Citywide meetings — the lifeblood of many associations because of their generation of revenue and their broad, clear educational and promotional benefits to attendees and their industries — are prospering again after facing attendance and budget challenges during the depths of the recession.
At the same time, however, the rules have changed in ways that can make planning a citywide event more difficult for planners.
“What has really changed in the market…is availability,” says Amy Ledoux, CMP, CAE, senior vice president, meetings and expositions, at ASAE The Center for Association Leadership. “And related to that is the change from a buyer’s market to a seller’s market.”
A significant market change that many planners are seeing, Ledoux says, “is that they might be looking at cities that they might be interested in going to, but those cities might not have availability on the dates they want or at the rates they need. There is more demand than there has been in the past.”
As a result, planners now face the dilemma that a seller’s market creates.
Heather Rhoderick, CMP, CAE, vice president, events and education, at the American Composites Manufacturing Association (ACMA) in Arlington, Virginia, agrees with Ledoux that availability of convention venues and dates are now key issues. “Things like the total space or the number of meeting rooms are issues that relate to specific convention facilities and whether they’re right for your meeting,” Rhoderick says. “Then you also have the issue of dates and whether you can get the right facility in a particular destination when you need it.”
Likewise, Rhoderick says hotel availability and rates in a market driven by resurgent and still increasing demand are another challenge — one based on demand versus available inventory, a formula that is driving rates up quickly. “Everybody is raising their rates now,” she says.
“And in many cases, rates are considerably higher than they were two years ago.”
She also finds that some large, major meeting hotels are now showing a preference for meeting business that stays in-house rather than using the local convention center. In turn, once a planner expresses an intention to host meeting sessions at the convention center, that makes negotiations with the hotel more difficult because they attempt to extract every possible dollar from room rates, a continental breakfast, function space and so on.
“We’ve always been consistent with what we deliver for the registration fee. And that’s important, regardless of what city you’re in or what your budget is.” — Heather Rhoderick
In turn, Rhoderick says, that puts more pressure on her total budget and ability to maintain the overall standards her attendees are used to. “We’ve always been consistent with what we deliver for the registration fee,” she says. “And that’s important, regardless of what city you’re in or what your budget is.”
To deal with budget and revenue challenges, ACMA has adopted a multi-level registration plan. “Instead of taking anything away, we decided to offer options.” Those include a premium category that includes “absolutely everything an attendee could want,” Rhoderick says. “But we’ve also given them options below that if they think a premium registration costs too much.”
As one way of dealing with budget and availability issues, more and more associations are booking their citywide meetings years — and sometimes as much as a decade — in advance. As a result, more and more major destinations are seeing more and more future business on their books. And that, too, can lead to availability and date issues, even if the meeting is being planned well into the future.
“There is always going to be someplace to put a meeting,” Ledoux says. “But if you have a large meeting — one with 5,000 to 20,000 people — sometimes those locations are harder to find now.”
Although the association meeting market has largely returned to its prerecession health and well-being, budgets remain flat for many of them. That means that in many cases, they must increase registration or exhibition fees to cover increased costs.
“It’s becoming more expensive for the organization to put on a meeting,” Ledoux says. “We’re just not able to get the room rates anymore that we got during the recession. But because of those low rates back then, a lot of planners have become accustomed to room rates that are under $200. However, now that there is more demand, hotel rates are getting back to where they were before the recession.and it’s difficult for an organization to explain that to their members. Even if the association keeps its registration rates the same, the attendee is probably still going to be paying more, because air travel is costing more these days, too.”
As a result, many associations have to adjust their agendas in a way that will reduce costs, but not diminish the value of the meeting. “For example, they might do away with some things, like providing breakfast or coffee break,” Ledoux says. “Or they cut their grandiose buffet by $10 a person.”
Food and beverage costs also are becoming an issue for many planners, says Steven Stout, CAE, director of meetings and special events at Hospitality Financial Technology Professionals (HFTP) in Austin, Texas.
In general, he says, convention centers have held the line on pricing. “But F&B prices at hotels have skyrocketed.” And the main culprit is increased service fees, which have reached unprecedented levels of more than 20 percent in some high-demand meeting hotels in A-list destinations.
There also are extreme examples of price hikes, such as the cost of a gallon of coffee, Stout says. “I saw one hotel recently where the cost of coffee was $110 a gallon.”
As a result, many meeting planners, including Stout, now look first at the cost of coffee as a predictive metric of other hotel costs for the meeting. “We even put the cost of coffee on our RFPs now,” Stout says.
As a result of rising meeting costs, sponsorship revenues have become more important than ever. And thankfully, corporate budgets have largely returned to normal, meaning that money is available again.
But at the same time, the process is evolving. Sponsorship dollars, once fairly generic, are now being targeted at specific elements of a meeting, whether that’s content or entertainment.
“Most sponsors today want to see more unique and different types of engagement opportunities,” Ledoux says. “They’re not so sold anymore on just sponsoring a coffee break. They want to make sure that the things they do really reflect their brand. For example, the Austin Convention & Visitors Bureau brand is very much linked to music. So they like to sponsor events that relate to music as part of their branding. So more and more, it’s a matter of matching the needs of the sponsor to the meeting. There’s a lot more of that going on now. Sponsors want to see more of a return on their investment.”
And although sponsorship budgets are nearing pre-recession levels, Ledoux says, there is much more competition for those dollars.
Challenging market conditions also are prompting planners more than ever before to consider second- and third-tier destinations as a cost-cutting measure. “And sometimes second- and third-tier cities are willing to offer concessions, whether that be at the convention center or on hotel rates,” Ledoux says. “So a lot of associations are now exploring more options when it comes to destinations than they might have before.”
That, in fact, she says, is one of the most significant changes over the last few years — to the dramatic benefit of second- and third-tier destinations, which have gained more market share than at any time in the past.
Budget pressures have motivated Rhoderick to start to consider second-tier destinations. In 2016, she will host her annual meeting in Salt Lake City. “And that’s a destination we probably would not have considered before,” Rhoderick says. “But in terms of everything we looked for — except for the airlift, which is usually the challenge with second-tier cities — Salt Lake City has all of the things we were looking for.”
And, she adds, bang for the buck was a key factor in the decision.
Stout is very willing to look at second-tier destinations. “We’ll go wherever the deal takes us,” he says. “Of course, we take other things into account. But if we get a really great deal from a particular destination, even if it’s second-tier, we’re not afraid to go back if we had a really good experience and also got a good deal.”
Stout met in Minneapolis one year, and the following year HFTP convened in Austin. “They’re both fantastic destinations,” Stout says. “And once attendees arrive, they just love being there.”
He also hears anecdotally more frequently now from peers that more and more association planners are increasingly open to second-tier destinations. “It’s interesting to see that destinations like Minneapolis, Austin and Raleigh, North Carolina, have been getting more business than I would have ever thought possible,” Stout says.
In turn, the challenge for planners and organizations is the potential effect on attendance. “That means it’s on the organization to sell the meeting and not the destination,” Ledoux says. “If there’s enough value in the meeting itself, people shouldn’t really care where the meeting is taking place. But the truth is, a lot of people do. There’s a certain allure to certain destinations. But I also think that what associations are finding is that when they go to second- or even third-tier destinations, the experience that is delivered in many of those cities is really quite exceptional. And they’re finding that their attendees have an exceptional experience. And part of that is being treated like a big fish in a small pond. The attention of the entire city is on your meeting, to make sure that it’s successful. And when an association can have an experience like that and say, ‘Wow, that was a phenomenal meeting,’ that really opens their eyes to second- and third-tier destinations.”
Many second- and third-tier destinations have fascinating histories, interesting local architecture, unique local cuisines and other factors that are natural lures if investigated. “So I think highlighting what is unique about those kinds of cities and helping attendees embrace and explore the city is another thing that’s driving the interest in those destinations,” Ledoux says.
“And because of that, some associations end up going back because the experience was so good.”
Somewhat surprisingly, technology — which has transformed meetings for both planners and attendees over the past decade — often presents challenges for large citywide meetings.
One issue is bandwidth at convention centers and cost of wireless. “Those are definitely things we look at now and discussions we have with the convention center,” Rhoderick says. “Attendees expect to be connected now, with good Wi-Fi, no matter where they are.”
Because he plans the annual meeting for a technology-based association, Stout says the topic is always an important one for him. “We’re a big technology show, so Internet at the venue is always a big issue for us,” he says. “We always try to make a pre-emptive strike before the event, and we have an entire meeting with the convention center that is just based around Internet service to talk about our needs. We do that because in the past we’ve told a facility what we need and they’ve said, ‘Oh, that’s no problem.’ And then there’s a problem.”
He agrees that a shocking number of major convention centers have fallen behind in terms of the bandwidth required to meet today’s demand for multiple devices from the typical attendee.
“That kind of surprises me and it kind of doesn’t, because our members are primarily technology people from hotels,” Stout says. “And a lot of hotels have the same issue, which is bandwidth for their guests.”
Based on that, in fact, HFTP hosted a session at their meeting in Los Angeles on how to improve technology for hotel guests.
Like other associations, in the recent past he has experienced sessions that were down because of technology issues and digital signage that didn’t work properly. “Then we realized that the hall downstairs was down when the show opened,” he says. “And that’s really bad for us, because a lot of our exhibitors don’t have physical products to show. They do that on the Internet. And they were down for an hour and a half.”
Concerns over the quality and consistency of Internet service at his meeting is now “a constant issue,” Stout says, “so much so that it can determine where we’re going.”
Another issue that Stout finds troubling and frustrating is what he calls “housing pirates,” often questionable companies that contact his exhibitors and attendees and represent themselves as the housing bureau for the event. “That seems to be a real trend now, not just with my group, but with many groups,” he says. “They call people and say, ‘Make sure you book your room with us. We have great rates.’ And people get confused and think these companies are the official housing bureau, but they are not.”
HFTP has encountered serious issues with housing pirates. “For example, we had a company that booked with one of these companies and gave them their credit card information and showed up onsite thinking they had a block of 20 rooms for their team,” Stout says. “And the hotel had no record of their reservations.”
They ended up paying for hotel rooms twice. And they’re still trying to recover the money fraudulently charged to their company credit card. It’s not even known whether the perpetrators are in the U.S.
Now, Stout says, HFTP asks attendees and exhibitors to forward all solicitations to them for independent assessment of legitimacy and potential for legal action.
A positive trend that Stout, along with Ledoux and Rhoderick, see in the market is a steady increase in international attendance.
Growth in international attendance is one of healthiest things happening for U.S. associations since the recession, Rhoderick says, especially with domestic attendance flat at best for many associations.
Like many associations, ACMA enjoys a growing number of international attendees for their big show. “And that’s one of the reasons why we chose Orlando for our meeting,” she says. “It has good international airlift.”
HFTP expects to set a new record for attendance. And a big part of that milestone, Stout says, will be international attendance.”That has really helped build our show,” he says. “And it has also helped make our show floor more international, which makes the meeting much more interesting for people.” AC&F