Economy Puts a Dent in U.S. Meetings in Europe and Abroad

Fear of perceived lavish spending also hurts outbound volume; planners are ready to move business focus elsewhere.

The economic slump and recent backlash against corporate events have taken their toll on U.S. outbound meetings and incentive travel. The downturn has some international planners pursuing non-planning meetings business, while industry experts urge the time is ripe for planners to leverage deals for future meetings abroad.

Veteran international hotelier David G. Gabri, president and CEO of Associated Luxury Hotels International, which handles sales and marketing for meetings hotels and resorts in Europe, Mexico, and the Caribbean (in addition to its U.S. portfolio), said "significant retractions" in overseas meetings and business travel have occurred—predominantly in Europe.

"The characterization of meetings, incentives, and awards as junkets has been very damaging to international travel," Gabri said. While he said companies have had to take conservative approaches to international travel because of the downturn, Gabri noted they "don't want to add fuel to the fire with anything that can seem excessive."

"At no other time have we been so under the microscope by the public," said Catherine Peters, CMP, president of Denver-based Expert Incentives, which plans high-end programs in Europe, Australia, and New Zealand. "Companies that do incentives have large sales forces ... usually public companies that have to answer to stakeholders."

Still, the bigger conundrum remains the economy, as media and political criticism has eased off recently and the parameters of the federal Troubled Asset Relief Program (TARP) come into focus.

While Gabri said there have been small signs of market confidence returning, such as robust inquiries to ALHI in March for international meetings, former National Business Travel Association president Kevin Iwamoto, now VP of enterprise strategy for StarCite, said the mood at the March 30th NBTA Business Travel Financial Forum in New York City was grim. Iwamoto said some analysts at the forum warned hospitality executives that a business-travel turnaround might not occur until 2011.

Peters anticipates incentive programs will feel the brunt in 2010. "International groups aren't going to cancel at the last minute if they can help it," she explained, "but they won't sign contracts for next year, or if they do, the programs will be scaled back and closer to home," citing Hawaii, Mexico, and the Caribbean as potential beneficiaries. "Salespeople won't make their numbers in this economy, so there will be fewer qualifiers."

Peters, who mostly organizes incentives for under 50 attendees, is prepared to apply her expertise in meetings contracts. "When companies scale down, meetings departments are outsourced, so they'll look for temporary planners to do contracting and planning work," she said. "I'm networking my butt off."

Latin America meetings specialist Eli Gorin, owner of Aventura, FL-based gMeetings Inc., is looking to shift his business focus to consulting, speaking, and training on international meetings. He is developing a training program for Latin American hotels, providing them with intelligence for hosting U.S. groups. And he plans to consult for U.S. organizations that hold Latin America meetings, and train groups on risk management.

Gorin, who said he has no meetings this year, citing cutbacks by clients due to both belt tightening and perception issues, noted: "The economy is making me reassess my business. I have no plans to give up the meetings industry. I'm looking at other avenues to pursue that would be beneficial to the industry."

At meetings firm Concepts Worldwide, in Carlsbad, CA, president and CEO Terri Breining, CMP, CMM, said, for her part, that international business hasn't dropped disproportionately to the general decrease in business. "The programs are a little less lavish—but nothing that hurts the integrity of the meetings," Breining said. Her clients—Fortune 1000 pharma, tech, and franchise companies—are moving forward, "recognizing meetings are part of doing business," she said.

ALHI's Gabri said it is incumbent on planners to convince their executives to "see through the fog" and take advantage of "incredible values, prices, and terms" now. Said Gabri: "It's an absolute buyer's market. Planners who can negotiate 2014 and 2015 contracts on today's terms and conditions will be in fantastic shape. European hotels are doing extraordinary things to attract U.S. business."

Iwamoto of StarCite noted European hotels, traditionally inflexible with meetings contracts, are relaxing restrictions and even offering concessions. Said the former meetings and travel manager for Hewlett-Packard: "Now is a golden opportunity for planners to show cost-effectiveness and educate CEOs on the value of meetings, now that senior leadership has begun paying attention to meetings because of the media scrutiny.

Originally published April 20, 2009