The State of Government MeetingsNovember 1, 2017

The New Administration Has Created an Unsettling Uncertainty for Budgets By
November 1, 2017

The State of Government Meetings

The New Administration Has Created an Unsettling Uncertainty for Budgets
Planners attending The Society of Government Meeting Professionals’ 2017 National Education Conference had much to learn and discuss, including how the current administration’s policies will affect federal agency meeting budgets. Credits Christie’s Photographic Solutions

Planners attending The Society of Government Meeting Professionals’ 2017 National Education Conference had much to learn and discuss, including how the current administration’s policies will affect federal agency meeting budgets. Credit: Christie’s Photographic Solutions

Many veteran corporate and association meeting planners like to believe that the pressures and controversies that have intermittently flared up in the industry since the 2008 financial crisis are unique to them. The truth is, however, that government meetings always have been and always will be under more intense scrutiny, simply because they are paid for with taxpayer money.

That simple reality has led to a new set of concerns as political warfare and scandalous media headlines drive Washington, DC, as never before.

“The most important thing about the government meetings market right now, I think, is that we finally got over the scandals that hit the industry a few years ago,” says Michelle Milligan, CGMP, national president of the Society of Government Meeting Professionals while also working as an in-house planner for the Third Circuit Court of Michigan. “But at the same time, from a federal perspective, we’re also now in kind of a standstill. With every change of government administration, you just don’t know how things are going to go. For example, will there be as much money for meetings, more money, less money? And right now, with the new administration, there are also still a lot of government jobs that are vacant, so there is a lot of uncertainty about what those agencies are going to be doing with their meetings. So we really are at a standstill at the federal level.”

That uncertainty is taking a toll on Lori Kolker, owner of Rockville, Maryland-based Elle K Associates, an independent meeting planning company that has served major federal government agencies for 20 years.

‘Unprecedented Uncertainty’

“This has been a tough year so far,” says Kolker, whose largest current clients include U.S. Department of Education, U.S. Department of Customs & Border Patrol and U. S. Department of Homeland Security. The reason? A new administration that has created unprecedented uncertainty with a widespread and enduring lack of action so far.

“The bad news at the moment,” Kolker says, “is that the federal government started its new fiscal year on October 1, but I still have not gotten budgets from some of my largest clients for 2018. And that’s the first time in the 20 years I’ve been doing government meetings that has happened.”

What explanation is she getting from her contacts at her clients? “The messages I’m getting from those clients that are in limbo at the moment,” she says, “are along the lines of, ‘There’s a lot going on with this new administration, as you see on the news every night. I called upstairs to try to get an idea of what’s going on with our meetings for the coming year, and all I got in return was that nobody seems to know what’s going on now. So when that changes, you’ll be the first to know.’ Another one of my longtime clients said, ‘New administration. Things are weird around here. When I know what’s happening, I’ll let you know.’ The really bad news is that for weeks now, I have heard absolutely nothing from them.”

SGMP’s Milligan says she is not surprised by Kolker’s assessment. “I’m hearing that as well,” Milligan says, “from third-party SGMP members who plan meetings for federal agencies.”

Based on her long experience and her “inside the beltway” presence in greater Washington, DC, Kolker believes that what she characterizes as unprecedented gridlock among major U.S. government agencies represents a head-on collision between two factors well known around the country for months. The Trump White House has been slow to fill many top and midlevel non-Cabinet jobs at government agencies, at the same time the new administration is making equally unprecedented budget cuts across the government, with the exception of the Pentagon.

“What we don’t know yet is what lasting effect those two things will have on the government meeting industry going forward,” Kolker says. “And I am absolutely dumbfounded by that. I would never in a million years have ever believed we’d ever see anything like what we’re seeing. I’m at a loss for words, really. It’s shocking.”

A More Optimistic Perspective

Maureen Ford, owner of 20-year-old, Pasadena, Maryland-based Ford Hospitality Services Inc., another longtime independent planner of meetings for major federal agencies, does not share the assessment made by Kolker and Milligan that uncertainty is causing a virtual standstill in the market.

“I’m not seeing that concern about new budgets,” Ford says. “The clients I have already have their 2018 budgets approved. So that has not been an issue for me. But of course, there are going to be some that do not have their budgets yet. And I do agree that is simply because of the transition to a new administration.”

Ford believes that seven years after a major meeting-related scandal rocked the General Services Administration because of excessive and in some instances outrageous spending at a Las Vegas conference, the cloud that hung over government meetings for years has finally dissipated. GSA is the agency that broadly oversees government meeting policies such as per diem payments for hotel rooms and food.

“I actually think things are improving now,” she says. “When the whole GSA scandal happened a few years ago, it was absolutely horrible for us as third-party planners. Certain agencies cut us off completely. One of my largest clients was within the Department of Justice, as an example. And after the scandal, they were intimidated and told they could not work with us anymore. And a number of my clients told me that behind the scenes — that they were being pressured not to work with me. And it was because of the debacle of the GSA scandal. So thankfully, all of that has gone away now and things are back to normal.”

The pressure to stop using Ford Hospitality Services was only half of the problem, she says. “The other thing was that a lot of the agencies who did continue to work with us really cut back their budgets because the people in these agencies that approve the meetings were afraid of what their expenditures might look like if they got out there. Even worse was that some clients were told by their supervisors to use teleconferences or webinars instead of face-to-face meetings.”

Cost-cutting?

Serious concern is being expressed among government planners that Trump administration budget cuts will cause many meetings to be cancelled in favor of less expensive online meetings or webinars. “There is a concern now over how many meetings will continue to be held in person versus how many will become a webinar or a web-based meeting,” Milligan says. “I think that’s at the forefront of planner concerns now.”

And given the uncertainty created by the Trump administration, that current concern could morph into a career challenge in the foreseeable future. “That concern has been there for some time now,” Milligan says. “But it’s really there now because of the new administration and the talk about cost savings. So as planners, we really have to push back and make the case for why face-to-face meetings are so important.”

The anticipation of broad budget cuts, in general, also are currently of concern to many planners, according to Milligan. “There don’t appear to be a lot of budget changes yet,” she says, “but there certainly could be.”

The good news on that count, Kolker says, is that “so far, it looks like budgets, at least the ones I’ve seen, are at the same levels as last year. That means they’re flat. But at least they’re not being reduced — yet.”

Meanwhile, the new GSA per diem rates released October 1 for hotel rooms, food and ancillary services such as audio-visual, were increased over 2017 rates, as a result of rising costs across the board worldwide.

At the same time, however, Kolker says, the number of attendees for some major meetings is trending downward as budget concerns grow with fiscally strict Republicans in complete control of the government.

One bright spot in the market, Kolker says, is that she is now booking considerably more meetings hosted by associations that have their events paid for by the federal government because of the role they play in developing government policy. “The really good news is that I’m now getting a ton of association meetings that are funded by the government,” Kolker says. “And a number of those meetings I’m getting now are funded by the Department of Education. I just booked an association meeting for 700 people in Chicago next March that’s one of the ones funded by the government.”

Hotel Rates and Negotiation

A major difference between government meetings and corporate or association meetings is that costs for hotel rooms and food are fixed, based on GSA’s annual per diem rates, which cover the entire world and are broken down by destination and time of year.

As a result, Ford says, the simple and essential mantra of government planners is “per diem or better. Period.’ ”

Despite the fixed costs, hotels love government business, Kolker says. “And they are coming in with incredible deals,” she says. “They’re offering complimentary this and complimentary that. And many of my clients cannot pay for food and beverage, so I tell the hotel I need this or I need that, like a complimentary breakfast or a free welcome reception, and they’re giving it to me.” She believes that the motive behind the concessions is that hotel sales executives understand the unique pressures that government meeting planners now face in terms of costs, while also very much wanting the business. “They also know how much volume there is in the government market and that, until this year at least, that volume was stable,” Kolker says. “As soon as they see ‘government meeting,’ the first thing they say is ‘what do you need? What can I do?’ ”

Somewhat ironically, perhaps, one reason hotels like government business so much is that there is virtually no negotiation of rates. “There’s the government per diem, so there is nothing to negotiate. For the hotel, it’s take it or leave it. And they take it.”

Yet another reason hotels covet government meetings is that they last longer. Typical government meetings last a week, with Sunday check-in and Saturday departure, Kolker says, adding that even those that are shorter almost always last six nights.

Food and Beverage

Another quirk of government meetings is that many federal agencies do not allow any expenditure for food and beverage. Individual attendees pay for their own meals and are then reimbursed by their agency for the per diems.

“That means that for many of my biggest clients, there is also no negotiation over F&B,” Kolker says. “In general, even though some agencies do still use the per diem food rate to accommodate a group as a whole, after the scandal a few years ago GSA put tighter oversight into place, which in turn convinced agencies to have attendees dine on their own based on their per diems.”

In today’s market, Kolker says, the only time she does F&B as part of a major meeting is when sponsors can be found and convinced to pay for it.

Unlike Kolker, Ford typically books hotel rooms, food and beverage, and ancillary services such as audio-visual. And each is based on a prevailing GSA per diem rate.

“So if you want to use that food per diem for a group, for breakfast, lunch and dinner, you just add up the per diems for the day and then multiply by the number of attendees,” Ford says. “And you get a purchase order for that amount.”

She then negotiates with the hotel. “And in general, hotels do ‘government’ menus to hit the per diems,” she says. “And depending on the volume of meetings you do as a planner, you can negotiate better deals with the hotel than you could ordinarily afford on the per diems.”

On a state or local level, there is typically more budgetary flexibility when it comes to F&B, Milligan says. “For my job in Michigan, I can do F&B. I just have to follow the various per diems for food or a break or whatever it is. But we can also get exceptions, if for some reason the hotel’s rates are higher than what the per diem allows. And various Michigan agencies have their own per diems for what you can spend for each type of meal, like breakfast. But again, there are sometimes exceptions made if you can show there is no way you can get a particular meal in a particular place for the per diem.”

Perhaps most surprisingly to corporate and association planners, government meetings planned directly on behalf of the sponsoring agency are executed with no contract. “The agency just issues a letter of intent that’s not even binding,” Kolker says. “But it does include everything we negotiated. And the hotels accept those because it’s like with the national debt. The government is behind it, so people know the commitment will be honored.”

Her hotel commission is not covered in the letter of intent. She attaches an addendum to the letter of intent.

Another significant difference between government and corporate or association meetings, Ford says, is that “a lot of my government clients have to go through multiple channels just to get approval of a meeting. And again, that’s something that came as a result of the GSA scandal. Things are getting a little better now, but getting a simple approval is often very complicated. That is typically not the case with corporate meetings, where there aren’t so many layers of approval required. So government meetings often take a lot longer to get approval.”

Looking to the Future

One specific concern government planners now share is “how much money there will be to put into a meeting,” Milligan says. “Often, there is the expectation from a government agency that you can go plan a big conference, but have very little money behind it. And in particular, that happens a lot at the local government level. But in general, I’d say that’s everyone’s biggest concern now. In other words, agencies say, ‘They want me to plan this wonderful event, but spend as little money as possible.”

Another perspective broadly shared by planners is that the GSA scandal permanently exacerbated concerns about the potentially toxic relationship between costs and optics.

“But today, no one is ever spending the kind of money on things like the ones that caused the scandal,” Milligan says. “And it was never true that the kind of spending that caused the scandal was anywhere close to typical. Those were individual, isolated incidents. But unfortunately, based on the publicity, the whole industry was called out for overspending. But that was just not true. And for statewide and local meetings, there was never any indication that agencies and planners were overspending.”

Most important of all, in Ford’s opinion, is that fact that the government meeting industry is “pretty much back to normal. But the stigma of the GSA scandal has stayed with planners,” she says. “That means you just have to be very, very careful when it comes to cost and perception, because with the kind of mainstream media coverage that Washington scandals get now, it would be horrible for all of us if anything happens with regard to how government agencies spend money on meetings.” AC&F

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