Attendees Continue to Crave Engaging Experiences, But You Don’t Have to Bust Your BudgetNovember 6, 2019

Budgeting for 2020` By
November 6, 2019

Attendees Continue to Crave Engaging Experiences, But You Don’t Have to Bust Your Budget

Budgeting for 2020`
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Amy Durocher, of Global Cynergies LLC, says a charitable activity creates a positive experience for the team and for the community, and is always budget-friendly.

The experiential trend in the meetings industry looks to continue into 2020, and into the foreseeable future. Attendees of all types of meetings, not just incentive programs, seem more than ever to crave engagement beyond run-of-the-mill sessions and meal functions. The budget for the program must therefore support an impactful experience — however it is defined for a given group. A telling statistic comes from the American Express Meetings & Events’ 2020 Global Meetings and Events Forecast: With a 10% budget increase, most respondents said they would invest in an “improved on-site experience.”

Guiding that investment is the corporate culture, notes Amy Durocher, director of global accounts with Scottsdale, Arizona-based Global Cynergies LLC, a venue sourcing company. “More creative companies and those that have a higher percentage of millennial employees are going to be looking to create experiences that are different than perhaps your more traditional Fortune 500 or 100 type of companies,” she observes. Naturally, the type of meeting also informs the ‘design’ of the experience. A unique experience is clearly a high priority for incentive trips, for example, and that can involve a more significant investment. “Every year we have to raise the bar, so they want to qualify and have this experience they couldn’t have on their own,” says Ira Lawrence Almeas, CITE, president of West Orange, New Jersey-based Impact Incentives & Meetings Inc. For example, while a standard city tour at the destination may be more affordable than an exclusive ‘behind the scenes’ tour, the latter is more conducive to the goal of delivering that unique experience.

“I do think that people are a bit more sophisticated in the way they eat, and they want that to be tended to when they’re at a hotel for several days.”
Amy Durocher

The experiential trend even extends to training meetings, which are often stereotyped as a ‘no frills’ kind of event. “We’ve noticed an overall trend in the meeting and training space, in that people are very interested in experience,” says Beth Becker, Global Meeting Services Manager with Downers Grove, Illinois-based MicroTek, a training solutions company. She finds that millennials and Generation Z attendees want training spaces and experiences that are ‘interesting’ and schedules that allow for more networking and impromptu breakouts. In some cases, a little added investment can create a more engaging meeting setup. “If budget allows — rent couches and chairs that create a more casual, comfortable look and feel,” suggests Kim Hentges, CMP, event manager with Flower Mound, Texas-based IntelliCentrics. “For a working breakfast, lunch or dinner, rent unique tables and chairs to create a different vibe that is felt as soon as the attendees walk through the door. Décor adds to transitioning from the normal to the unique or different.”

ENHANCING THE MEETING EXPERIENCE

Decisions about whether to invest in elevating the meeting experience must be made in the context of impending increases in air and lodging costs, as these may impinge on the budget available for such enhancements. The 2020 Global Meetings and Events Forecast predicts that overall meetings budgets in North America will rise only moderately next year — by 1.8% in the United States — and notes that this budget expansion is “likely not enough to cover the increase in air and hotel rates.” The survey predicts a 4.3% rise in daily hotel rates for the United States and a 2.8% rise in group air rates for North America.

While many corporate meeting and travel departments are surely preparing for such effects of inflation, Durocher observes that other companies may be more focused on the immediate future when it comes to meeting costs. “We at Global Cynergies and myself specifically, are still seeing quite a bit of short-term business, especially when it relates to our corporate clients. So, some of that forecasting can seem a little less top-of-mind, because we’re still working with such short booking windows. Many clients are still booking meetings within 90 days,” she explains. “But when corporate clients are forecasting out for their larger programs that do have a more extended booking window, then certainly the forecast in room rate and air travel increases is something to talk about.”

DEALING WITH RISING COSTS

Rising air travel costs may especially affect incentive programs, which are often taken to exotic destinations to entice potential qualifiers. Planners may wish to look closer at domestic cities that can offer an intriguing experience along with travel savings. “If you have a limited budget, you’re not going to go a far distance where the air might be half your budget,” Almeas says. “Within the U.S., going to a second-tier city such as Charleston, for example, or going to Sedona or even Sonoma/Napa could make for very unique experiences.” Most recently, Almeas planned an incentive trip to Toronto, which boasts attractions such as the Hockey Hall of Fame and is accessible to vineyards in Niagara. The air cost is reasonable and the exchange rate is favorable, he notes.

Another way to reduce air travel costs is to reduce the number of attendees. The savings certainly extend beyond transportation.

According to the 2020 Global Meetings and Events Forecast, the average cost per attendee per day — excluding air travel — in the United States begins at $539 for internal team meetings/training meetings; $632 for product launches; $640 for senior leadership meetings/board meetings; and $685 for incentives/special events. For many companies, a more palatable option along these lines is to reduce the physical attendance. Younger professionals in particular are more receptive to the idea of virtual participation in meetings, Becker observes. “Much of the new generation is very much tied to work/life balance, and they’re very technically adept and used to a virtual learning environment,” she says. “So they don’t feel it necessary to get on a plane and would rather take the eight hours for the event, instead of a day before and after to fly there.” Virtual meeting technology can also assist companies in regionalizing a meeting, i.e., breaking it down into smaller meetings held close to regional offices so as to reduce or eliminate air travel costs. General sessions can then be mediated by videoconferencing, for example.

Apart from rising air and lodging costs, F&B increases from suppliers are also important to factor into the budget. “Certainly, that’s something that can be a percentage increase year over year,” Durocher says. In addition, there is an ongoing trend toward healthy and organic foods, specialty foods and culinary exploration, etc., which tend to carry a higher price tag. “I do think that people are a bit more sophisticated in the way they eat, and they want that to be tended to when they’re at a hotel for several days,” Durocher says. “Hotels may have a special market menu that focuses on local and sustainable, and there can be a higher cost associated.”

BE AWARE OF SURCHARGES AND FEES

As the ideal lodging budget takes into account all of a hotelier’s surcharges and fees, it’s important to be fully aware of these costs. Some planners are seeing familiar fees repackaged or renamed. The resort fee, for example, may be called a facilities fee or a destination fee. “I think hotels are getting very creative with add-on or hidden fees,” Becker says. “You’re also seeing an increase in service charges. There was a recent forum discussion about people adding on to the service fee and they were calling it an event fee. So you may see a 23% service fee and an 8% event fee, which brings them to a 31% service fee, basically. And, they justify it by saying that the event fee is for room setup and teardown, but that’s really just part of the cost of your event. The service fee used to be the tip for the staff, and that’s changed over the years to where now it encompasses a lot of other things and goes more to the hotel than the staff.”

The first step is to secure transparency on such fees. To that end, “We’ve implemented language in all of our Request For Proposals (RFPs) in order to force the hotel to fully disclose any hidden fees that they might have, so we make sure to include those in our total cost,” Becker explains. “And you can put in your contract, that if you didn’t disclose these fees to me, I don’t have to pay them.” The next step is to try to get the fees waived or reduced. Unfortunately, resort fees and service fees will not be open to negotiation in many cases. According to the 2020 Global Meetings and Events Forecast, 83% of responding global hoteliers indicate they are most open to negotiating room rates; 75% say amenities; and 75% say Wi-Fi. But only 27% and 42% were open to negotiating resort fees and service fees, respectively. Becker’s experience reflects this result: “I have not been very successful in negotiating resort fees. Occasionally, I’ve been able to come down a few points on service fees, but even then it’s really difficult. So, it wouldn’t be my first place to go to negotiate, because I don’t think there is a lot of flexibility in those costs.”

“Sometimes we will get RFP responses from the hotel and it will say very clearly, ‘We do not negotiate on our resort fee’ or ‘We do not negotiate on our facilities fee,’” Durocher says. “So at that point, we are very transparent with our client and say, ‘We’re looking at your overall budget and you need to know upfront this is not an area the hotel is going to negotiate on, so to find some additional value for you, we’re going to need to work on the other areas of the program.’” The inflexibility on these fees isn’t “so common that I see it multiple times in any given destination, but common enough that I might see it in one or two hotels in a particular destination,” she adds.

CONSIDER OTHER HOTEL OPTIONS

Planners looking to save on lodging while delivering an engaging on-site experience might look to some of the boutique brands that major chains have introduced. These can be especially appealing to younger attendees, and offer a more modest price point. Along these lines, Almeas suggests Marriott’s Moxy Hotels. “It’s Marriott’s new entry-level, hip hotel. When you check in there’s no registration desk; there’s just a bar at the entrance way. You check in at the bar and get a drink. Their rooms are nothing special, but they’re a little funky and offbeat. If you have a millennial group, they might not need the chocolate on the pillows and the slippers under the bed at night when there is turn-down service. You can then use the savings and do some really cool experiences that are local, such as distillery tastings or a give-back for the community.” Durocher cites Marriott’s AC Hotels as “a more modern, streamlined approach to hotel design, but there are also many independent and smaller brands, especially in the urban centers, that kind of tick those boxes and appeal to the younger clientele. Their focus is on the public spaces of the hotel versus the accommodations, but the accommodations are still very chic and trendy.” The caveat to these properties is that meeting space can be rather limited.

For some groups, opting for a lower-tier hotel, even if it’s part of a trendy brand and has adequate meeting space, will be seen as compromising the experience for the participants. Among the most popular options for reducing costs while preserving upscale lodging, F&B and perhaps off-site events, is to cut the number of nights in the program. This is identified as the primary area to cut costs in the 2020 Global Meetings and Events Forecast. Compared to eliminating events from the annual meeting schedule, holding shorter programs appears to be the best option. Even holding the meeting at a lower-quality venue is arguably preferable to cancelling the event. “When budgets become tighter and/or the economy takes a turn, it is still important for purpose and branding to be present, whether that is having a smaller meeting in a three-star venue, restaurant or even at your office,” Hentges says. “Being visible does add value, versus the alternative of your customers or potential customers wondering why that annual meeting is not taking place.”

The second most-preferred cost-cutting area identified in the American Express Meetings & Events survey is off-site evening events. While eliminating such events may be seen as running counter to the experiential trend, that’s not necessarily so. “You do see corporate clients who are giving their attendees a free evening,” Durocher says. “That limits the expense and might appeal to those attendees who like to have a little more freedom on how they’re spending their time in a particular city. So I think it can tick more than one box.”

Overall, planners budgeting for 2020 will face the typical escalations in air, lodging and F&B costs, together with the challenge of hard-to-negotiate resort and service fees. But thankfully, there are many strategies that can help them offset these costs while ‘ticking the box’ of an engaging experience for attendees. Once the ‘must haves’ for that experience are identified, the most sensible cost-cutting measures will emerge.C&IT

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