The View From Across the Pond
John F. Burke, director of Venues World, a Dublin, Ireland-based company that sources venues and provides destination management services across the globe, offers his thoughts on the state of meetings in Europe.
“It is clear that destinations such as Spain, Portugal, Ireland, and Hungary are leading the way in terms of both presenting and adding value when it comes to pricing and inclusions for the corporate meeting and conference business,” Burke says. “Interestingly, Germany, through its secondary city locations, and Italy are showing strong signs of bringing new value to the sector. Given that these two markets present great opportunities for larger events, this is a significant move away from the higher cost-driven events of the past.”
Burke adds, “Signs indicate that locations such as London, Paris, Amsterdam, and, to a lesser extent, Vienna, are still relatively expensive and will remain so for the coming 12 months. New locations, once they can deliver on air-access concerns, such as Bratislava [Slovakia], Seville, and Valencia [both in Spain] are beginning to win business as their rate offerings are as much as 30 percent lower than regional major city rivals.”
Overall, Burke acknowledges that given the disparate nature of the various European markets, responses to changing economic times are more reflective of the prevailing circumstances in individual countries. “In addition, my view of the European corporate meeting sector is that venues previously have not set trends or markets but have followed them. In the current market, given current restrictions in corporate budgets, venues that anticipate market changes are doing well.”
Burke believes that Europe continues to have the potential for significant growth over the coming two years. “Much of this has to do with geography. With the global expansion of Western business, Europe is becoming the natural destination for those businesses wishing to bring both client and employee events together. In addition, businesses are looking at moving what heretofore were regional events to a one–event global solution and thus benefitting from economies of scale, integrating networking opportunities and locations that can equally service both East and West.”
In case you hadn’t heard, the sky is falling in Europe. Or at least it seems that way: Greece teeters on the brink of bankruptcy; Spain, Portugal, and Italy are not far behind; and it’s questionable whether a bailout from the other European Union countries can avert widespread economic disaster.
Given such uncertainty and potentially dire consequences, it might seem prudent for U.S.-based companies to shy away from holding meetings in Europe until the wreckage clears. After all, who knows how the economic weakness might hamper vendors’ ability to perform, or what labor strikes or other protests might disrupt life—including a critically important meeting—in a major European capital?
But in reality, the opposite is turning out to be true. With crisis comes opportunity. Flush with cash and looking to exploit business opportunities in Europe, U.S. companies are apparently spending more on meetings and incentives in Europe than at any other time since the onset of the Great Recession.
Demand Has Returned
Ariba, a global technology company that facilitates commercial transactions online, is one firm boosting its meeting presence in Europe. The Sunnyvale, CA-headquartered company canceled its major annual European meeting for customers and partners in 2009 after the economy cratered—opting for a virtual event supplemented by smaller regional meetings—but traveled again last year, hosting the event in Amsterdam, and headed this year to London with an event for 300 people.
For next year’s meeting in Barcelona, Traci Oziemblowsky, Ariba’s director of global events, expects 500 attendees as the company opens the event to more industry members. Ariba selected the Spanish city for its drawing power. “The feedback we’re getting is very positive,” Oziemblowsky says. “It seems everybody wants to travel to Barcelona.”
The rest of the Continent is also seeing renewed interest from North America.
“Our business has been very strong to Europe,” says Jim Schultenover, president of Global Events Partners (GEP), a Washington, DC-based company that markets destination management companies to North American meetings buyers. “We’re seeing more and bigger programs, although we’re not seeing a return to unlimited spending. Still, it’s okay to go overseas again.”
Keeping costs in line is a priority for the Ariba event in Barcelona. The budget for the event this year is only slightly higher than for the previous meeting, according to Oziemblowsky, because attendees pay a registration fee as well as their own hotel bills.
But groups are spending more when they go abroad. As evidence, revenue for GEP’s international DMCs has grown 18 percent this year over last as compared with five-percent growth for the firm’s domestic DMCs, according to Schultenover. GEP’s meetings business to France increased five-fold through July over the same period last year, he says, and it increased almost that much to Prague in the Czech Republic. Schultenover says Paris remains the number-one destination for U.S. groups, followed by Prague and then Spain.
“It’s not surprising that with the European economy as soft as it is, the intra-European meetings business would be soft, and that gives more opportunity to U.S. buyers,” Schultenover says.
Those opportunities combined with an estimated $1.2 trillion in cash that, according to a study by REL Consulting and CFO magazine, U.S. companies are hoarding, makes spending money on meetings a little easier. Yet despite the potential bargains, Schultenover says it is business necessity that primarily drives U.S.-based companies to hold meetings in Europe.
“We work with Fortune 250 companies,” he says, “and to grow their businesses, they have to do business around the globe. They’re continuing to do incentives and customer-facing events even though internal meetings still need additional approval.”
Despite the renewed interest in Europe, global economic uncertainty has instilled extra caution in corporate decision-makers.
“We’ve talked quite a bit with our hotel [in Barcelona] about options if something might happen and people aren’t able to travel,” Oziemblowsky says, acknowledging that Europe’s economic troubles—and Spain’s in particular—have raised questions about potential strikes and protests during Ariba’s meeting. Predictably, those talks come down to contract terms.
“We’re still negotiating, but it looks like we have a little more negotiating power on things like cancellation and attrition,” Oziemblowsky says, attributing the extra clout partly to the size of Ariba’s business, which is large by European standards.
Mary MacGregor, vice president of account development for BCD Meetings and Incentives, says that her company’s corporate customers increasingly demand contract conditions that can stymie suppliers. “Some European suppliers fall short around the minimum insurance that clients require them to carry, or their unwillingness to add clients to their insurance policies,” says MacGregor, current president of Site, an association of incentive travel executives.
She also says that clients are asking for 60 to 90 days before settling master bills rather than a more standard 30 days, and some suppliers, either because of their smaller size or anemic solvency, cannot wait that long. (Hotels of North American chains usually are more willing to accept delayed payment; most European suppliers require payment in advance.)
“We’re vetting potential partners much more aggressively, insuring their financial viability and the caliber of their staffs,” MacGregor says. “We’re talking about terms and conditions up front, rather than going through the process and then asking for a contract. If it’s a new supplier, our contract terms accompany the request for proposal; if it’s a preferred supplier, they’ve already agreed. It’s a new best practice.”
Like Schultenover, MacGregor says that business is picking up in Europe, but she also mentions India, Southeast Asia, and South America. “Our clients’ interest in international travel increased at the beginning of this year,” she says. “Some clients are expanding their operations in those destinations, but sometimes there are values to be had.”
MacGregor says that while some major European capitals remain too pricey for some groups, other destinations offer value, such as Scotland, Ireland, Prague, and, no surprise considering the recent press, Greece.
“Greece is a fabulous destination, and clients are looking at it,” MacGregor says, conceding that the idea of Greeks taking to the streets in protest of government austerity measures could give planners pause.
“The reality is that clients do become more wary of using destinations where there’s been negative media attention,” she says. “But we haven’t had those conversations about going elsewhere, and our clients who have the budget and interest are still willing to go outside North America.”