The Return of Luxury Meetings

A dollars-and-'sense' approach to overcoming perception issues

In late January, meeting and incentive planners as well as journalists covering the industry gathered for the three-day 2011 Luxury Meetings Forum. The forum was held at the Ritz-Carlton Laguna Niguel in Dana Point, CA, less than a mile from the St. Regis Monarch Beach resort—where AIG held its now-infamous retreat almost three years ago. 

The location was quite fitting, since the matter at hand was changing the negative perception of luxury meetings. 

A spirit of cautious optimism prevailed at the forum. Even with a growing economy, it was widely conceded that over-the-top meetings and incentive trips have not returned. Attendees agreed that the emphasis now is on getting the most value possible out of tight budgets and ensuring that event objectives are met. 

Does that mean that luxury is completely off the table? Not necessarily, provided companies can leverage the impact luxury resorts and amenities can have on achieving the goals of meetings. Here’s a roadmap to connect those dots.

The Perception Puzzle
“When the AIG effect hit, the meeting and event world was really in an unstable position because they were already being tested by things like the faltering economy and new technology,” says Susan Radojevic, who heads up the Peregrine Agency, a strategic event alignment firm based in Toronto. “Organizations that understood meetings as more than boondoggles and junkets knew they would eventually do events again, but in the meantime, the negative public perception won out.”

Google “AIG effect” and you’ll get more than 4 million results—but comparatively few of them are recent. Tracy Latkovic, director of sales and marketing for the St. Regis Monarch Beach, believes her resort no longer is notorious. “We don’t hear about it anymore. The meetings industry rallied around us in a big way. The general population may not understand, but inside the industry we know that the AIG effect is old news.”

Old news or not, the brouhaha over AIG’s corporate retreat has caused a permanent shift in the meetings industry and marks the beginning of a new era of accountability. Planners understand that luxury resorts often come out ahead in terms of value, but perception continues to be an issue for the uninitiated—which can include a planner’s higher-ups.

Jennie Jacobson, the president and founder of Unique Events, Inc., a corporate meeting and event planning and consultancy group, is one who finds that some companies still are afraid of perception issues surrounding luxury properties. Her solution? “We just keep it low-key,” she says. “Most of the time when describing a resort property, we avoid the word ‘luxury’ opting for ‘deluxe,’ which is easier to digest.”

Meanwhile, after a few lean years, planners may find themselves paying pre-AIG prices again. “Trendwise, we’re on the upswing,” says Latkovic of the  St. Regis’ group bookings. “Because we saw an exceptionally long downturn, it was a buyers’ market. Now we’re having longer conversations.”

Tom Faust, vice president of sales and marketing for Omni Hotels, also is seeing meetings bounce back. “We continue to note an uptick in our group bookings; in fact, we’re seeing a 9 to 13 percent increase on a month-to-month basis. We’re booking more financial, pharmaceutical, retail, and oil and gas group business. Education and medical have been pretty steady.”

Giuseppe Lama, managing director of Pelican Hill, a five-star resort tucked between California’s storied Laguna and Newport beaches, says group business is coming back in the financial and automotive sectors. He expects stronger insurance business for Pelican Hill, while the St. Regis Monarch Beach already is recouping some of its insurance and medical/pharmaceutical clients.

“So far in 2011, we’re about 40 percent ahead of where we were in 2010 in terms of meetings bookings. We’re seeing even more growth for 2012, and longer lead times,” says Latkovic.

Yet groups aren’t rushing blithely back. Planners have had to find ways to finesse their budgets, like hosting shorter programs and less elaborate final nights, and giving attendees more free time. “We’re cutting back on flashy entertainment and decor,” says Jacobson, whose client list includes Fortune 500 companies in the biotech, entertainment, pharmaceutical, real estate, and technology sectors. “The budgets are definitely not all the way back. Companies have cut back on speakers, so we’re doing more CSR-focused activities,” she says. 

“More than cutting back, planners are just being savvy,” says Lama. “There’s a lot of accountability, so they need to see value in every dollar they spend with me. They’re not providing gifts in the rooms like you used to see. They’re not sending golf shirts to everybody.”

There also has been a major shift in the way the value of meetings is measured, and frugality is just the tip of the iceberg in the era of accountability.

The New Rules
“What I don’t see going away any time in the near future is justification of spend. If I’m going to take a meeting to a luxury hotel, I need to be able to prove that the meeting gets results,” says Patricia Kerr, director of distribution sales support for Manulife Financial. The emphasis now is on value, both in terms of a dollar amount and, crucially, in terms of how well a meeting achieves its objectives and contributes to broader corporate goals. 

Esther Podany, vice president of meetings and events for Pearson Higher Education, sees each event she organizes as part of a whole system. “I approach meetings as a shopper looking for the best value. My group organizes more than 100 meetings for our company each year. I need to get the best value for each event.” 

She, too, is keeping one eye fixed on her budget and the other on what her meetings accomplish. “If I’m hosting a training program, it’s crucial that all of the A/V setup and food are taken care of so that my attendees can really focus. What I value most is a smooth meeting where the planner can take care of issues as they crop up, before attendees are even aware of them.” 

Planners are leading the shift toward goals-based planning, and suppliers are adapting to this new reality. Pelican Hill’s Lama points to how much the initial meeting with clients has changed over the past few years as evidence of the shift. “We have a conversation about the goals of the program before a contract is signed. When we’re actually preparing, we keep in touch with the planner. The meeting could be a year away, but already we’re all aligned.”
Planners also have to consider what sort of message a luxury resort sends to attendees. “We’re trying to reward attendees in a meaningful way,” says Jacobson of Unique Events. “If people are outperforming their peers in this economy, we want to recognize that. A luxury resort says to them, ‘We value what you’ve done, and we’re going to provide a luxury experience to show you how much we appreciate your work.’ ” 

In order to demonstrate what a great motivator luxury can be, Jacobson points to an incentive program her company is planning for May 2012. Unique Events went into full gear early on and supplied the client’s employees with DVDs of the high-end resort. One year out, the room-block already is halfway booked with incentive winners. “The value of the experience has people working hard because we’re showcasing the destination,” she notes. 

How to Soothe a CEO
“A CEO might be worried about how using a luxury property is going to be perceived, and that’s really what has to change,” says Radojevic. “Planners need to take the ‘big picture’ approach and look at how the meeting is going to get aligned with goals, be measured against goals, and then how the design of the meeting is going to impact those goals. Part of that design is where the meeting is going to be held, and if the planner makes sure the property will facilitate goals being met, then negative perceptions will change.

“I think the reason there’s so much misperception is that the big picture of meetings and events in general is not being addressed effectively enough,” Radojevic adds. “Executives more often than not perceive meetings as an outgrowth of travel and hospitality, and primarily a cost and not an investment.”

In addition, Radojevic says planners tend to talk about meetings-related products and services from a logistical point of view rather than focusing on outcomes. She suggests redirecting the conversation to focus on how hosting a meeting at a certain venue will help build business and develop leadership within the organization. 

“Don’t say, ‘Here’s a luxury property that we think is going to fit, it has 50,000 square feet and good breakout space ...’ A C-level executive doesn’t care about that. She cares about how the venue is going to fit into the larger picture, and about how the business of meetings is affecting her or helping her grow the top or bottom line,” says Radojevic.

Bridget Russell, national account manager for Experient, uses a simple template to quickly match an event to an appropriate property category. “Executive meetings and sales incentives will consider luxury properties. National sales meetings will look at four-star properties either within a downtown area or a resort location—depending on whether or not outdoor activities are being offered as part of the program. Training meetings typically look at limited service properties due to budget,” she says.

Russell also outlines her strategy for site inspections, and emphasizes tailoring questions to suppliers to the type of event, to ensure that the property is the best fit. “Ask about the staff-to-attendee ratio for food and beverage events, for example. In a case like this, a higher-end property is more likely to have the staff necessary to ensure success. If recreation is extremely important, does the property offer these services onsite or will the client have to leave the facility? Again, this is a situation where a luxury property might be more appropriate for the event.”

The good news is that suppliers are getting on board the ROI train. “We want to partner with our clients and understand all the tools,” says Omni’s Tom Faust. “We’re working on a fall program of five events to address meetings ROI—how to measure it and what to focus on. We know you’re not going to be able to measure ROI without defining clear objectives upfront.”

Radojevic also puts emphasis on the big-picture business of a meeting. “Planners are still focusing on the ‘what’ and the ‘how’, and not the ‘why.’ So when they go to speak to C-level executives, more often than not they’re coming in with brochures and talking about the logistics of the space or maybe technology. But for the CEO, it’s all about tactics, and not about the business of the meeting itself. If you can’t speak to an executive based on what she needs or wants, you’re just spinning your wheels.” 

Radojevic believes in asking lots of questions, and the first one to ask is  always: Why? 

“What a CEO cares about is why she should do this, and how does this particular ‘why’ fit into her bigger picture, whatever that is,” she says. “One of the questions we always ask is, ‘Picture this event—what do you see?’ In the initial stages of planning, the organizer should be probing, developing questions that focus on the present time.” 

Sources also advocate asking, “What’s the goal?” Or if an executive comes to you with a preconceived idea for the meeting, try:

• “Why are you suggesting these options?” 
• “What are the alternate choices being considered?” 
• “How does this idea mesh with what’s going on right now within the company?” 

Sketching out the big picture yourself by asking questions the moment planning begins will help you realize the full potential of your meeting. But what if you’re still running up against perception issues when making your case in the corner office? 

Radojevic believes in addressing them head on. “People are passionate about different things,” she says, “and because the last few years have been a roller-coaster ride, one of the questions we tend to ask is, ‘Have you taken emotion out of the decision?’ Sometimes you have to focus only on the business side of things.

“If you can provide a core value proposition upfront, and that proposition outweighs the CEO’s perception of the event, then your proposition is going to win,” Radojevic continues. “A CEO always operates from 60,000 feet, and she looks at all of the parts of the whole to see how they fit in. If something doesn’t fit in, she wants more information. If she doesn’t get it, the answer is going to come back as ‘No, I don’t want a luxury property.’ ”

Radojevic adds: “The core value proposition has been, up until now, presented in terms of efficiency and process rather than a simple equation: ‘By holding this event and spending  this much money, this is what you’re going to get in return.’ That’s the  bottom line.”

Unique Events’ Jacobson also advocates focusing on goals and outcomes rather than logistics. “We show the value, and the reasons a certain property is a fit. A lot of the people pushing back have no idea, because to them it’s all about perception and budget. But if you educate them, you can change their minds. Be more thoughtful and strategic. Keep luxury meetings under the radar and, again, show value. It’s a slow process, but the economy is on its way back.”