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Hotel Industry News |
Tuesday December 2nd, 2008 |
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Survey Reveals Meeting Expenditures Will Stay The Same |
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Number of Meetings Will Increase Slightly, But Industry Planners And Suppliers Widely Apart on 2003 Projections |
DALLAS, Jan. 22 If the travel industry expects more meeting and convention bookings to offset sluggish business and leisure travel in 2003, it faces a big wakeup call, according to a just released meeting industry survey by Meeting Professionals International (MPI) and American Express (NYSE: AXP).
Meeting planners in the U.S., Canada and Europe project an overall average budget decrease of 1.1 percent in 2003 vs. 2002, even with a 1 percent average growth in how many meetings they will plan. Conversely, business travel partners who supply hotels, air travel and other services to the industry project a 6 percent average increase in meeting revenue and the number of meetings they will host respectively.
The sizable gap is spelled out in FutureWatch 2003, a first-ever meeting industry report that side-by-side compares buyer and seller data. Beyond differences in what planners say they will spend and what suppliers expect to make in meeting revenues, broader issues include conflicts about flexible cancellation and attrition clauses and increased use of technologies that could greatly impact an industry built on relationship-based buying and selling.
"The business of meetings is big business, and in economic times like this, it's good news that spending will remain relatively the same, and the number of meetings held will increase slightly. Overall, the global
$102.3* billion industry represents a significant portion of all business- related travel, including approximately 27 percent of all hotel bookings in the U.S. alone. But these trends signal a major shift in how the business of meetings is conducted and reveals a looming threat of commoditization," said Edwin L. Griffin, Jr., CAE, president and CEO of MPI.
"Face-to-face meetings are here to stay, but a soft economy combined with organizations demanding less financial risks when booking, plus new technologies all mean the industry must adapt to change. As the only association equally representing both sides, we hope this revealing data sparks deep dialogue," Griffin continued.
The survey's 1,300-plus planner respondents (15 percent of MPI's total planner base) have significant buying power with 2003 meeting budgets equaling $3.94 billion total. More than 2,700 corporate, association, independent and consultant planners, plus suppliers from hotel chains, convention hotels and conference centers, resorts, airlines, convention and visitors bureaus and other related businesses responded to the survey.
Planners and partners differ on projected spending and revenues
According to FutureWatch 2003, the aggregate economic size of the meeting industry in the U.S., Canada and Europe is not expected to change as planners project a statistically insignificant 1.1 percent decline in spend with geographies differing slightly.
-- Canadian planners report the lowest average annual budgets at nearly
USD$1.57 million (approximately CDN$2.4 million) but expect the
highest growth at 3.8 percent.
-- Europeans have the highest average annual budgets at just under
$4 million (approximately 3.9 million Euros) and predict a 2.9 percent
budget increase.
-- U.S. planners project an average 1.7 percent decline and control
average budgets of $3.3 million.
On average, suppliers hope for a more than 6 percent increase in meetings revenue, with Canadians most aggressive at 8.3 percent, followed by those in the U.S. at 5.8 percent, then Europeans at a 2.9 percent increase.
The two sides are nearly as far apart in predicting change in how many meetings will be held in 2003 vs. 2002, with suppliers again projecting a 6 percent increase overall vs. a 1.1 percent gain indicated by planners.
"It's very clear that the industry is moving more toward a more price- based model, fostering heated competition between various properties, venues and destinations as they rush to grab market share," said Griffin. "Add the fact that planners and their organizations are no longer willing to take the economic risks of inflexible attrition or cancellations clauses and suppliers bear a larger burden to deliver value."
Cancellation and attrition controversy
FutureWatch 2003 also reveals that nearly one-third of planner respondents ranked relaxation of cancellation and attrition clauses as the most significant operational trend for 2003, while 15 percent of suppliers placed relatively low priority (fourth out of four options) on becoming less stringent with cancellation and attrition clauses, behind choosing more flexible pricing, additional incentives or personal service to better help planners in 2003.
"It is obvious planners seek flexibility and greater assurance that their meeting business commitment will not result in an overwhelming loss in the case of catastrophe, which creates a larger burden for business travel partners to prove value and assume economic risk. The two sides must come together on this issue," said Griffin.
Increased impact of investment in technology
The use of and investment in technology is potentially moving an industry steeped in one-to-one buying and selling toward a more low-touch sales process.
-- Planners project a 23 percent increase in Web use to window shop for
venues and destinations, while expecting to increase actual Internet
bookings by only 5 percent.
-- 81 percent of suppliers said they will invest in Web site improvements
in 2003.
-- 54 percent of suppliers anticipate increased investment in customer
relationship management (CRM) technology training and staff.
"As companies and associations downsize meeting departments and move more toward the Internet, much like we've seen in the business and leisure travel segments, planners will have to adapt in order to maintain their internal value," said Griffin. "Already we're seeing a shift in the corporate world toward the process of acquiring meeting support and services becoming a function of the procurement department to generate efficiencies."
Additional findings
The survey also revealed that:
-- Independent planners will have the largest budgets in 2003 with an
average of more than $4.8 million in annual spending, nearly
$800,000 more than the average budget for corporate planners.
-- Primary markets will continue to dominate as hosts for major meetings,
but about 9 percent of planners overall expect to increase use of
secondary, regional and domestic markets.
-- U.S. and Canada planner venues of choice are resorts or city hotels
(62 percent), while Europeans favor city hotels or convention centers
(54 percent).
Association Insights, an independent market research firm, conducted the research for FutureWatch 2003. Approximately 15,500 MPI members were invited to participate via email, to which more than 13 percent of suppliers (1,130) and 18 percent of planners (1,340) responded.
About American Express
American Express is a leader in corporate expense management services; its Corporate Cards, Corporate Meeting Cards and Corporate Purchasing Solutions are used by more than 70% of the Fortune 500 and tens of thousands of mid-size companies. American Express Meetings & Incentives assists clients with a wide range of meeting planning and event management services. American Express also operates one of the world's largest travel agencies with more than $17.2 billion in worldwide travel sales in 2001. American Express Company, a diversified worldwide travel, financial and network services company founded in 1850 -- is a leader in charge and credit cards, Travelers Cheques, travel, financial planning, investment products, insurance and international banking.
About MPI
Established in 1972, Dallas-based MPI (www.mpiweb.org ) is the leading expert committed to shaping and defining the future of the meeting and event industry. As the largest professional association for the $102.3 billion meeting industry, MPI defines the return on investment and strategic value meetings bring to individuals, organizations and the global economy. MPI members conduct more than 770,000 meetings and special events annually. MPI helps its members enhance professional value by providing them with best practices, superior education, research, professional development and networking opportunities.
* $102.3 billion is the total spending for the meeting and convention industry in 2001, as determined by the total value of output delivered to final demand as a result of delegate, association, exhibitor, corporate and incentive traveler expenditures. Convention Industry Council
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