December 2013

2014 Meetings Focus Trends Survey

by Tyler Davidson

With the economy stuck in low gear on its long, steep climb up “recovery mountain”—and a federal government that is having a hard time actually governing—meeting planners and industry experts are forecasting a temperate climate in 2014, but perhaps shaded by clouds of uncertainty.

This year’s Meetings Focus Trends Survey attracted complete responses from nearly 600 meeting planners, and while the economy appeared to slowly build momentum, the end of the year witnessed a government shutdown and threat of default that furthered an atmosphere of skittish corporate confidence. Compounding this was a major failure in the rollout of the Affordable Care Act—aka “Obamacare”—which sowed additional confusion and apprehension in the marketplace.

“It seems like consumer confidence is continuing to edge up a bit, but business confidence is a little sluggish with the shutdown and healthcare,” says Bobby Bowers, senior vice president of Smith Travel Research (STR), which tracks U.S. hotel trends. “In 2014 everyone is talking about the economy getting better, but we haven’t seen that big growth pop coming out of this downturn. People are sort of looking at this as the ‘new normal,’ and that may contribute to the fact that those in the corporate world don’t have the confidence they’ve had in the past when we were coming out of a downturn.”

Hotels and Negotiating
According to Bowers, the luxury segment is continuing to pace ahead of the pack, and has even surpassed 2008 numbers—the Holy Grail of pre-recession performance. As a whole, he says, the supplier side is inching back toward its previous peak performance levels.

“We’re pretty much there, almost across all of the asset classes,” he says. “We’re not quite there in terms of rates, but we’re very close in terms of luxury properties, because they really got hit. If you look at the nominal—not factored in for inflation--RevPAR [Revenue per Available Room] rate, we’re pretty much back to where we were, but if you factor in inflation we’re about a year off.”

Since occupancy rates have steadily climbed in the last two years, and are expected to hold relatively firm in 2014, meeting planners will probably see rate increases in the range of 4.5 percent, Bowers contends.

“I think it’s going to continue to be one of these environments that, depending on the market you’re in and the type of meeting you’ve got, things are going to be pretty competitive,” Bowers says. “If it’s a bigger event, you’ll have the opportunity to push the negotiations a bit because they’re just not back to where they were. If it’s a smaller event, it may be a bit tougher.”

STR predicts the top, or luxury, end of the hotel market will see average daily rates (ADR) increase 5.4 percent by the end of the year. Upper upscale is expected to post a 4.6 percent increase and upscale may rise 5 percent.

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