Chalk up 2004 as the year the tables turned. While the hospitality industry in major U.S. markets suffered occupancy dips and plummeting revenue during the last four years, meeting planners were keen to cash in on a buyer's market. While doing so, however, they were forced to navigate a course through potential perils such as strict attrition penalty clauses and their parasitic partnerclients booking outside of the room block via a hotel industry drunk on filling rooms at any cost through the Internet.
The good news for hotels is that due to rising occupancy ratesup 3.7 percent through the first 10 months of 2004 when compared to the same period in 2003, according to Hendersonville, Tenn.-based Smith Travel Research (STR)they can take back the reins of their inventory. The bad news for planners is that outside of a few notable big-box exceptions, supply is down at least for the next couple of years, which means prices are on the riseto the tune of a 3.9 percent rise in the average daily rate nationwide through October, according to STR.
"For meeting planners specifically, when they negotiate for '05 and '06, they'll definitely see increases in rate if they negotiate with the big-boxes," says Jan Freitag, director of client services for STR. "We expect supply growth to be just above 1 percent this year and in 2005, meaning that with fewer newer rooms on the market, hoteliers know there's a limited supply, so they can ask for a premium on rooms."
But expectations of accommodations price hikes aren't the only issue concerning planners in the new year.
To paint a portrait of the North American meeting planning landscape, Meetings Media annually polls its readers on key aspects of the industry as part of its Meetings Market Trends survey. Although rate hikes and now-perennial hot-button issues such as attrition clause enforcement and booking outside of the block continue to top the planner-anxiety list, several other trends are materializing that generally bode well for the industry.
Planner DemographicsThe old chestnut that the meetings industry is overwhelmingly comprised of women holds true, as the survey found that 82 percent of respondents are female, up 3.4 percent from the 2004 Meetings Market Trends survey. But while last year's poll showed a significant amount of male independent planners (44 percent), the number of independent planners who are men was down 13 percent in this year's study, which could point to more rank-and-file planners striking it out on their own due to corporate downsizing or the sheer joy of entrepreneurship.
When it comes to organizations supporting planner career growth via memberships in industry associations such as MPI, PCMA and the like, it seems the free ride is over, as industry association sponsorship was down 6.1 percent overall when compared to the 2004 survey. Association planners were down the most, with 10.6 percent less of them this year saying their organization supported their membership in trade organizations; corporate planners weren't far behind, posting numbers that were down 6.9 percent from last year.
Sponsorship of CMP/CMM certification increased by 4.4 percent overall, however, compared to last year, with 10.5 percent more association planners answering in the affirmative during this year's survey.
Organizational sponsorship of qualified third-party training took the biggest tumble, falling 9.7 percent in this year's survey; corporate planners were down 16 percent and association planners fell by 10.6 percent in this category.
Anatomy of a MeetingAttrition clause enforcement and attendees booking around the block continue their ascendancy on the list of planner concerns, with 6.3 percent more planners responding that attrition clauses were enforced more frequently in 2004 than in 2003; 9.9 percent of association planners answered in the affirmative on this issue, along with 5.1 percent of corporate planners and 3 percent of independents.
Overall, 3.9 percent more planners said attrition clauses were enforced on them for the first time. Association planners are finding the allowance for slippage has decreased when compared to the last survey, with 8.5 percent more indicating as such.
"We have seen [attrition clause enforcement] more in 2004 than in the previous years," says association planner Terri Carlton, CMP, manager of meetings and corporate travel with Chicago-based Blue Cross and Blue Shield Association. "The attitude is that it is part of doing business. One hotel in particular was very adamant about the attrition fee even though we had booked and signed five meetings prior to the completion of the hotel. When we finally held the meetings, only one of the meetings did not meet the room block and we were charged attrition. This occurred even though the other four exceeded our projected blocks. We will look long and hard before we decide to take future meetings to that hotel."
Independent planner Patricia Fisch, president of Washington, D.C.-based International Destinations, agrees that attrition clauses are being enforced more strictly, and says her association reduces the number of hotel rooms it guarantees.
"We take the position that it is better to block less rooms and then run over the guarantee than it is to pay attrition," she contends.
It seems planners are applying their concerns about stringent attrition policies to site selection, as 24.8 percent more of them in this year's survey listed attrition policies as one of the most important criteria for selecting a hotel; 16.5 percent more planners overall put meeting room technology on the most-important criteria list, along with 13 percent more who highly value guest room technology.
The issue of booking outside of the block is also top-of-mind with most planners, with 4.7 percent more of them in this year's survey responding that the issue is a major concern, led by an increase in independent and association planners of 5.5 percent and 5.3 percent, respectively. Forty-one percent of association planners listed booking outside of the block as a major concern this year. The number of planners that said it is of no concern dropped 8.3 percent from the last survey, with independents (13.5 percent less than the last survey) and corporates (11 percent less) as the planners driving this trend.
"I received a contract from a hotel that stated that we would not get credit for any sleeping rooms booked outside our block and I immediately contacted the sales manager and said that the statement had to go before we would sign the contract," says corporate/government planner Donna L. Cook, manager, conference services for Arlington, Va.-based System Planning Corporation. "We instructed our attendees about how to make their reservations, and told the hotel that if it is offering cheaper rates outside of our block, we will not be penalized for that, so the hotel removed that statement. We monitor our room block very carefully by requesting a rooming list weekly, and match the list of names with our attendees who have registered with us to attend, and if we find a name on our list but not on the hotel's rooming list, then we ask the hotel to check for each individual's name and move them to our block."
The length of the planning cycle appears to be moving in two directions, with 4.9 percent more of all planners in this year's survey responding that their booking window is two months or less, which was almost entirely driven by corporate planners (13.8 percent more in this year's survey). Those with planning cycles of 13 months to two years grew by 3.3 percent in the most recent survey, however.
"I definitely see the window shrinking in our planning schedule," Cook says. "We are now planning meetings less than seven months out, and some we are doing in less than 10 weeks. I think that with the state of world events planners are not sticking their necks out to book in long-range terms as often. Attrition clauses are one of the main reasons we don't book as far out as we used to. The attrition clauses are also including F&B as well, which is a double whammy."
The duration of the typical meeting is also moving in two directions, with 4.7 percent more of all planners responding that their meetings are one day or less, pushed by a 9.4 percent increase of corporates holding one-day meetings in this year's survey. Conversely, four-day meetings increased 3.3 percent overall this year, led by association planners (3.1 percent more) and corporates (4.7 percent more).
According to the survey, planners are shortening the typical length of their meetings by squeezing in more meeting sessions per day, with 10.5 percent more planners responding that they scheduled more sessions per day during the past year when compared to the previous survey. Association planners (15.2 percent more) and corporate planners (9.2 percent more) were the leaders in this category, with 5.2 percent more independents joining them.
"We are scheduling more meeting sessions per day and it is at the expense of entertainment," says independent planner Fisch of International Destinations. "This is because the delegate wants to get more ROI from the meetings than they did in the past."
Association planner Jan Collins, CMP, executive assistant for Tampa, Fla.-based Institute for Business & Home Safety, says her organization is getting creative when it comes to offering delegates activity options.
Because of the shrinkage we are experiencing, we incorporate fewer activities into our agenda," she says. "Our meetings are being compacted at the expense of a golf outing that is usually scheduled between two meetings.We use a sort of handoffwe cut outside activities but enhance the in-house programs. I also try to solicit area venues to provide coupons for when the attendees are on their own."
Contrary to Collins' experience, a greater number of association planners are choosing golf as an activity option in this year's survey, with 18.5 percent more saying they often incorporate time on the links into their agenda. Conversely, 11 percent less corporate planners listed golf as a frequent activity offering. Associations are also incorporating more spousal programs (12.9 percent more) and casino outings (5.8 percent more) when compared to last year's results. Corporates, on the other hand, have decreased their use of casinos by 5.8 percent since last year's survey, along with a 4.3 percent decrease in spousal programs. Independent planners registered a 6.3 percent increase in casino/gaming activities during the last year.
Other rising trends in association activities include using attractions and theme parks (up 13.2 percent over the last survey) and spa activities (up 12.1 percent); corporate planner use of spas has decreased 9.4 percent in the same time frame, however.
Down across the board, however, is the issue of security, with an overall drop of 14.1 percent of planners who responded that they were more concerned with security issues during the past year, as compared to the previous survey. This trend was driven by corporate planners (17.6 percent less) and association planners (14 percent less), but 9.1 percent fewer independent planners also listed security as of more concern during the last year.
Although the threat of a terrorist attack may no longer be a chief concern, the issue still lurks in the back of the minds of some planners.
"I feel confident that our government is doing enough to stop or at least warn us of anything that they see coming," says association planner Brandee Fondren, membership administrator/board of directors liaison with Riverview, Fla.-based Florida RV Trade Association. "I am a little concerned that we haven't had any attacks on U.S. soil for a few yearslike it's a little too quiet."
Traveling hand in hand with security concerns is the airline industry, which suffered a massive drop in business post-9/11 as many delegates opted for meetings that were located within driving distance. Although a sizeable number said they required less air travel, the fear of flying trend went into a tailspin during this year's survey, with 15.9 percent less planners saying they are requiring less air travel for their attendees when compared to last year's survey. Independent and association planners said they increased their use of airlines in 2004 over the year before, with 7.3 percent more independents and 2.7 percent more association planners answering that they required more air travel.
"The fear of flying was a short-lived phenomenon for my members," says association planner Randy Dyer, CAE, president of Washington, D.C.-based TASC. "Airfares are still cheap. When that ends, we will have a much bigger problem than fear."
Financial TrendsMeetings budgets seem to be inching upward, with 72 percent of planners responding that their budgets either stayed the same or increased during the past fiscal year; 26 percent said that their budgets increased, with 6 percent noting that their budgets climbed by more than 10 percent.
Planners are also bullish on the future, with 82 percent of respondents saying they believe their budgets will either stay the same or climb this year; 24 percent expect their budgets to rise by up to 10 percent and 6 percent foresee an increase of more than 10 percent.
Corporate planners were a little less rosy than last year, however, with 15 percent more of them expecting a budget decrease of up to 10 percent this year when compared to results from the previous survey; the opposite is true for independents, with 13.9 percent more of them in this year's survey believing their budgets will increase up to 10 percent in 2005. Association planners were also less pessimistic, with 8.4 percent fewer of them responding that they expect their budgets to decrease this year when compared to last year's survey; 8.5 percent more of them expect their budgets to stay the same or increase next year, when compared to the last survey.
Attendance during the 12 months prior to the survey appears to be rising. Half of all respondents noted that attendance remained about the same, but 18 percent said it increased by up to 10 percent and 9 percent said attendance jumped by more than 10 percent.
Association and independent planners registered the highest percentage of attendance gains, with 28 percent of association planners and 27 percent of independents reporting an increase during the past 12 months. Corporate planners were not far behind, with 24 percent reporting an increase. When compared to last year's survey, 6 percent more association planners said they saw an increase in attendance, along with a rise of 6.6 percent for corporate planners and 7.5 percent more independents who saw attendance numbers rise up to 10 percent.
Expectations regarding the number of meetings and events that will be held next year showed an amazing climb, with 90 percent of all respondents saying they will either hold the same amount or more meetings in the 12 months following the survey; 34 percent expect their number of meetings to increase up to 10 percent next year. When compared to last year, 10.6 percent more planners thought the number of meetings they plan would increase in the 12 months after the survey was taken; association planners showed a 10.4 percent increase in this area and corporate planners get the smiley face award by posting an increase of 14.2 percent over the survey published in 2004.
When it comes to the types of facilities utilized for their meetings, independent hotels showed the largest increase over the previous survey, with 16.3 percent more planners saying they used independent hotels the most for their meetings. Association planners reported the largest increase in this category, with a 21.9 percent rise; corporate planners were next (12.8 percent more), followed by independent planners (12.4 percent more). Corporate planners showed a 14.1 percent rise in the number of them that use conference centers for most of their meetings, and 18.8 percent more of them use convention centers for most of their meetings.
"I think that the smaller independent hotels are being more aggressive in their marketing and cold calls," says Carlton, the planner for Blue Cross and Blue Shield Association. "We are finding that they are more open to negotiation in hopes of securing you as a repeat customer."
Corporate planner Barbara Grobicki, marketing manager for Knoxville, Tenn.-based Brunswick Boat Group, also finds the little guys are more willing to deal.
"Independent hotels are more flexible in their terms and the 'extras' that they offer," she says, "along with being more interested in creating relationships for the long term."
According to the survey, the services of independent planners are being sought out by more planners. Fewer planners in this year's surveydown 8.4 percent from the last surveysaid they didn't use any outside or independent planners. Of those who do use independent planners, the largest increases over the last survey were in the following categories: air travel (up 5.4 percent); audiovisual (up 4.3 percent); spousal programs and housing (both up 2.4 percent); and local transportation (up 2 percent).
"I always use a third-party planner for my meetings," says Collins, the association planner with the Institute for Business & Home Safety. "She sets up site visits and negotiates contracts for me. I do the physical site inspection and sign the contracts, but she saves me a lot of time and headaches."
Even planners on tight budgets recognize the benefits of hiring an independent to do specialized work.
"We currently do not have the funding for third-party planners, but if we did I would use them often," says government/corporate planner Denise McNeill, executive coordinator for Washington, D.C.-based Public Health Institute: Population Leadership Program. "Meeting planning involves attention to detail and it would be nice to hand over some of the responsibility and be allowed to focus on a few key areas, opposed to all. I would use them to handle registration, venue research and contract negotiations."
Perhaps a reflection of corporate downsizing and outsourcing trends, independents reported a big increase in sales volume this year over last year's survey: 16.5 percent more independents reported a sales increase in the 12 months prior to the survey, with 6.9 percent more responding that their sales rose by more than 10 percent; 6.7 percent more corporate planners reported a sales decrease this year, with 4.7 percent more listing the shortfall as more than 10 percent. Association planners generally reported a dip in membership, with 5.2 percent more of them saying their sales were down up to 10 percent this year when compared to the previous survey.
Looking AheadDespite rising costs for accommodations and continuing concerns regarding vexatious obstacles such as attrition and booking outside of the block, planners interviewed for this article were generally upbeat about the meeting planning industry for 2005.
"I am extremely optimistic," says independent planner Robb Thornsberry, president of Anaheim, Calif.-based Infinity Events. "I have already experienced a turnaround in 2004. U.S. companies have had to adapt to our changing times, however the meetings industry will still continue to be an integral part in some shape and form to the return of a strong economy."
Association planner Carlton agrees.
"I feel that it is on its way to recovery," she says. "One indication on our end is that I have already seen an increase of meetings that we have booked in 2004 compared to the previous three years. It appears that 2005 will continue the trend."