Due to a strengthening economy, many companies and organizations are hard at work launching new products, hosting challenging sales incentive programs, training additional staff and managerial crew, and setting new goals, objectives and five-year plans for the future.
There’s no better way to do that, of course, than to meet face-to-face at a premier downtown meeting hotel or golf and spa resort, near or far.
While one might expect budget belts to be somewhat loosened as more business is conducted and more meetings are scheduled, however, “it ain’t necessarily so” as the old song claims.
That’s because nowadays the budgeting process is more complex. Planners are more entrenched in strategic meetings management, and therefore more concerned about return on investment and meeting business goals than they are about just event costs.
At least that’s the new spin on budgeting these days, a lesson that was sorely learned by meeting planners after the financial crisis of 2008. Today, more than ever, planners are severely challenged by the resurgent seller’s market.
It’s a sobering fact but the reality is that when the economy is down, planners will find a friendlier marketplace on the supplier side of the industry but, when it’s on the uptick, as it is now, not so much.
And, as to whether there exists a buyer’s or seller’s market, some planners are on the fence about it. Take Glenna Fulks, assistant director of corporate events at the Trevose, PA-based Advertising Specialty Institute. In an interview late last fall, Fulks described her situation:
“We have a network of 25,000 distributors and suppliers throughout North America, and we host five national trade shows in metropolitan areas each year, along with a stream of other corporate events. From my experience, all indicators show that meetings are back up but, with that said, so is a tougher marketplace in which planners must operate.
“Sure, there are always pockets of opportunity out there like in Las Vegas. While it appears to be back to its old glory days, especially if you’re trying to book a meeting Wednesday through Saturday, send them an RFP for a meeting that begins with a room block on a Sunday night, and they will jump through hoops to be the first to answer you and give you the deal of a lifetime — assuming, of course, that they don’t have a citywide convention loading in over the weekend,” she says.
“So, seller’s versus buyer’s market? My answer to this would be that the shift appears to indicate that it’s more of a seller’s market Wednesday to Saturday with fewer concessions available to the buyer. There are still deals out there, however, and there is still some open territory when the two parties can meet in the middle and strike a decent deal for both sides. But during a shoulder season and for a meeting that arrives on Sunday and departs on Tuesday, I see it as being very much a buyer’s market.”
But, have no fear. According to Fulks, hotels learned something back in 2009 and 2010, especially if multi-year contracts are a possibility.
“There are enough veterans out there who know that the lean times could come again, just like they did at the end of 2008 and into 2009,” she says. “And it’s better to be prepared and have a little cushion than to fly by the seat of your pants and pretend that the air will never again be let out of the balloon. On the flip side of that analogy, however, there are smart meeting planners who did not take undue advantage of hoteliers during the lean years but partnered with them instead, so there is a good deal of mutual understanding and respect that was built and, conveniently enough, can now be collected on.”
Since 2013, however, Fulks strongly believes that even with the fiscal-cliff scare and the potential of the economy taking another hit, things in the hospitality industry seem somewhat stable. “Hotels are cautiously expecting to increase and build on their rates over the next few years — to get back to where they were in 2008 before the last financial disaster,” she says.
“It is so much easier to do business with someone with whom you have a relationship. They will go the extra mile for you and vice versa.” — Glenna Fulks
Gail Schuster, village gatherings director for DaVita, the dialysis division of DaVita HealthCare Partners Inc., a Fortune 500 company located in Denver, CO, agrees with Fulks’ assessment of the meetings marketplace and makes another interesting observation.
Schuster says, “The meetings industry is on the upswing, and I do believe it is a sellers’ market, even so, the sellers’ increases have far outpaced the meetings industry upswing. Yes, the method of budgeting has remained the same, for us anyway, however, the percentage of our ‘spend’ has changed. Five years ago, we were able to negotiate inexpensive hotel rates and added concessions. Today, the hotel expenses have increased, yet our overall event budgets have not.”
Again, when budgeting for corporate meetings and events, money isn’t everything. One New York-based meeting planner of a large publishing company claims that “saving money on meetings doesn’t mean anything if you don’t get the expected outcome. Today, budgeting for meetings is more about ROI — and not just that but, now, ROO (Return on Objective) as well.”
She says that what has changed for her company, an aviation leader that regularly hosts major industrial events, are its marketing strategies. “Instead of blindly mailing and emailing material to promote exhibitions, trade shows and other events, we are seriously testing markets now and looking more closely at the demographics we want and need at the events to make them a success, which, in turn, leads to increased business and expansion — our objectives — or ROO,” she points out.
“For instance, we now look at who was on the attendee list and the potential ROI that each attendee brought to play. If a CEO cancelled their attendance and replaced it with a director, then there is scrutiny as to whether that director can bring the same weight as what his CEO would have contributed to the event. Certain events are marketed and targeted towards the very top echelon of attendee, while other events are not. So, the budget is weighted.”
Billy Bauer, marketing director at Royce Leather, Secaucus, NJ, underscores the importance of ROI and ROO, the new wrench in a meeting planner’s tool box. He says that he has been facing increasing pressure from management to clearly demonstrate the financial return on investment of staff development and encouragement initiatives.
“We hold conferences twice a year at our corporate headquarters in New Jersey, once in July and once at the end of December. During that time we fly in all of our regional sales managers, IT and logistics people and distribution center employees from around the world to either hype them up for the second half of the year, or thank and celebrate them after another successful year,” Bauer says. “To save costs, we host these conferences onsite as we have a gorgeous plot of land around our main U.S. distribution center so we have a big picnic in the summer, and then in the winter we transform our massive showroom into a gala area. We also know the exact dates and times of these events, as we have been doing them for a long time, so everyone is on the same page from a coordination perspective; therefore we save money on speakers, vendors and suppliers also by booking well over a year in advance for each event.”
Furthermore, Bauer notes that while it is sometimes difficult to demonstrate the ROI on human capital management initiatives, the company generally tries to measure it by collecting “happy sheets” premised on employee feedback.
“Today’s economic climate is forcing marketing…executives to demonstrate that their talent development initiatives justify the meeting investment by using convincing metrics, which indicate a substantial monetary ROI and ROO.” — Billy Bauer
“But now, this is a fairly light touch, which is no longer sufficient to satisfy the CEO,” he observes. “Today’s economic climate is forcing marketing and human resource executives to demonstrate that their talent development initiatives justify the meeting investment by using convincing metrics, which indicate a substantial monetary ROI and ROO. Flimsy estimates of impressions and reach are now unacceptable forms of reporting,” notes Bauer. “Now, every hashtag of information is not only available, but also immediately collectible, quantifiable and deliverable. Because anyone can potentially double-check your wrap report facts, it’s important to use reliable third-party tools to back up your ROI/ROO claims.
“Many of the social monitoring and analyzing tools that are out there now, such as RowFeeder and Klout, require setup prior to the event for comprehensive results, so be sure to set these up as part of the budget and have them in motion as soon as you’ve created that event hashtag.”
While planners must be more artful in crafting their budget than ever before, especially in regard to ROI and ROO, keeping an eye on the bottom line is always a concern. To accomplish that, planners must be creative and Schuster notes that a good rule to follow is “no one category should exceed 30 percent of the total budget.”
In addition, Fulks reminds us that during the financial crisis of 2008 and beyond there were a number of hotels that created money-saving initiatives for corporate planners. “I’m talking about rebates back to the master account if a certain threshold of spending was achieved, or offering guest room Internet connectivity into the overall room rate and so on. I remember saying at the time that once the hotels started offering these items during the lean years, that they would never be able to put ‘Pandora back in the box’ when times returned to normal,” she says. “And it’s been true. The guest room Internet connectivity has become pretty standard now — especially if you ask for it as a concession on your RFP, and the same with the rebate back to the master account. Hoteliers were the ones who opened that box and conditioned their customers to expect it.”
Everyone the world over loves saving money, and meeting planners are no different. Consider these time-honored, money-saving tips from savvy planners:
Day of arrival. Many hotels sit empty on Sunday night. If you can put “heads in beds,” they are going to be more willing to discount their rate as well as throw in concessions that will add up to cost savings.
Thinking local. Hotels like to showcase their area, so play up what the area is known for. For example, if you’re meeting in Atlanta, consider serving pickled watermelon or fried green tomatoes.
Sharing. Find out what kind of audio-visual setup the group before you is using and work out an arrangement to use all or part of it to save setup costs.
Concessions. Don’t be afraid to ask, because you have no idea what the hotel may agree to. They may offer to meet you halfway. If you ask for a 10 percent discount on F&B and the hotel declines, ask if they will consider designing a per-person menu around a set price; or if they will agree to allow you to use the 2013 menu pricing, even if the meeting is in 2014, as long as you sign by the end of the month.
Rebates. Ask the hotel if they will consider a rebate on the room block if you get your contract signed by the end of the month. If they agree to 5 percent on the room block as a rebate, then ask them to apply this as a credit to the overall bottom line.
Relationships. But, more than anything else, Fulks advises planners to create a solid working relationship with the sales manager at the hotel. “It is so much easier to do business with someone with whom you have a relationship. They will go the extra mile for you and vice versa. Connect with them on LinkedIn and then recommend them for their skills or write a nice recommendation of your experience working with them. This will take only 15 minutes of time, and they will repay this favor 100 times over because you have gone to the effort of publicly praising them in front of their boss and other customers.” C&IT