions hotels to not cut their rates too steeply, so that the climb back to higher profits is not as precipitous as it was post-9/11. However, hotels at every price point will be more willing to negotiate with meeting planners, if not on rate, on many other concessions.
Clearly, all segments of the meeting marketplace are shifting to destinations that offer good airlift at affordable prices, with enough direct flights so that attendees don’t have to add on a night due to travel. Those cities that offer good airlift and affordable hotels will obviously come out on top.

There are opportunities for smaller cities that are considered drive-in markets; all segments report taking some national meetings and making them regionals in order to cut costs or attract more attendees.

Planners who have contracted with hotels and are having to cancel are paying cancellation penalty fees in some cases, meaning hotels can recoup some—but not all—of the revenue that would be attached to the meeting actually taking place.

Association meetings are not canceling at the rate of corporate meetings, as to be expected, since meetings are the lifeblood of associations and association business needs to be conducted. Associations also have the advantage of loyalty and brand awareness among potential meeting-goers, but many will move their education online in order to cut costs. Corporations will likely schedule more meetings around large association events they attend, called co-locating, in order to save on expenses.

And hotels that are willing to help meeting planners be creative with meetings, sharing ideas that they’ve seen at other meetings, finding cost-saving measures that will help the planners’ budgets, will win the business.

The biggest opportunity lies with companies that offer online or virtual meeting applications, which will replace many face-to-face meetings. And hotels that are able to offer both—live meetings and enough meeting space and appropriate audiovisual equipment so that planners can extend the live meeting to those who are not able to attend—will definitely survive this downturn.

Statistics from Corporate Meetings & Incentives Magazine respondents
Meeting managers canceling one or more meetings
• 56 percent (of that number, 58 percent cutting up to 20 percent of meetings; 16 percent cutting between 21 and 60 percent)

Postponing meetings
• Nearly a third, 31 percent, said they are postponing meetings until later in the year or to 2010• 40 percent said they are planning quarter-to-quarter (wait and see, not yet canceling)

Changes to meetings - Shortening length/days of meetings
• 52 percent shortening the number of days
Taking larger or national meetings and making them into smaller or regional meetings
• 31 percent said they are taking larger meetings and making into smaller or regional meetings

Reducing number of attendees
•48 percent reducing number of attendees

Site selection/changing destination based on airfares and costs
• 65 percent said they would choose meeting destinations with lower airfare • 65 percent said they would consider using less-expensive properties for meetings• 20 percent said they would book during the shoulder or off-season

Moving meetings online
• 42 percent of those who are canceling or postponing meetings said they would replace them with virtual meetings or teleconferencing

photo courtesy of Tiffany Diamond

Though almost all staffers were snowed in during the Seattle Snowpocalypse of ‘08, all had their laptops and virtual connections at the ready to keep business running as usual. There may have been more hot cocoa breaks than usual and a few may have taken some optional “Snowman Time,” but our event managers and coordinators kept action items in check.

Even when the snow finally stopped, the streets of South Lake Union remained iced over due to low traffic. Office coordinator, Tiffany Stevenson, credits YakTrax for keeping her upright on her treacherous walk from the parking lot on the days when she could make it in.

As if multi-tasking at work isn’t hard enough, Director of Event Operations, Rebecca Partman, was able to simultaneously email, participate on can calls, move forward on a project and orchestrate the kids, husband and dog to find and don snow clothes, boots, hats, gloves and unbury sleds not seen for the last 360 days … without breaking a sweat! Admittedly, having a Snuggler handy right at close of business was a big bonus.

Holly Hall, Event Manager, found no issue with the snow at all. Being from Colorado, she welcomed the fluffy white stuff by the foot at her house. Her Labrador retriever and 16 month old Son were the source of great comic relief from the forward momentum of work. Nothing beats working from home under the warmth and comfort of a blanket while watching a new snow fall.

Stay tuned for more stories of how the RTP staffers braved the snow (or didn’t)…