Industry insiders expect meetings spending to be a mixed bag heading into next year, as organizations remain cautious about the amount and public perception of their spending while hotel and meeting venues offer deep discounts and concessions.
Some meetings management company executives, planners and recent industry research reports said that as budgets are being set for 2010, meetings bookings are starting to increase slightly. Yet, they said spending on those meetings will be flat or less than this year's as organizations plan for fewer attendees and, in some cases, shorter events.
While there are no clear signs that meetings will return to pre-recession levels in 2010, early indications have created optimism that the latter half of 2010 and 2011 could see an improvement over 2009 numbers.
"Instead of a V with a shot going down and then a sharp shot up, it's more like a U that is starting to turn up," said Carlson Marketing president of engagement and events Fay Beauchine. "We are still at the bottom of the U, but starting on the up-slope. We see some drop-in business coming for fall. By that I mean we had clients that were holding their budgets tight to the vest, but now decided to operate some programs this fall. This business is a much tighter timeframe now because we can all put on an event in a month.
"We see a nice first quarter shaping up, probably not as strong as 2008, but much better than 2009," Beauchine continued. "In the first quarter of 2009 is when the AIG effect really took effect. It was fourth quarter, lots of media bashing, and then first quarter, lots of cancellations."
A Meeting Professionals International and American Express bimonthly Business Barometer survey of more than 700 respondents released this month indicated that poor business conditions have continued since June, but in the next six months some respondents expect increases in the number of meetings booked.
Twelve percent of suppliers and 7 percent of planner respondents indicated an improvement in current booking activity, while just 1 percent and 2 percent reported a decrease, respectively.
BCD Meetings & Incentives executives said that 2010 meetings budgets largely would be flat compared with 2009. The companies planning increases are those holding meetings around mergers and acquisitions or product launches.
"For the foreseeable future, every company is very financially responsible. They are evaluating every program and ensuring there is a reason behind the meeting and that they will get some return element before they move forward," said Dave Sonricker, BCD senior vice president of MICE for the United States and Mexico.
Wyeth Pharmaceuticals associate director of global congress and convention management Nancy Hoppe expects similar meetings spending levels next year in the United States. Internationally, however, Hoppe said the company might spend about 10 percent to 15 percent more than in 2009 because many of its major conventions occur in even-year cycles.
Maritz vice president of channel management Rhonda Brewer said budgets are loosening slightly and anticipates an overall increase over 2009 levels. "It's a slow uptick," she said. "People are still very cautious about where things are going to go. They may have a budget, but it may not be as dynamic as it was in the past."
One association meeting planner, responding to an International Congress & Convention Association and meetings and incentive travel exhibition IMEX survey released this month, said, "Our association meeting attendance is down 22 percent in 2009.We anticipate a similar decrease in 2010 of between 15 percent and 18 percent. "The association planner expects attendance to not "return to normal levels" until the second quarter of 2011.
Major factors contributing to flat or lower spending expectations include deep hotel and meeting venue discounting and concessions. This month, lodging industry data supplier Smith Travel Research reaffirmed its forecast of continued occupancy, revenue and rate declines for the U.S. lodging industry through 2010, despite slight signs of recovery seen in July.
The research firm projected a full-year average daily rate drop of 9.7 percent this year, a 17.1 percent drop in revenue per available room and an 8.4 percent drop in occupancy, and it expects those drops to continue, albeit more modestly, in 2010. Even though July showed signs of recovery, with gains in weekend leisure demand, Smith Travel Research industry research manager Chad Church said there was no reason to alter those expectations.
"It seems that November 2009 would be our best opportunity to see demand move into flat or positive territory, but that's more a function of the comparison to large demand losses in 2008 than true demand growth," Church said on STR's HotelNewsNow Web site.
Demand might take a further hit if unemployment numbers do not improve or if the swine flu virus has a significant impact on travel, said Church. Smith Travel Research president Mark Lomanno, however, said the firm would watch group travel results closely this month to look for unexpected signs of a quicker recovery.
Gaylord Hotels senior vice president of sales Mike Mason said he's seeing companies that canceled meetings in the first half of the year reinstate them. While he expects 2010 to be similar to 2009 on a larger economic scale, he said companies might move toward former meeting levels in preparation for the eventual recovery.
"I'm not sure if the light at the end of the tunnel is sunlight or not, but there's a sense we have that there's a loosening, and our customers are able to talk more about planning meetings," Mason said. "There's still a lag in making decisions and getting contracts signed, but the front end of the process seems to be moving much smoother than it was 45 days ago."
"2010 is the year to get the oar back in the water," Carlson Marketing's Beauchine said. "Hotels are willing to structure more flexible attrition clauses and more flexible cancellation penalties. If demand for 2010 is higher than '09, but lower than '08, as long as the supply-demand equation remains where the supply is larger than the demand, you are going to see good deals."
Global Conference Associates president Jim Fausel Jr. said the deals seen in 2009 will carry throughout 2010 as meeting venues try to attract those looking for value during the demand slump.
"It has lessened the bridge between supplier, the planner and company," said Fausel, who added that the increase in advance bookings are for events beyond 2010, as well. "Gone are the days that this is the price, take it or leave it."
Egencia Meetings & Incentives director of North America Debbie Grossi said, "Hotels are trying to hold strong and clients believe the longer they hold off, the more the hotel will fold and reduce the pricing. It's hard to come up with that happy medium."
Jay Boehmer and Michael B. Baker contributed to this story.
Originally published Sept. 21, 2009