Lower demand for meetings and increased cost-consciousness by buyers for the meetings that are being booked have forced hotels and other meeting suppliers to become more competitive on pricing, keeping a lid on average costs per attendee.
According to original MeetingNews research, the majority of planners expect per-attendee meeting costs to decrease or hold flat this year compared with last year, though a growing portion of planners anticipate those costs to rise in 2010.
Of 208 meeting planners surveyed by MeetingNews, 31 percent said cost per attendee this year would decrease, while 57 percent expected the cost to stay the same when compared with 2008. Perhaps a sign that hotels and other meeting suppliers could firm up pricing in the next year, 25 percent of the respondents expect cost per attendee to increase in 2010—more than double the number expecting an increase this year.
Noting that hotel expenses are the largest per-attendee meeting costs, Advito senior director of global business development George Odom said, "The industry dynamic is such that hotels are hurting for business, so they're becoming more competitive in their pricing structure—with rebates as well as just discounts. The way the market is today, it's very competitive: Hotels want to get people in, while meeting planners are moving from more upscale locations since they're watching their spending. In some cases, you can buy the same for less.You put those things together and your cost per attendee goes down."
According to Smith Travel Research data released late last month, hotel pricing for the first half of the year was about as soft as it has been in quite some time. STR senior vice president of operations Bobby Bowers, noting that revenue per available room declined nearly 19 percent in the top 25 U.S. markets, called it "the largest first-half decline ever recorded by Smith Travel Research." According to STR, average daily rates fell by nearly 9 percent the first half of this year, compared with the first six months of 2008.
That one-quarter of respondents expect cost per attendee to increase next year, compared with only 12 percent this year could be an indicator of an upcoming shift in the pricing environment, Advito's Odom said.
"Maybe some of those meeting planners are expecting costs to go up because the suppliers are trying to get their pricing up," according to Odom. "The meeting planners may be reading those signs in the market, but that is going to be driven by the overall economy. If the economy does turn some, then the prices will respond to that. If it is still flat or negative, then costs will respond to that too."
Still, for both 2009 and 2010, the bulk of the respondents expect costs per attendee to be flat—even though that doesn't necessarily mean overall meeting expenditures are holding flat as well.
Experient vice president of strategic account management Cynthia Hornketh said that even though some clients are trimming meeting spending, their cost per attendee has remained flat. "Even though some events are being held at the same cost structure, some of my very large corporations are doing fewer events," Hornketh said. "While they're not holding back on the events being held, they were eliminating others. That means their overall meeting and event spending could be down, but the cost per attendee would stay the same."
However, as more and more organizations take a more strategic approach to managing meetings spend, the cost per attendee is likely to be driven down, Odom noted.
"It goes back to that old saying about that which is measured is managed," Odom said. "As people start to look more at costs, costs will go down. If you take that thought process and apply it to cost per attendee or cost per meeting, those people are looking at that and trying to minimize the cost and maximize the value."
Meanwhile, Maritz Travel president and CEO Christine Duffy said another trend—the use of virtual meeting elements in conjunction with live events—could redefine the cost per-attendee metric, as meeting planners can reach more attendees with less cost.
"For the same cost in the past, we may have had a physical event with 1,000 people," Duffy said. "By integrating virtual communications into the live event, we may be able to reach 5,000 people, so the cost per person becomes much more attractive from an ROI perspective."
Originally published Aug. 10, 2009