With the pressure on large national events increasing, some destinations are benefiting from groups that want to stay close to home.
While the state of industry remains bleak for meetings and incentives across the board, a silver lining is emerging for some destinations seeing an uptick in local and regional events. These bright spots, mostly in second-tier destinations, are benefiting both from a trend among organizations breaking up large conventions into smaller multiple events, and also from national events that are downsizing and looking for an affordable destination.
Resorts and meeting venues close to large cities are seeing the biggest benefit from corporations and groups relocating closer to home.
"The split used to be 60 percent destination and 40 percent local business from Denver, now its reverse, 60 percent Denver," says Heather Ulrich, conference services manager for Keystone Resort. The Keystone Conference Center is the biggest in the Rocky Mountains with over 100,000 square feet of meeting space, and is a 90-minute drive from Denver.
An hour south of New York City, 254-room Ocean Place Resort & Spa in Long Branch, NJ, is seeing "shorter booking windows; RFPs [requests for proposals] moving from large markets to nearby second-tier destinations; and corporate meeting planners holding more regional meetings."
Joseph Jenci, director of sales and marketing, says there has been a shift in the types of events the property is hosting.
"Prior to this year, it was 80 percent corporate meetings, and now we've seen a reduction in corporate meetings taking place. But what we're seeing replacing them are SMERF [social, military, educational, religious, and fraternal] group meetings and association meetings," Jenci says.
These groups may have been priced out of resorts in the past, he adds, but now they are finding availability and deals at luxury properties. Ocean Place is offering a per-person, per-day complete meeting package rate of $199 including oceanfront rooms through the end of April with a minimum of 10 rooms.
Jenci says he is seeing companies consolidate regional events into one conference to save costs, and the opposite as well—companies breaking up large national events to save on travel costs. But one thing is clear; it's not just perception issues at play.
"In the past, we've never heard 'Our budget is X' upfront, and in the beginning of a conversation. Theme dinners, activities, started the conversation last year," he says. "Now the conversations are starting with 'this is our budget, what can we accomplish?' "
The resort, with 40,000 square feet of meeting space, is accessible by train and ferry from New York City, adding to its appeal for meetings, he says.
Recent studies seem to support the idea that companies are favoring smaller regional events. Meetings technology company Worktopia said budgets were tightening for 71 percent of respondents in a customer survey of 60 corporate travel managers, directors and planners released at the end of 2008. Among that group, 32 percent were looking to break up national events into regional meetings. American Express Business Travel in their annual global business forecast for 2009 advises clients "a movement toward shorter events in more local destinations should help corporations achieve the best return on investment." And, though oil prices have fallen in the past months to around $40 a barrel, travel costs have a growing influence on site selection, according to PKF Hospitality Research in a survey of 129 meeting planners released in January. Nearly 50 percent of the respondents said gas prices and airfares forced them to change their meeting destination. The percentage of planners considering second- or third-tier cities in an effort to control costs rose to 38.2 percent in 2008, according to PKF-HR.
CVBs Look for Opportunities
One big winner in these troubled economic times has been New Orleans. The city already has more meetings and conventions booked for 2009 than what it held in 2008, thanks in large part to the city's draw for association business, which has remained steadier than corporate meetings. And the Big Easy is seen as a value destination for groups, helping it draw in more customers.
The pace of the growth has completely made up for the decline in bookings after Hurricane Katrina hit the city in 2005.
"The word 'Katrina' isn't even mentioned when we plan our business anymore," says Stephen Perry, president and CEO of the New Orleans Convention and Visitors Bureau.
Only two large corporate events have been canceled in the city through the CVB. Levi Strauss canceled a 155-person meeting scheduled for April after a companywide mandate to cancel offsite meetings. Blue Cross canceled a 50-person meeting in April after consolidating four planned events into two, reports The Times-Picayune.
The CVB is reaching out to customers with value-add packages as a "thank you" to its best customers, Perry says, with everything from help in marketing events to production assistance. Called "Extraordinary Experiences," the program was first launched in August last year and has been extended through 2012.
"We're seeing customers have to balance cost and ROI to a degree that they never had before. We're trying to show tremendous value," he says.
The packages are available to groups using the 1.1-million-square-foot Morial Convention Center and booking at least 1,000 hotel rooms on peak nights, and include free meeting space rental, food and beverage, value-adds like wireless Internet, and free marketing assistance.
For incentives, Perry says he expects to see a pick-up in new bookings for 2011 and 2012, as corporations look for value, domestic destinations instead of resorts in the Caribbean and Mexico. The CVB is positioning New Orleans as a "triple bang" for the buck, with a focus on value, corporate social responsibility, and experience. "Incentive are very leery right now about high-profile destinations," Perry says.
Rochester, MN, is also taking the "opportunity" of the downturn to target more business in its home state and surrounding states of Iowa and Wisconsin, says Brad Jones, executive director of the Convention and Visitors Bureau.
"That may not be a long-term strategy, but it's a great short-term strategy," he says. "There's some nervousness out there. We're seeing some attrition through the first quarter, depending on the business, up to 10 percent."
The downturn allows the CVB to be "much more creative," Jones says, adding that clients are more willing and open to bureau suggestions, and are focused more on the content of the meeting, than on the destination.
"For us, we're seeing more national business, people are much more open to coming here," he adds. "We have 5,400 hotel rooms and a good track record with national events."
Business Hotels Shift Focus
Hyatt Regency Century Plaza in the Greater Los Angeles area has long been a favorite for business travelers and meetings, but now the 726-room property sees an opportunity for targeting incentives and local business looking for a four-star property close to home.
"We have done some [incentives] but not a huge amount. Last year we did a very large American Express one," says David Horowitz, general manager of the Hyatt Regency Century Plaza. "It's not a core business, but interestingly as resorts have become less and less attractive, we are positioning the hotel as a great place for incentives."
Century Plaza has the opportunity to market itself as a destination hotel with the sunny weather, beaches, mountains, and golf of Los Angeles—just as any resort offers, he says.
"There are nuances, so that people can have a resort-like feel," Horowitz says, adding that the property spans seven acres with gardens, pools, and a spa.
Incentive or conference groups worried about the perception of excessive spend may be looking for a property that is still considered a business-minded hotel. The hotel is also hoping to score with local conferences looking to stay in L.A. to lower airfare costs.
"Now is a great time to buy, there's a lot more value," Horowitz says.
Like many business hotels, the Century Plaza has seen an impact from the economic recession in the form of shorter lead times and cancellations.
"We still get a good amount of leads, but the conversion ratio is not quite as strong as it used to be. The time from receiving the lead to booking it is taking longer, because everybody is afraid to sign the contract," says Horowitz.
There have also been some cancellations, and corporations that are reducing headcount at events, he adds.