It has been two or three years since many American corporations held a meeting abroad. But now that the economy is slowly reviving and the public perception issues that kept many corporations from meeting anywhere since the federal TARP bailout are fading for firms that did not take government funds, it's time for companies with international divisions and customers to start looking across the seas.
While the pullback may have been necessary, it means that it has been two or three years since managers were brought together to learn about strategies and goals, since employees of international divisions were able to talk to their counterparts in other countries and on other continents, since channel partners gathered to discuss best practices and learn about upcoming products, and since salespeople were brought together to be motivated.
"You hold meetings to have an effect, to align people around corporate strategies," says Steve O'Malley, vice president and general manager of Maxvantage, a strategic meetings management alliance between St. Louis-based Maritz Travel and American Express Business Travel. "There is an immense value to having face-to-face meetings. Companies need to recognize that value."
Still, if you haven't been out of the United States in a few years, the fact that it is a buyer's market is not the only change. Here is a meeting buyer's guide to what's going on, and where the destinations worth considering are.
Lock In Low Rates
"What we are seeing currently is there has not been a big pickup in demand among U.S. customers for international destinations," O'Malley says. "On the incentive side we are seeing more requests for international destinations, but on the meetings side companies are still feeling their way.
"It's a buyer's market," he continues. "Now is the time to make commitments for short-term and longer-term group travel. Do multiyear deals. Hotels feel they will have pricing power again by 2013."
His customers are not the only ones that feel that way. "Business travel is coming back, there is no doubt about it," said Craig Banikowski, president & CEO of the Alexandria, VA-based National Business Travel Association (NBTA), when the NBTA Foundation released its 2010 Industry Pulse survey in late September. "Companies are already getting their teams back on the road to help build business. As the economy continues to improve and both domestic and international costs rise, we will see airlines and hotels wield more negotiation power … the buyer's market we've been able to take advantage of over the past few years may be slowly turning around."
The NBTA Foundation found that the corporate travel managers surveyed estimate their outbound international spend was up 13 percent this year and will grow by another 11.4 percent in 2011.
How much of that growth will consist of group travel is unclear. O'Malley says Maxvantage's transient business travel market shows signs of returning to 2007 levels next year.
"We are seeing a recovery in business travel, but it is a little slower in groups and meetings," agrees Steven Powell, senior vice president for worldwide sales for Denham, England-based InterContinental Hotels Group (IHG). Recalling a chart, he adds, "The line is going up, but not as fast as we want."
Lead Time Is Growing
Many planners have gotten used to planning meetings and events at the last minute, often due to uncertain budgets. However, in the last few months, some meeting professionals say it has been because corporate planners and executives want to use up their budgets before the end of the year.
For more elaborate events and incentive programs, "2012 is the conversation point now," says Phil Mullins, president of WMI Travel Management in Deerfield, IL. "Meetings see a shorter lead-in time—one to four months is not out of the realm of possibility—still, 12 to 24 months is more common," he says.
On the other hand, growth in individual business travel means that group planners—particularly those considering popular European business destinations—may not have the freedom to book on as short notice as they have enjoyed in the last couple of years, Powell says, especially on Tuesdays and Wednesdays, when most U.S. business travel happens. "If you want high-demand dates, rates will not be as negotiable either," Powell says.
In the short term, the group travelers IHG expects to see are high-level executives, Powell says. "They will be the first ones back on the road, in smaller groups. We are not seeing [the recovery] in our mid-tier brands. It is in InterContinental and Crowne Plaza."
Deals Beyond Room Rates
"Don't be afraid to negotiate," says Tanya Feldman, manager of group event management for West Des Moines, IA-based performance improvement and meetings management company ITAGroup. "They want your business."
While Powell warns that European meeting and event contracts are less attrition-friendly than in the U.S., many hoteliers and other international suppliers are willing to dicker on this and other perks that can cut meeting budgets more than they are on already-reduced room rates, says Kimberly Holtel, director of marketing communications for Dayton, OH-based Excellence in Motivation.
EIM's incentive, meeting, and event travel managers have found many hotels "are offering a menu of concessions" from which customers can choose four or five that best fit their needs. "These are above and beyond normal concessions," she says. "International vendors are more willing to negotiate for business."
This is true even at the top of the market. In September, Four Seasons Hotels and Resorts introduced the Meetings Made Yours package, which offers value pricing—room rates at participating properties start at $120 in the Asia/Pacific region and 175 euros in Europe, the Middle East, and Africa—as well as a choice of four of seven concessions, including a welcome reception, a daily coffee break, a suite upgrade with every 25 room nights, and a 15-percent room attrition allowance.
In Monaco, all four hotels owned by Monte Carlo SBM Hotels and Casinos have not merely joined the principality's other properties in a program arranged by the Monaco Government Tourist and Convention Bureau that offers guaranteed group rates in U.S. dollars. Adding to the spirit of cooperation, and adding value, they are including Internet access in guest and meeting rooms, access to the spa and fitness center, and shuttles from the hotels to the casinos in those rates, says Cathleen Williams, director of group sales North America for SBM.
"We did not drop our group rates to the basement," notes Williams. "How can I tell a client I'm giving them my best rate and then drop it 40 percent? We can negotiate other things. We have one of the best attrition policies, especially in the shoulder season."
Air Travel Woes
"The new reality is, air travel is an unpleasant experience," says O'Malley. "Flights are very crowded, and now I also believe we will see prices increase in 2011."
The NBTA Foundation 2010 Industry Pulse survey says that corporate travel managers agree: It finds an increase of nearly 3.25 percent for international air fares in both coach and business class this year, and predicts a rise of 3.8 percent in coach and 3.9 percent in business class in 2011.
"Airlift was always a little bit of a question," says Mullins. "There is not as much space as there used to be a few years ago, especially for more than 100 to 200 people."
Beyond that, the growing frequency of flight cancellations, combined with reduced numbers of flights to many international destinations (particularly second and third-tier destinations), makes lift a concern, O'Malley says. "It has to be part of the planning. If you miss a day of a meeting, it can be devastating."
That said, while it "taints our ability to have a flawless experience at a meeting or event, attendees are immune because they are used to it," he adds.
Where To Go
What the popular destinations are for a meeting depends on which planners and meetings management companies you talk to, who their clients are, and what industries they are in.
Still, some common themes arise. For instance, Ireland and Spain were mentioned as destinations that many meeting and incentive planners are looking at. That's probably not a surprise as the depth of the economic problems in those countries makes them bargain destinations. In that vein, cruises to the Greek islands were also mentioned.
Europe
Aside from Ireland, Spain, and Greece, two European destinations that several planners mentioned were Italy and England—notably London. "Due to the 2012 Olympics, there are a lot of updates in London," says ITAGroup's Feldman. "New venues, and new and renovated hotels."
And while clients are only "gradually looking at Europe again," says Mullins, he is bullish about London for reasons other than the Olympics, which can raise cost concerns with incentive clients. "In the last few years, London has offered far more access to royal venues," he says. "You can rent the Tower of London for the same price as other venues that do not offer nearly the pageantry. You can have an event at Kensington Palace—for example in the permanent display of Princess Diana's dresses. Why rent a banquet hall?"
IHG's Powell says European capitals like London and Paris are strengthening, and Moscow is improving as well.
Along with Spain and Portugal, Feldman mentioned Monaco as a good value, adding that its U.S.-dollar rate guarantee is popular with clients. The same applies to Switzerland, she says, which adds security-friendly neutrality to the mix. And Vienna and Prague are coming back, she adds. EIM saw European requests slow in October as the U.S. issued a travel advisory and many countries warned of the possibility of imminent terrorist attacks.
And cruising is popular everywhere from the Dalmatian Coast to the Baltic and Mediterranean, says Holtel. Bill Boyd, president and CEO of Sunbelt Motivation and Travel in Dallas, adds Barcelona to the list, noting, "cruises are in U.S. dollars, there's no gamble."
The worsening exchange rate is causing a problem for European destinations, Boyd says. "It wasn't a big thing three months ago. Now it is. What we were selling at $3,000 per person a few months ago is now $3,400. That's a deal-breaker."
Mullins, on the other hand, doesn't see the exchange rate as a problem, saying it "is not out of its normal band" and advising corporate executives planning a meeting to buy currency futures to lock in their costs if they are concerned.
Asia
Asia is the muddiest picture. On the one hand, it is where more and more commerce is happening, so inevitably many companies want and need to hold meetings there. Beijing and Shanghai in mainland China, along with Hong Kong and Singapore, are major business centers. On the other hand, travel time to the Far East can be triple that to Europe, and airfares are far costlier. The same applies to India.
But Powell says IHG is seeing growth in Asia, where hotel occupancy rates are as strong as those in major European business capitals and business centers. "Asia dropped very quickly in 2009—double-digit drops—but now it is showing double-digit increases," Powell says.
"We are showing Asia, but it has to be the right client with a good budget and the right demographic of participants—higher income and well traveled," says Feldman. She adds Vietnam and Cambodia to the list.
Boyd says Sunbelt has not sent an incentive client to Asia in six years, but that has "less to do with money than travel time." He adds that public perception issues can still be a factor with a destination as far as Asia.
Caribbean & Mexico
The Caribbean and Mexico have a number of advantages, most notably geography. Both are close enough to be easy flights—excluding a few of the smallest Caribbean islands that require transfers.
Thus, while most international destinations are booking largely for 2012 or thereafter, "the Caribbean is still booking for 2011 and looking very strong," says Feldman. "Mexico is looking good for those clients with tight budgets as there are good deals in Mexico."
Mullins agrees, noting that both "still make so much sense from a cost perspective, and the quality has gotten phenomenal." The latter point is particularly true of Mexico, where the last few years have seen "very dramatic new developments" in the resort market, he adds. Boyd points to Cancun—where the beach has been fully restored to its original width and glory—as well as Los Cabos, Puerto Vallarta, and the Riviera Maya as destinations where "new properties are popping up all over."
Mullins points to Cancun and particularly the Le Blanc Spa Resort, a five-star all-inclusive "that has a real focus on both quality and value." It's not the only Mexican resort embracing the budget- and planning-friendly all-inclusive scheme.
The Fiesta Americana Condesa Cancun goes all-inclusive this month, and Sol Melia Hotels and Resorts' ME Cancun just announced that on Jan. 1, it will be "moving to an all-inclusive program without changing the experience," says Raul Petraglia, the resort's managing director. All of the restaurants and bars, and the beach club and spa, will be part of that, he adds, noting that meeting and incentive planners have been asking for all-inclusive packages for three years.
And both Boyd and Mullins say Mexican drug violence is entirely off corporate buyers' radar at this point.
As for the Caribbean, there haven't been many new properties outside of the Dominican Republic in a while, Boyd says. Mullins notes that the properties are resorts, which some companies are still not comfortable being seen in. "But the travel time and cost are incredible," he notes.
And from an environmental perspective, Boyd points out, flying to Bermuda has much less of a carbon footprint than flying to Asia.
Originally published Nov. 1, 2010