The state of the economy, programme costs and dwindling budgets are top-of-mind for Canadian meeting planners. By Sandra Eagle and Don Douloff, with files from Alanna McQuaid, Market Report, January/February 2009
Budget restraints, company cutbacks, reducing expenses – callit what you will, but the overarching concern for meeting andincentive travel planners this year is costs. It doesn’t really matterif your niche is in the corporate arena, a not-for-profit associationor fulfilling third-party contracts, the state of the world economy hasthrown a spanner into what has been, for the last five years at least, therelatively stable sector of meeting, event and incentive travel planning.
The economic downturn and its impact across the Canadian industrial landscape mean planners have to manage expectations of quality programmes on a much tighter budget.
And the issues related to the downturn in the economy are affecting every facet of the planning experience. Hotel room, travel and F&B costs start off the long list of planner concerns, followed by fewer attendees at trade shows, fewer meetings to plan or the outright cancellation of events. Coupled to that are reduced sponsorship spending and less participation from suppliers at shows. “With the economy the way it is, will we be able to recruit as many delegates to our annual conference?”
Many planners are clearly worried about the affordability of meetings and events. “As economic conditions worsen, there is a need in our industry (financial) to meet more with employees and provide more training opportunities, and to do client appreciation events. But of course, the budgets have decreased – and the commodity prices have increased. The planners get stuck in the middle, trying to manage upset clients and maintain relationships with our vendors with impossible budget restrictions. We need more economical options.” Planners are concerned about attrition and cancellation clauses in contracts, the instability of airlift and lack of seat space, and hotel requirements for getting adequate meeting space. “What concerns me is short turnaround – based on the economy, I think clients decide, last minute, if they are going to host a meeting or event.”
And to top it all off, with fewer events to execute, planners are concerned about their jobs. “If I can’t communicate the value and ROI of meetings and events to the senior management team, will I still have my job?”
Diane Whittington, CMP, is one busy event planner, doing serious road-warrior time as the corporate events manager for Samsung Electronics Canada Inc.
She will be chalking up over 20 events in 2009, which segues into the lead-up to the 2010 Vancouver Winter Olympics. Samsung has been a global TOP sponsor of the Olympic Games since 1997. If Whittington thinks she is busy now, in 2010, she won’t stop moving.
Whittington says, “the focus on business, going forward, is extremely tight. If you can’t present a business case for an event, it’s not going to get done. The belt-tightening has begun and the return on investment (ROI) is very important. We are focusing on economies of scale and we have to look at every dollar before it’s spent. We do corporate marketing around our four departments: consumer electronics, home appliances, IT and wireless terminals. So if I’m doing an event, let’s say a consumer show, we have to make sure the focus is on driving sales and ROI measurement. We have to be able to show why doing that event was good for business.”
According to the annual Global Business Travel Forecast and Trends Report, published by American Express Business Travel, released in the last quarter of 2008, senior management will be taking a closer look at meetings spending and will want to measure the return on investment of meetings and events for their companies. The report says there will be a movement towards shorter events in more local destinations, which should help corporationsachieve the best ROI. The report also states that implementing and managing a meetings policy is expected to provide companies the ability to drive certain cost-saving practices. Based on a recent survey of American Express clients, over 70 per cent do not have a stand-alone meetings policy. Finally, technology developments, such as teleconference and social networkingsites, are gaining popularity as tools to strengthen the interpersonal relationships created through traditional meetings.
For associations, who usually are already operating on tight budgets, the squeeze on membership attendees is its own particular headache.
Wendy Walton is the conference and professional development officer of the Canadian Library Association (CLA).
Its largest event is the annual general meeting held in late May. The event rotates across the country, returning every three years to its home base in Ottawa. This is Walton’s largest event, as about 1,200 members either attend for all four days or take advantage of the single-day passes the association offers.
Walton says there hasn’t been time to see the effects of the last-quarter financials on the CLA. “It takes time to filter down and for us to see what type of effect it will have on our annual meeting and tradeshow. We’re about 80-per-cent sold-out for this year, but next year will be interesting. We have a new executive director who comes to us with a lot of experience.She may be planning to utilize podcasts and webcasts to our membership, to control costs.”
Another area in which Walton sees definite cost savings is signing a multiple-year contract at convention centres for her annual AGM. “One centre has offered us a fixed rate for the first year that we signed for 2011, and will give us a ceiling for the second year, and if we sign on for a third, they’ll give us even more. They are prepared to offer us discounts on services as well.” Walton says there are not many Canadian convention centres that she hasn’t used in her 20-year stint in the industry. “Knowing the centre I’m going to use makes it easier to plan and execute an event. You have a solid perspective on what you’re dealing with and how things work. You become familiar with the building and its quirks and you know how to deal with its staff and procedures. We are fortunate that we are able to book so far out.” Walton is booked straight through to 2015.
While Walton has an advantage of a national group for members, Brenda Caplan, is the executive assistant to the president of the regulatory body for professional engineers in the province of Ontario. “We’re a not-for-profit group, so we pay for all of our members’ expenses. We are keeping a tight watch on our budgets this year.” Caplan spends about 50 per cent of her time planning meetings and working on special-event projects. Her biggest event is the AGM that includes a gala that recognizes the association volunteers and committee members. “For 2009, our AGM budget is okay, but I may see a 10-per-cent-drop in my budget for 2010. Right now, I am reviewing hotel contracts that we negotiate. Room rates are coming down, because we’re giving them F&B.”
But despite the doom and gloom of the nightly newscasts and daily papers, and the concerns of individual planners, for this year at least, the spend in meeting planning in Canada is expected to dip by only about 1 per cent, although the spend in incentive travel will take a bigger hit. According to our corporate s
vey respondents, the average meeting spend in 2008 was $679,900, while they expect the average in 2009 to be $669,500.
Canadian planners are about evenly split as to the increase or decrease in the number of events to be held in Canada. One quarter (24 per cent) say they expect meetings held in Canada to increase, while 22 per cent expect the number of Canadian meetings to decrease. Fifty-two per cent expect the number of meetings held in the country to remain the same. “As we are dependent on donors for our funding, we will definitely not be increasing the number of meetings in 2009. I do not expect a decrease; however, some smaller meetings may be accomplished by videoconferencing.”
U.S. and international destinations are expected to be hit with a much sharper decrease of 37 per cent in the number of meetings held in the U.S. and a 32 per cent decrease in the number of meetings held internationally. “Because of the economy, I think we will find more companies looking for that extra edge in Canada. This is where planners need to be more creative and come up with ideas that are “firsts” for the clients. Whether it is canoeing in the Yukon, kayaking in the Queen Charlottes, fishing off the East Coast or golfing in Saskatchewan, we have to ensure our clients still get the “wow” factor, but keep costs down for their programmes. Staying in Canada for Canadians makes sense.” Planners are concerned about optics, and the idea of staying close to home and supporting the Canadian economy just makes more sense. “It would be best to hold as many related meetings/events on home turf to stimlate the economy and retain active partners in our industry.” With shrinking budgets, planners are worried about maintaining marketing initiatives and are concerned that sponsorship budgets will dry up. “I don’t know that we’ll see a drop-off just yet, but I am certain [meetings] will not increase. I believe rather than the number of events fluctuating, the financial crisis will cause events to struggle attendence-wise and in obtaining sponsorships. Another corporate respondent
writes “Corporations are afraid to spend before they know more about the future of the economy and the implications on their business, employees and clients.”
According to our corporate respondents, incentive-travel plans will still be on the books, with 57 per cent of companies taking at least one group. Third-party planners anticipate a slight decline, from an average of just over six group trips planned (6.3) to just under six (5.7) this year. Group trips still account for 21 per cent of all incentives used, with the year-end cash-bonus incentive jumping from 37 per cent in 2007 to 55 per cent this year. This year, we asked some questions about incentive-trip demographics.
The average age group for an incentive trip is the 35-to-55-year-olds (average 45.8 per cent). Planners told us that almost half of you (48 per cent) are influenced by the age group in your decision-making process, and that exotic destinations (42 per cent), family involvement (37 per cent), physical activities (36 per cent), and a shorter duration (35 per cent) are important for this age group.
On the destination-management-company (DMC) side of the equation, Global Events Partners’ annual survey of its partner DMCs worldwide indicate that overall revenues seem likely to decrease; some larger meetings may end up being cancelled; reductions in spend and size are likely, but, at the same time, DMCs are amenable to short-term bookings, which are expected to increase this year.
A key challenge cited by respondents included the ongoing threat of planners ‘going direct,’ bypassing DMCs to carry out programmes either directly with hotels or with vendors outside the DMC sphere.
DEEPER SHADES OF GREEN
Going green is gaining momentum, and the imperative to ‘think green’ continues to be top-of-mind for many Canadian planners. Yet, as our 2009 Market Report Survey indicates, when it comes to eco-friendly meetings, planners still face challenges.
All told, 248 planners participated in this year’s survey, of which 39 per cent report never having done any ‘green’ activities, such as planning a green meeting or event, including ‘green’ clauses in RFPs, etc. When asked, “What are the main reasons that you have not participated in any green initiatives?,” 22 per cent said ‘costs may be too high.’ That number rises to 24 per cent and 26 per cent, respectively, for third-party and government/association planners. Indeed, a scan of the verbatim answers reveals that cost is an obstacle.
“Companies want to say they are being green, but are scared of the cost associated with it,” noted one respondent.
“You have to look at the diversity of practices possible and how the overall cost is balanced,” says Shawna McKinley, Vancouver-based project manager for Portland, Ore.-based Meeting Strategies Worldwide. “If you save by not printing, avoiding bottled water or reducing shuttles, you might be able to divert funds to invest in organic food options, or more sustainable and reusable signage. For every meeting, there should be a basic, minimum set of green measures that can be provided at no additional cost.”
Despite cost concerns, however, planners continue to forge ahead with green meetings. Fully 59 per cent of survey respondents either planned or tried to plan a green meeting or event; breaking it down, those percentages translate to 44 per cent (corporate planners), 62 per cent (government/association) and 77 per cent (third party). Wendy Walton, conference & professional development officer of the Canadian Library Association, says the CLA did a carbon offset at the last AGM, by adding $10 to the cost of registration and donated the funds to Tree Canada. Even though they are not doing that this year, Walton maintains that, “our membership is focused on green, we don’t provide handouts, we post all sessions on our website, we use water coolers instead of bottled water and we recycle containers. The less material you organize before the conference, the less you’ll have to deal with after the conference. We are also partnering with VIA Rail to get people to our conference in Montreal this spring. They’ve been wonderfully supportive, offering an extra 10-per-cent discount off of the lowest priced fare. It also helps to be at Le Palais des Congrès de Montreal, they’re one of the top green organizations in Canada, and they have the awards to prove it.”
And in terms of planning another green event, 54 per cent of total respondents said they “already have” or “would definitely” do so, with virtually identical numbers (56 per cent, 56 per cent and 53 per cent, respectively) reported among corporate, government/association and third-party respondents. South of the border, ‘green’ continues to gain traction. Meeting Strategies Worldwide’s State of the 2009 Sustainable Meeting Industry white paper quotes The MPI Business Barometer, November 2008, which reports that, “Many meeting professionals continue to expect a trend toward ‘green’ meetings. This will continue to positively impact the providers of products and services designed for that market. Technology providers and regional destinations may specifically prosper from current trends.” Furthermore, the report identifies ‘green meetings’ as a top-ten trend planners see most affecting meetings and events business over the next six months.
The Meeting Strategies white paper also reports that a recent survey of corporate travel managers by the National Business Travel Association indicates
nearly 30 per cent incorporate green issues into their travel policies and that nearly 25 per cent prefer green meeting suppliers. More
over, in the future, another 30 per cent will use hotels that feature environmentally friendly amenities and practices, according to the survey.
Closer to home, other stumbling blocks hamper planners’ efforts to go green, as between 5 per cent and 9 per cent of respondents (across the three planner groups; average 7 per cent) said they haven’t participated in any eco-friendly ventures because “no green initiatives are available.”
And commenting on the biggest challenge to planning green meetings, one respondent said, “ensuring that all vendors and suppliers complied with greening policy.”
“On-site oversight is a critical part of follow-through,” says McKinley. “There are two ways to help address the challenge. First, make sure reporting measures are included in contracts with vendors. Having this kind of agreement in writing gives planners a leg to stand on when going back and requesting verification of green practices through things like trash-hauling reports. Second, engage your event team in on-site verification. If you work with a host or volunteer committee, see if someone might champion the task of overseeing compliance. Set clear parameters for them to follow, to ensure they get you the information you need.”
– Sandra.email@example.com, Don.firstname.lastname@example.org