Is the corporate meeting an endangered species this year? Certainly cancellations seem to be rampant, encompassing everything from board meetings on up to Cisco’s annual sales convention, which was to have taken place in San Francisco this August, using 42,000 room nights.
But while some companies are bailing out of meetings already booked, even when it means paying hefty attrition penalties, others are taking the stance that certain types of meetings are even more important during a harsh economic climate.
Overall, the challenge faced by corporations this year is placing new importance on strategic meetings management. For planners, the situation means not only wringing the best values possible out of the buyer’s market, but ensuring that the goals and objectives of the meeting are accomplished.
Pulling the Plug
In the wake of the economic meltdown, even industry veterans are shocked by some of the cancellations they’re seeing.
Among them is Richard Miseyko, CMP, CMM, president of Site Search Inc., in Tampa, Fla., who says his corporate meetings business started taking a hit last November when a client “pulled the plug” on a national sales conference scheduled for Orlando in January.
“Even though it cost them $80,000 in attrition penalties, they felt it was cheaper to cancel,” he says.
Miseyko was also surprised by the decision by another client, a business machines manufacturer, to reduce by half the size of a meeting planned for 2011. At the same time, the client decided to replace several smaller meetings with webinars and teleconferencing.
“In the case of this client, it was all about perception,” he says. “They are actually very profitable right now, but they are the subsidiary of a larger company that is not doing so well. They don’t want to look extravagant.”
In both situations, Miseyko says he was especially surprised that the cancellations were for sales meetings.
“These are the very ones that you want to have in order to pump up your sales force,” he says. “While such meetings can be among a company’s biggest annual expenditures, the bang for the buck is enormous. When companies fire their sales force and stop doing meetings, they’re hurting the very engine that runs their success.”
Sara Herzberg, national account executive at Concepts Worldwide, a San Diego-based meeting planning firm, says both association and corporate clients have canceled meetings, including a technology users’ group who incurred $1 million in attrition fees.
“In some cases, the cancellations are more fear-based than budget-based,” she says. “Some clients are choosing to push a meeting a year back. Everyone seems to be waiting for this year to go by and 2010 to come up.”
Priority Meetings
Despite the recent cancellation of some sales meetings, this segment appears to the most recession-proof among corporate meetings. According to Kevin Maguire, president and CEO of the National Business Travel Association, they may even be on the increase.
“We’re seeing sales meetings continuing, probably even being added, because they are so important to the growth and future of companies,” he says. “It’s meetings that are perceived to be frivolous that are gone. Unless you can really justify and show a return on investment, the meeting is discontinued.”
Karen Farrington, CMP, president of Suncoast Meetings and Events in Tampa, Fla., is among planners who are seeing increased demand for sales meetings, while requests for other types of meetings such as training sessions are down.
“My sales meetings are stronger than ever because people need to find new business in this type of economy,” she says. “Dollars for training are being allocated to sales. Keeping up client relationships is essential.”
Similarly, Terrence Donnelly, CMP, vice president-corporate markets for the meeting planning firm Experient, says that corporate meetings and events involving customers or partners are still going forward.
“The customer and partner events we’ve had recently have gone very well, although companies are spending less on them,” he says. “If they’re in a competitive environment and they know a competitor is having a users’ group event, they know they can’t cancel theirs. The results would be devastating.”
Not only are some companies proceeding with customer-related meetings, but some are stepping up promotional efforts to ensure that those meetings are well attended this year.
“We are extremely concerned about our annual customer conference where our attendees are in the banking industry and, of course, have been severely impacted by the financial climate,” says Michelle Gothan, senior marketing coordinator for Early Warning Systems in Scottsdale, Ariz. “Travel budgets are being slashed, so we are ramping up our efforts to make our conference the ‘go-to’ education event that they choose for 2009.”
Corporate meetings that are far more vulnerable to cancellation are internal meetings unrelated to sales.
“Companies can do virtual meetings in those cases, and this is happening more and more,” Donnelly says.
Kathleen Zwart, CMP, meetings and events manager for Blue Cross Blue Shield of Florida, believes this trend is gathering momentum.
“All company budgets have been reduced for 2009 and we’re asked to do more with less,” she says. “I think there will be more videoconferencing, webinars, teleconferences, etc., and that people will be less inclined to hop on a plane for a short meeting. Managers will rethink how many people need to attend meetings and conferences and be more careful with where they are spending their limited funds.”
No Frills
Regardless of which types of meetings are going forward, programs that are heavy with content and light with frills are the order of the day.
“We have eliminated entertainment and other non-business-related events at our meetings,” Zwart says. “While we still allow for networking, it is generally over a scheduled meal or during breaks. Even team building, once focused on fun activities, is being designed around giving back to the community, such as Habitat for Humanity.”
She adds that perception concerns—brought on by the notoriety surrounding companies such as AIG—are playing a part, along with budget constraints.
“We are cognizant of the fact that anything we do could end up on the front page of the next day’s newspaper and guide our planning accordingly,” she says.
Farrington is also seeing corporate demand for simplified events and team building with a social responsibility focus.
“Companies are still spending, but ROI (return on investment) is more important and all budget items are being looked at more carefully,” she says. “They still want a nice awards night, but not with all the bells and whistles. And clients seem to be more socially conscious in these tight economic times.”
Donnelly at Experient says clients are looking to cut costs for meetings on everything from food and beverage to hotel rates and attrition charges. More companies are also requiring attendees to share rooms, he adds.
“Fortunately, we’re getting a lot of support from suppliers because they would rather work with a reduced budget than see the event canceled,” he says. “The venues are being more receptive than they would in a good economy. And most hotels are coming around—we’re able to go in and negotiate rates.”
Because of the uncertain economic outlook, attrition charges are becoming a more important part of hotel negotiations than ever, says Donna Valentine, CMP, president of Excel Meetings and Events in San Francisco.
“Clients are worried about booking a meeting that may have to be canceled if things get worse,” she says. “That’s of more concern than getting the best room rate.”
Outsourcing Trends
In a time of corporate layoffs, are more companies turning to outside sources to assist with meeting planning? While some third parties say their business is increasing, job placement executive Dawn Penfold, president of The Meeting Candidate Network in New York City, says it appears that most companies are not outsourcing anymore than usual these days.
“I think everyone in this economy is just holding their breath and waiting to see what’s happening,” she says. “Meetings are not increasing, so even if companies are letting planners go, there are fewer meetings to plan.”
At the same time, Penfold says she is hearing from increasing numbers of corporate meeting planners who have lost their jobs and are looking for freelance work.
While corporate meetings are taking the biggest hit these days, Penfold notes that association meetings are also suffering, and that both the association and corporate worlds are linked.
“Association planners are being laid off as well, and there is a trickle-down effect from what is happening with corporations,” she says. “Companies are not sending as many people to association meetings. We may see this intensify during the next six months.”
Valentine is among several independent planners who say they are seeing an upturn in corporate business.
“Corporate clients are outsourcing more as they are cutting back on management staff,” she says. “We’ve been extremely busy since the holidays. It’s not a bad time for third parties.”
Donnelly says Experient has also seen increased outsourcing from corporate clients.
“However, we are telling our corporate clients that we’re not trying to replace their meetings departments, and that we understand that we might just be a short-term fix,” he says. “Companies might rehire their planners when times get better, and we want to encourage that. Our message is that we can be an extension of the team. We’re all in this together.”