Industry Worries Over Energy Costs

As the price of oil hit $64 per barrel in January, energy-related price hikes for meetings seemed inevitable. To gauge this, an online poll was conducted at SM's MiMegasite.com. It can't be known for sure whether all 50 respondents were meeting buyers, but the results seem telling anyway: Seventy percent said they expect high energy costs to have at least some impact on meetings they are involved with this year. Thirty-four percent said that as a result of rising energy costs, they expect to see fewer off-site meetings in 2006; 22 percent said the quality of certain aspects of meetings will be cut back to offset the costs; and 14 percent expect fewer attendees.

According to Brad Weaber, senior vice president of Conferon in Twinsburg, OH, the concern is well founded because of the threat that rising fuel costs pose to the airline industry. Considered in conjunction with the recent folding of Independence Air, rising fuel costs could be considered "a precursor to other low-cost startup airlines having trouble," which could then lead larger carriers to raise their prices, says Weaber. In fact, JetBlue recently announced a rare quarterly loss, blamed on fuel prices.

Still, 30 percent of respondents foresaw no effect on the number, size, or quality of their 2006 meetings. "I'd expect absolutely no impact," says Julie Smith, vice president of operations for Langhorne, PA-based Signature Marketing Group, who plans sales and incentive meetings. But Smith admits that in some cases, she needs to increase budgets, particularly for air travel.