Experts say that corporate meeting spending should see a small bump in 2005, as planners and suppliers report slightly larger budgets, along with greater executive oversight.
For the second year in a row, budget increases should outpace inflation and price increases, but not by much. "Generally, our corporate clients are forecasting modest budget increases in the five to ten percent range," says Dave Lutz, president of Conferon Inc., a meetings management firm in Twinsburg, OH. "Some companies are still cutting back, but generally we're looking to see more money, especially for recognition and incentive events."
But bigger budgets come with stricter approval processes, Lutz says. "In the big corporations in particular, approval policies for meetings are getting more stringent. There are a lot of rules and regulations due to the Sarbanes-Oxley laws and increased internal scrutiny. But that doesn't necessarily mean fewer meetings. It just means more red tape."
One effect of all that regulation is that ever-higher levels of approval are required for purchase orders, which adds another layer of hassle to contracting with suppliers, already the job's biggest headache for many planners.
Pharmaceutical and medical meetings in particular will see a lot of scrutiny in 2005, say medical planners. Laws in the pharmaceutical sales field, which are meant to prevent kickbacks to doctors from drug companies, can sharply limit the amount of money spent on all kinds of medical events. But planners say the shows go on despite the red tape. "Each company we work with has its own way of interpreting the codes," explains one pharma planner. "They may enforce a per-person spending limit for food and beverage, but then they may be able to spend more on venue rental, or on getting creative with décor."
Meanwhile, many venues, particularly in cities like San Francisco, New York, and Washington D.C., are using the recovering market to nudge prices upwards.
"The negotiating climate is still in the buyers' favor," says Conferon's Lutz, "but we are seeing suppliers place a higher premium on meeting space." Groups that were comped meeting rooms in 2004 are more likely to be charged for that space in 2005, or else they'll have to commit to bigger room blocks or more food and beverage spending. Notes Lutz, "The more food and beverage you do, the better your chances of getting meeting space thrown in."