Meetings & Events: The Green Shoots of 2010?

In the wake of the political fallout last year over corporate retreats, it was difficult to imagine that the meetings and conventions business would ever bounce back. Pundits pointed to sporadic green shoots as evidence that the economy was recovering, yet often this scenario was belied by deteriorating numbers. Worse, hoteliers were increasingly drawn into price wars to boost occupancy (there goes rate integrity), while slashing personnel in order to satisfy owner and lender fiduciary responsibility (not a pretty picture).

Fortunately for the hospitality industry, backlash against events has been countered with pushback. Chiming in, global research firm Oxford Economics established the first clear ROI link between travel/meetings and business growth. Next, Forbes Insights made a strong case for meetings as being instrumental in establishing relationships and then helping to facilitate closing the business. Their research proves what we’ve known all along: the nuance of negotiation can only be captured in face-to-face meetings.

Now where do we go from here? Moreover, what can we all expect in 2010? Depending upon who you talk to, the outlook for the New Year appears to be anywhere from less gloomy to mildly upbeat. The big question is whether everyone is ready for a rebound when those “green shoots” start sprouting!

What are Expectations for the New Year?

The Millennium Broadway Hotel and Conference Center, like many other facilities across the country, was hit hard by the political firestorm that spewed forth from Washington, D.C., an unintended by-product of obligatory grandstanding.

“We pretty much saw the meetings business go away due to the ’AIG effect,’” said John Gorham, Executive Director for the Millennium Conference Center. “In early 2009 we saw a dramatic fall-off in meetings business; it was like falling off of a cliff. However, the inevitable restructuring is now behind us and people are getting back onto the horse. We are seeing more ’last minute’ business and we’re starting to see conference business come back, particularly at our Millennium Conference Center in New York City, as people do not want to go down to Florida and be seen sipping a glass of Chardonnay under a palm tree because of the possible perception issues.”

The media fracas over corporate conclaves exacerbated an already fragile economic environment in the hospitality industry last year, triggering budget cuts for travel and events. But now the business climate is beginning to change; in a recent NBTA (National Business Travel Association) survey, more than half of 180 travel buyers project their travel spending to increase in 2010, while 31 percent expect no change in their year-over-year travel expenditures.

“I would say that we’re very much geared up for increased bookings and we’re not as challenged for rate or F&B,” continued Gorham. “We are cautiously optimistic about business on the meetings side in 2010; although expecting soft market conditions in the first quarter, which usually tends to be the case anyway. There is already lots of planning going on; and in talking to our clients, they want to be well-positioned when the market comes back.”

What Promotions are working in Today’s Market?

In the past, whenever there was a softening in revenue from room rates, hoteliers tried to make that up by adding ancillary fees and surcharges to the meeting planner’s bill. But that is no longer tolerated by customers who realize that they have more negotiating power in today’s market. Consequently, any property with meeting space ought to closely examine areas where they can offer flexibility in pricing to draw in more business. John Spomer, Vice President and Managing Director at Destination Hotels & Resorts, identified some areas where they are gaining traction:

“There are several promotions that are generating some extra event and group business for us,” said Spomer. “We are offering flexible pricing for audio-visual services and encouraging the bundling together of meals and rooms by offering discounts off the complimentary master folio account. In addition, we offer a dine-around program at participating area restaurants and bars. It is critical to establish this base of group business so that we can upwardly and competitively position transient room rates.

“Any property that has similar sized meeting space is considered to be a competitor, so we will continue to employ strategic pricing and promotions and bundling our services,” added Spomer. “However, none of this minimizes the importance of providing sterling service that meets or exceeds the expectations of our customers. A successful meeting is always paramount to the meeting planner and they expect the best rooms, great F&B, innovation and creativity in our offerings and service.”

Swimming Upstream in Today’s Environment

One way that hospitality organizations and conference centers are “swimming upstream” in today’s economic environment is to think outside the box when it comes to marketing. Although many companies have been hit hard by the recession and have sidelined events (think automobile industry), there are still a plethora of organizations, such as entertainment conglomerates, that are thriving and booking conferences (think Mickey Mouse). John Gorham, with the Millennium Conference Center, points out the benefits of penetrating new vertical sectors:

“What we’re doing to attract more meetings and events business is to explore different untapped groups, knocking on doors we haven’t before,” said Gorham. “We are capturing more local business, booking daytime events and doing a big push on our catering operations. We’re doing many special events in several vertical sectors for some of the largest companies in the world, and picking up meetings business from pharmaceuticals, entertainment conglomerates and financial institutions.

“As a result of the increased business from these new markets, we may have as many as 15 different groups meeting in our conference center on any given day,” added Gorham. “What continues to drive our meetings business is mainly new product and education, with the latter being relevant regardless of whether times are good or bad. A new product launch customized for the pharmaceutical industry, for example, can increase our top line revenue. And we’ve been able to get great feedback about how pleased our meeting planners and guests are; they have really praised our staff for being very friendly, helpful and happy.”

Preparing for the Rebound: Listening to Customers

There“s no doubt that 2009 will be remembered as a year wherein owners, asset managers and hoteliers all alike experienced profound anxiety. Many hospitality organizations have been forced to take less than draconian steps to cut expenses by reducing headcount/wages, closing underperforming F&B outlets and eliminating services or amenities. However, some upscale and luxury hotel groups have also invested more in customer feedback and are striving to deliver the kind of exemplary service experience that brings them back. In so doing, they will be better positioned in the rebound.

“In today’s economy, it’s more important than ever to reliably deliver meeting services, with utmost care, that are flawless and timely so that the customer is not only satisfied but walks away with that ’wow’ feeling,” said Ryan Magnon, Vice President of Quality for The West Paces Hotel Group. “That’s the core of what we do, and then the key to earning their loyalty is to deliver that kind of defect-free experience consistently, so that they know they can expect that level of excellence again and again.”

Getting repeat bookings from key business groups is no small challenge and goes beyond hitting service level targets. It not only requires a single-minded dedication and adherence to those rigorous quality standards, but a hospitality culture that treats meeting planners and guests as royalty. Often this means having a system in place for gathering feedback prior to and throughout the event that enables staff to be prepared for every contingency, delivering service without skipping a beat, so that the choreography is flawless.

Personalizing Service and Earning Customer Loyalty

“We personalize our services for each business group,” continued Magnon. “For example, if we are serving an organization in the insurance industry we would provide whatever expertise they require, whether it’s coordination of hotel rooms, food preferences, room temperature or any other area of service. When you individualize services then the customer feels as though they are the only group in the hotel or resort, and we become a second home or extension of their business. That’s how we focus on customer satisfaction and loyalty.”

Customizing service delivery also carries through to a personalized response to feedback so that business group customers know that their host cares about what they think. Although it’s important for hotels, resorts and conference centers to aggressively market their venues, caring for customers they already have is of equal or greater importance.

“In our surveys we make detailed assessments of both meeting planners and event participants,” added Magnon. “To find out if guests participated we simply ask the question ’Did you attend the meeting?’ and if so, then that is a service we provided that they participated in and we want to find out how we did. And if we don’t know that information in a relatively short period of time, then we’re at a competitive disadvantage, because today it’s all about market share, which has eroded on the whole because now the existing businesses are chasing fewer consumer dollars.

“That’s why we focus first on existing customers so that we can encourage them to come back,” added Magnon. “We still work to get new customers, but we rely more upon word of mouth and customer recommendations to garner loyalty.”

Is the Glass Half-Empty or Half-Full?

Whether we’re at the bottom of the economic cycle or in the early stages of a recovery depends upon location, your point of view and market perception. Regardless, most companies will eventually lose their “bunker mentality” and go back to holding face-to-face meetings, booking events and visiting with customers.

“For the most part I believe there will be very little or no increase in our business in 2010,” said Rosemary Jablonsky, Director of Conferences for The Hilton DFW Lakes Executive Conference Center. “If there is any improvement, it is not expected until the third or fourth quarters. Customers are asking for discounts in all areas not specific to guestrooms only. Most of our business is customized to the needs of the customer for each event.”

Building Perception Until Reality Catches Up

One useful barometer of how long it will take for meetings business to fully recover is the pace of actual bookings for the next two years as clients lock in to contracts. Transient business has picked up since last summer and events business is starting to come back. However, other indicators such as RevPAR and ADR are still trending downwards. The bottom line is that if clients perceive that rates are as good as they’ll ever get in this market, they are more likely to start booking now.

So far many analysts report that group bookings have picked up for 2011 and beyond, with soft conditions predicted in early 2010; this may be because planners understand the value they’re seeing today won’t last forever. Still, businesses seem to be operating on contingencies. As one observer noted, instead of planning for scenarios ranging from bad to worse, now everyone’s budgeting from bad to better.

Have You Had Enough of Chicken Little?

Whether those “green shoots” have started sprouting remains to be seen. Unfortunately we will always have Chicken Little to tell us the sky is falling, amplified by media and CGE into ridiculously biblical proportions. As noted earlier, one of the many casualties of the political fracas earlier this year was axed travel and meeting budgets, and ironically these discretionary funds are the hardest to get back. Now we have all since been informed by Oxford Economics that every dollar invested in business travel gets back an average $12.50 in increased revenue and $3.80 in new profits. When will we ever learn?

According to the U.S. Travel Association, meetings, events and performance incentive travel in the U.S. are responsible for almost 15% of all domestic travel, generating one million jobs and $27 billion in wages. And despite all the fear-mongering, not even H1N1 could convince us all to hide under the bed—most companies did not cancel meetings or events because of it, according to a new survey from the Association of Corporate Travel Executives (ACTE). Of course, like Chicken Little, we will always have those breaking news stories to rattle the markets and give us the jitters.

Let’s face it (pardon the pun): face time is intrinsic to business culture, essential for reading body language and handling the nuance of negotiation. In fact, 82% of respondents in the recent Forbes Insight study preferred face-to-face meetings when it comes to decision-making.

So the next time anyone suggests scrapping a face-to-face meeting in favor of a conference call when a decision is imminent, just consider this: the Forbes Insights study also showed that 58% of attendees in a virtual meeting admitted that they were also surfing the web, checking their email, reading unrelated materials or handling other ancillary work. Moral of the story…?

Stay in touch with the Meeting Planner and ensure that they are highly satisfied…because meetings and events are here to stay!