Meeting Budgets GrowingDecember 11, 2018

Careful Calculating and Negotiating Can Help Planners Achieve Event Goals By
December 11, 2018

Meeting Budgets Growing

Careful Calculating and Negotiating Can Help Planners Achieve Event Goals

 Think of planning and executing meeting budgets as a numbers juggling act that starts when an event is conceived and continues until it ends. Throughout the process, planners must create budgets that satisfy stakeholders, provide memorable attendee experiences and control costs.

Planning event budgets can be challenging. Budgets come in all sizes, and methods for planning them vary. However, the more planners know about formulating, tracking and managing budgets, the more they can stretch spending.

Precisely planning budgets is especially crucial during periods of shrinking budgets, but it’s also key when they are rising as they are now.

According to Cvent’s 2018 Global Planner Sourcing report, 52 percent of planners say their event budgets have increased from last year, and 71 percent said they are certain about what they can spend.

Budgets are rising as event size is increasing. According to Cvent, the number of meetings with more than 100 attendees have grown, while those with 100 attendees or less have declined. Meanwhile, price and discounts remain important to planners, and the desire to provide memorable experiences are still paramount.

A survey by Convene reports similar results. It says 42 percent of planners expect to see budgets rise in the next year, while 44 percent expect them to remain the same. Thirty percent say budgets for attendee experiences will rise. Price is the top factor driving venue selection.

Rising Costs

Whether budgets will increase enough to keep up with rising costs is an open question, and some planners are pessimistic about the prospect.

According to Jennifer Murphy, director of meetings, incentives, conventions and events for Marlborough, Massachusetts-based Atlas Travel & Incentives, “I think budgets will never increase at the same rate as costs. I’m continually shocked to see hotel banquet menu pricing these days and wonder how the price of a continental breakfast has soared to over $45 per person at many resorts. Meeting stakeholders are sending attendees to hotel restaurants and telling them to expense a $20 breakfast to avoid paying the exorbitant F&B costs. It’s creating more work for organizations to manage those reports and get true meeting budget data.”

“A good planner will know where the maximum profit lies with venues and vendors, and will know how to negotiate for benefits and services.”
— Carroll Reuben, CMP, CMM

Murphy says that, for the most part, she sees budgets shrinking, particularly in organizations that conduct mostly meetings of internal people and don’t necessarily identify true ROI benefits. Such organizations are quick to decrease budgets, or cancel a meeting entirely, without weighing the consequences, she adds.

On the other hand, Murphy does see exceptions. “We have worked with a few companies that have pulled resources from different departments to increase the budget for a meeting,” she says. “Specifically, the marketing department will sometimes cover the cost of that must-have keynote speaker, and HR might handle the room gifts to make the overall budget impact less costly to one department.”

Cat Butler, director of operations – project and onsite management for Chicago-based BCD Meetings & Events, sees a mixed bag. “In recent years, we have experienced stable budgets from some clients and fluctuations in others,” she says. “Depending on the state of a client’s industry, we have seen both growth and decline. In either case, clients have become more demanding for their planning partners and agencies to demonstrate methods that measure financial ROI. We need to clearly illustrate value for cost on all services provided.”

Other planners see budgets rising along with costs.

“It’s a fact of life, the cost of doing business rises every year,” says Carroll Reuben, CMP, CMM, of Los Angeles-based Meeting Excellence, an event planning and management firm. “The rises will keep up with costs, though it’s up to planners to negotiate and work hard to control the increases. Planners must always strive to deliver the best attendee experience.”

According to Amy Gagner, planner and account manager for Schaumburg, Illinois-based Creative Group Inc., “Clients’ budgets will need to increase to keep up with industry demand because the economy has bounced back, and meetings are in more demand than in years past. The bottom line is if you have more money, you can create a better attendee experience. There are many ways to accomplish this task, which would be determined and driven by your target audience and your client’s goals and objectives for the experience.”

Enhanced Experiences

Butler agrees that planners fortunate enough to see real budget increases may be able to enhance attendee experiences. For example, she says, planners with more to spend can focus on programs such as premium gifting experiences, enhanced mobile apps and top-tier experiences for elite attendee audiences.

Butler cites other areas, as well. “We can also allocate more funds to registration website design and offer live chat registration,” she says. “Investments can also be made in Corporate Social Responsibility (CSR) components that give back to the host community. For clients prioritizing data analysis, we can increase a budget for defining data strategy, managing data and taking a deep dive into data analysis for long-term event consultation. This list is as long as the planner’s and client’s imaginations.”

Successful budget planning must include some basic principles that can ensure accuracy and streamline the process. And planners must treat a budget as an investment that has to be diligently planned to correctly calculate ROI. In addition, it’s crucial to start the budget planning process early and proceed strategically, using a detailed event budget history. If there is no budget history for a meeting, create one.

Experienced planners offer the following tips on budget planning.

Butler suggests, “Start by assessing the client’s event goals. To motivate? Celebrate? Reward? Have a clear understanding of the brand and image so you can recommend the best solutions for their event design, technology and communication strategies. Recommend the best destinations with the right products and services (including airlift) and ensure it all fits inside their budget.”

Greg Jenkins, partner at Long Beach, California-based Bravo Productions, an event planning company, offers an example of goal-focused budgeting. “If your goal is increasing sales by inviting key potential customers, there should be an allocation for making a great first impression, whether through creative presentation of food or selection of the most appropriate venue that attracts guests,” he says. “Adequate dollars also will be needed on the back end to follow up with customers post-event. View the big picture, and put money into the function that has the most impact and will help you achieve your goals.”

Estimate Every Cost

List budget categories and line items, then research the costs for each item and come up with estimates.

According to Butler, “Work through the budget logically and bucket items such as air, guest rooms, program agenda, etc. From there, you can map your needs more specifically, considering ground transportation, F&B, activities, meeting rooms, production, apps, site inspection, printed materials, etc. Don’t let budget constraints hinder creativity. Sometimes the most challenging budgets can bring out the most creativity in a team, forcing it to be resourceful and think outside of the box.”

Write a description for every budget item to know exactly what it funds in case cuts must be made later. Be detailed. For example, a line item for a gift bag should include a description, count and price of each item.

When it comes to venue selection and pricing, don’t put too much weight on recommendations from other planners. According to the Cvent survey, peer recommendations are the top influence on venue sourcing decisions.

Allocate funds to areas that provide the most value for event goals, attendees and stakeholders. Make every dollar count, says Jenkins.

“Some planners make the mistake of spending lots of money on what I call ‘trinkets and trash’ that many guests will not appreciate, throw away or pass on to someone else. Plastic mugs, key rings and pens cost money (and don’t appreciably enhance the experience), and those dollars might better be utilized for food service or an event element that will be much more memorable,” he adds.

Include fixed ancillary expenses items, such as service charges, resort fees, sales and occupancy taxes and other costs usually not included in quoted prices. According to Jackie Wood, chief experience officer for Seattle-based Sparkwood Events, “I think that the extra fees and hidden costs can derail a budget. Most planners know about resort fees, service charges and taxes, but there can be a list of additional charges that get tacked on, such as administrative fees, Wi-Fi connections, parking, room delivery, etc. It adds up in the end.”

Communicate Constantly

Keep stakeholders in the loop throughout the budgeting process. Address concerns. Offer cost-cutting options. According to Kelly Fuller, CMP, CIS, planner and account manager, Creative Group, Inc., “The biggest mistake is not keeping clients informed. Always be up front about where the budget sits as you’re planning. Clients always appreciate being kept abreast of current numbers. It’s the best way to show your stewardship of their budget, whether it’s letting them know you are over budget, or that there are extra funds in one area that can be used in another.”

Set aside part of the budget for unexpected expenses. This is especially important for outdoor events, which are subject to weather changes. Also, even the most well-prepared budgets can drift higher and cause last-minute surprises. Some planners add 10 to 20 percent to budgets for emergencies. According to Murphy, “One of our best practices is to encourage our clients to include an executive discretionary fund that allows them to add spending on-site but with clear parameters on how it can be spent.”

Immediately update budgets for changes in estimates, pricing, receipts, quotes and other information as soon as possible. Maintain a real-time attendee count. Planners can incur extra costs because a surprising drop in the number of attendees can cause loss of perks and privileges based on attendance.

Murphy describes her approach on keeping the budget current. “I encourage my team to update their clients’ budgets each time a change is made so that they see how it impacts the overall budget and perhaps identify other areas that may no longer be needed because of that change,” she says. “Most times, planners only worry about increasing the budget when costs go up but forget to do it when costs are removed or decreased. However, this can backfire since it could prevent new things from being added due to cost concern.”

Reuben suggests using another term for the word “budget” can encourage planners to update frequently. “The term budget is a misnomer,” she says. “We should really call it a financial projection. It is a dynamic process that starts as soon as the event is identified and continues throughout the planning and execution, and even after the event is over for final accounting.”

Errors can ruin a budget and meeting if they aren’t caught. According to Butler, “The biggest mistakes start with inaccuracies at the get-go. Pay attention to detail when reviewing contract terms and conditions. Inserting incorrect data can result in significant incorrect totals.”

Butler cites an example: “Failing to calculate taxes into the budget or inputting the net value rather than gross could impact the final budget by 20 percent depending on where the event is held. Create the budget and get a second set of eyes. Collaborating with your sourcing and planning teammates should catch these types of mistakes prior to the budget being sent to the client,” she adds.

Budget-cutting Tips

Experienced planners offer the following practices to identify savings.

Act as consultants for budget savings. “Make informed recommendations that help clients stay focused on the end goal, rather than on big-ticket items, such as F&B, entertainment and production,” says Butler. “Be consistently mindful of the primary event goals and objectives, as this will then help you identify areas for budget savings. For example, if well-being is a top priority, then elements associated with this objective should be least likely to be removed as they will have the biggest impact on the end goals of the event.”

Negotiate, calculate and be flexible. “A good planner will know where the maximum profit lies with venues and vendors, and will know how to negotiate for benefits and services,” says Reuben. “Ask for discounts if certain conditions can be met like prompt payment by check or cash instead of credit card (which costs vendors 3 percent). If you pay cash, you could ask for the 3 percent as a discount. With F&B, piggy-back on the menu of another event held in the same place at the same time, allowing the chef to bulk-buy. Don’t just buy off the printed menu.”

Examine the impact of cost cuts on attendee experiences. According to Murphy, “We look for value savings because sometimes reducing the cost of a service isn’t always in a meeting’s best interests. Ask yourself, ‘Does this reduction lead to a positive attendee experience?’ It is important to avoid having them feel the event was mediocre.”

Suppose a group wants two dinners, and the budget allows for one to be a great experience but the other to be so-so. In that case, says Murphy, “I believe in removing an entire dinner, giving the group an evening at leisure, and applying the savings to build up another evening dinner. It’s better to have one ‘wow’ event than two non-stellar events.”

Consider using speakers and entertainers that live in or near the region where the meeting is held. This cuts travel costs. Contact the talent directly instead of through an agency to save on fees. Another suggestion: Book the same talent for two different events that are held in the same area within a year or two.

Mix Meeting Formats

“Consider changing the format of meetings so they can be shorter, and the balance of the program be held online with webcasts,” says Reuben. “The use of technology, particularly communications technology in the form of customized apps and other media, will help to contain costs.”

Don’t fail to plan for greater than expected food consumption at receptions not followed by dinner. Attendees may treat the reception as the last meal of the day and drive up catering costs.

Obtain at least three quotes from each vendor, including those who have offered good prices in the past. There’s always a chance of beating the price of “go-to” vendors.

Don’t use several separate online meeting management services. Instead, consider an integrated event management system that combines services because it’s typically less costly and more efficient.

Consider how lower- or higher-than-expected attendance can impact the budget. For example, receiving 100 more attendees than expected in a breakout room can mean higher costs for F&B or AV.

Planners must not be lured into a false sense of security by the overall increase in meeting budgets and should continuously work to control costs because prices may rise. Economic experts cite the possibility of inflation due to the combination of a hot economy and rising interest rates.

However, diligent budget planning can help control costs in any economy. Moreover, careful budgeting can help planners achieve meeting goals and defend outlays to stakeholders. C&IT

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