MeetingNews editors last month met with Kirsten Olean, director of meetings for the Association of American Medical Colleges, and independent meeting planner Emily Milliot, senior partner for AG Communications, to discuss the impact of the changes of the past year on meeting planners. While Olean's association does not depend on meetings for revenue, it holds about 75 meetings per year of 100 to 150 attendees and another 200 or so committee-type meetings. Those numbers were flat from 2008 through this year. Milliot, who saw her mainly pharmaceutical clients' meetings decline in 2009, said AG usually plans 30 to 50 meetings a year.
MN: What major changes have you seen in the industry in the past year and what lessons have you learned?
Kirsten Olean: The biggest change has been the shift from a seller's market to a buyer's market. Especially in the association world, rate and affordability is key, and certainly this has been the year to grab up bargains, particularly at the high end of the chain, because luxury brands have been giving it away. I'm starting to see that shift a little bit just in the past couple of months. Hotels were very liberal with contracts and willing to be liberal on attrition and cancellation, where they used to not have any flexibility, but in the past couple of months I've seen that tighten up again. Hotels in the early part of the year made some pretty bad deals for themselves, and those are coming back to bite them. I think they've been burned by some of those contracts they booked when they were desperate, and as a result they're cracking down. I'm seeing it first happen with the luxury brands, because I think they were the most desperate.
We sign our own contracts that we find very fair and balanced and designed to protect both parties, which hotel contracts generally aren't. Hotels that have consistently signed those contracts are coming back and saying, we can't sign reciprocal cancellation, we can't agree to net profit and attrition, and they're claiming corporate as the reason.
Although they still need business, their rates and occupancy are beginning to creep up a little bit, so they feel they're in a little better of a negotiating position. They just did themselves a disservice by being too flexible earlier in the year. We're paying the price for that a little bit. I'm actually seeing less flexibility in contracts right now than even in 2008, when times were still pretty good for them.
Unlike corporate, we book pretty far out, and this year, we've been booking even further out to take advantage of the deals out there.
MN: How far out?
Olean: For most of our meetings, we're typically in about an 18-month advance, but we've been booking into 2012 now to try to take advantage of the deals. We're finding they're there pretty much through 2011, depending on the city, but once you get into 2012, the deals aren't there as much or they're not willing to bid on a small piece of business that's maybe 75 rooms on peak. I recently sent something out for 2012 to Chicago and not one hotel bid on it. They know things will be better in 2012, and they're not even going to bid on a little piece of association business when they know something better will come down the pike.
MN: What's your biggest event?
Olean: Our annual meeting. It's 4,000 people, about 2,000 rooms on peak.
MN: What's yours, Emily?
Emily Milliot: It depends. For CME, when we do a satellite symposium, it could be up to 500. For an annual meeting that we do with one of our clients, it's 250 to 300. For speaker training, it's up to 300. I agree with everything that Kirsten was saying. For us on the medical side, we are very limited in being able to go to resorts. Most of our pharmaceutical companies don't allow the use of a hotel if "resort" is anywhere in its name. It's the same with five-star hotels. We used to go to all the luxury properties and now we can't.
MN: Even with an amazing deal?
Milliot: The deal doesn't even matter to them.
MN: Is that a recent change?
Milliot: It's been going that way. Three of our pharmaceutical companies recently mandated from this summer on and are in the rules going forward. It's truly perception. The pharmaceutical companies we work with are not the big giants, so they see what's happening to those large companies, and they don't want to be in the spotlight. It's been fine, because there are great deals at the lower price. There has been excess on the side of some physicians and some companies in the past, so you understand the pendulum going back to the other side.
Olean: It's been a little less for us on the association side, but that perception issue is still there and we've been battling it all year. I've actually seen us book a more expensive property because it wasn't Ritz-Carlton or a Four Seasons, and it's really frustrating because we're not really getting the best deal. For us, the word "resort" doesn't seem to be the issue, nor the number of stars, but the luxury brands are. It's pretty much the Ritz-Carlton or Four Seasons. They won't go to the Ritz- Carlton, but they'll go to an equivalent-level resort because it doesn't have the same stigma, which is unfortunate because the deals at Ritz and the Four Seasons this year have been fantastic, and you want to take advantage of them.
At a number of industry roundtables, we've talked about how hard it is to explain to the public that you don't go to the Ritz-Carlton because the sheets are 800-thread count or whatever, but because you will have a better meeting at a higher-level property. It's not about the luxury but about the level of service. You will have a better experience as a guest, a meeting attendee and meeting planner in a hotel where the service level is that high.
MN: Is that perception problem going to linger?
Milliot: It is in my industry. I think this is the way it's going to be for a long way out. At some of the lower-starred or "normal" hotels—and they're not bad hotels—you do have to ask two or three times to get something done, whereas the first time you ask at a high-end property, it's done and it's usually done before you even ask. They anticipate needs. When you're planning a meeting for 10 attendees or 4,000, you're worried much more about the strategic part of the meeting that you don't want to worry, is my coffee break out 10 minutes early? There is an absolute value to that.
Olean: I think for us in the association world, it's going to fade—I think it's already started to fade. It was a knee-jerk reaction to the whole AIG thing and everything that was in the press. Now that it's not in the press, it's not as much on people's radar screens. I'm not hearing that as much now from the internal staff or our clients. It was coming down before any of the AIG stuff even happened.
Milliot: Some meeting attendees look forward to going to these nice places, because they don't get to. It doesn't really impact our attendance, because for us it's education, they have to go.
Olean: I heard one meeting planner say she had a group that said, we don't want to go to a high-end resort; we want to try a mid-level property. She said, fine, I'll book you in one. She did it once. They were miserable because they were used to being in a high-end resort, and she never had to do it again. That's one way to do it.
MN: Were there changes that your organization made in the past year regarding meetings policies or budgets?
Olean: From my end, I'm not sure it was entirely successful, but we were asked at the beginning of the year to trim travel budgets by 10 percent. Our travel budget is pretty big. We have 500 employees and a lot travel. A lot of that was thinking about how many internal people traveled to our meetings, especially in instances when attendance was dipping, and looking at that ratio between staff and constituents and not wanting it to be lopsided. A whole set of guidelines came out about what should be considered when staff goes to meetings. With the cycle of our revenue, which comes from medical school and residency applications, there was some concern that those might dip. They haven't and we've been okay. Therefore there's been less concern with being really restrictive on travel.
Milliot: For us, it's been just economizing. Our clients have lowered the number of meetings and have had more regional meetings.
MN: Have there been any changes to your approach to the way you collect data or make decisions within your organization?
Milliot: We try to consolidate. We use our national salespeople as much as we can with the hotel chains to try to do repeat business where that makes sense. That does help with the spend, because if you can bring back a meeting, they're willing to negotiate better attrition, better cancellation, better room rates. We've also brought in people to help us on a project basis, so that keeps our overall administrative costs down.
Olean: We're in a position where the decision making about meetings is not centralized—we control the site-selection process and the research centrally—but it's either an internal client, or committee or board who is making the decision about where we're going to go, so we don't have the ability to do that consolidation. We have leverage because we do a large volume, and we do work through national sales and CVBs. They know the value of our account as a whole, but we can't say we're going to book these three meetings over the next two years in your property, because we don't make the decision about where the meeting's actually going. What we do is the research. They'll say, we want to go to one of these three cities, and we'll present what the best options are. We've had situations this year where we've had some attrition, and we've always been able to negotiate a credit toward a future meeting. If something small comes up, we'll suggest the hotel where we have a $5,000 credit. They're very motivated by cost. It's not a decision I can make as a meeting planner. It's a little tricky with the accounting, because this meeting will pay the attrition and the other meeting gets the credit, but it all comes back to a central pot. I know a lot of associations are doing that type of leveraging now, and a lot of meeting planners are trying to take advantage of multiyear deals or multiple meetings in one property. We don't have the ability to do that because of the way we're structured. It would be nice.
Originally published Jan. 25, 2010