Though it was not a welcome challenge, the recession has sharpened many planners’ budgeting skills in the course of trying to put on quality events with fewer dollars and, in some cases, fewer in-house staff.
Teresa King, senior events manager, marketing communications, with Scotts Valley CA-based Seagate, can speak to both circumstances. In January 2009, her five planning associates were let go, and the budget for the company’s worldwide sales meeting was roughly halved (while the headcount was only reduced by about a third). She now has outsourced planning support, but it’s still difficult to “make ends meet” with regard to the sales meetings, customer events, trade shows and the President’s Club incentive King plans. There is, however, the promise that budgets will rebound in the near future. “I have probably eight different events looking forward to 2011; this time last year I had two. So I think it could be picking up, and I think the money is loosening up a little,” she said.
The industry’s gradual recovery has not gone unnoticed on the supplier side. Whitney Kirkland is director of sales with Barton G, a combination DMC, production and catering company based in Miami. “We saw a pretty major drop-off. There were a few weeks just over a year ago where every phone call was somebody calling to cancel a meeting or scale back,” he observed. “And by scale back I mean basically cutting a company like us out of the picture, or in some cases just using the hotel linens and not going with an upgraded linen. But fortunately we’ve seen a pretty significant bounce-back.”
What remains in place, perhaps for the better, is more budgetary scrutiny and concern for cost-effectiveness. “We’ll get the question more often in the sales process, ‘How do you help us save money?’ — even from clients we’ve been working with for years,” said Kirkland. One cause of the added cost-consciousness, he believes, is the increased involvement of procurement in meeting planning. That tends to lengthen budget-approval processes, which in turn often results in more short-term meetings: Once the budget is approved, it’s that much closer to the event date.
A Buyer’s Market...For Now
Jennifer C. Squeglia, CMP, owner of RLC Events Inc., which primarily serves Massachusetts clients, and former planner with both John Hancock and Fidelity Brokerage Company, corroborated this trend. But she added that there are significant booking options for those short-term events, as many hotels are still hungry for business. “I do think right now it still is a buyer’s market. There are still some very good deals to be had out there. But I am starting to feel a shift, and that it’s not as one-sided [in favor of planners] as it has been.” Before the pendulum swings back any further, however, it’s time for planners to make the most of their limited lodging budgets. “The hotel rates I’ve been getting have been much lower, so we’ve been able to stay with four- and five-star hotels,” King recounted. “Just last week I went to do a site visit to San Diego for our global sales event in 2011, and this is the first time ever that San Diego has been within my budget.”
However, it “happens pretty frequently” that her budget simply will not allow for an event component that meeting owners want, and she must then bring that to their attention. “I don’t think they [upper management] know whether it’s feasible or not” when they make cuts, she explained. “So I try to make it work and I say, ‘Here’s what it’s going to cost for lodging, F&B, transportation, etc., and this is how many people you can bring.’?”
Said Squeglia, “As planners, we have to be able to say to stakeholders, ‘We’re not going to be able to do this for X dollars.’?” But, she added, such conversations are also opportunities to display one’s budgetary resourcefulness. “I won’t just say, ‘This doesn’t fit in our budget.’ I’ll say, ‘The way it stands now this doesn’t fit in our budget, but here’s a couple of options.’ So I try not to deliver it as bad news. For example, if you have a budget of $50,000 for F&B and $25,000 for audio-visual, and then find out audio-visual will be $35,000, perhaps we can take some money from F&B.”
Of course, shuffling the monies within the budget is always constrained by the meeting group’s objectives, priorities and expectations. “Our events are known for how well everybody gets fed, so I haven’t cut F&B that much,” King commented. “I still estimate $250 per day per person, and I’m not seeing that change too much.”
Food And Beverage
But she has recently found a way to spare the company from paying that amount when attendees don’t consume the $250 in F&B expenses. Since some attendees may skip breakfast or just buy something at the coffee shop instead of visiting the breakfast buffet, King managed to purchase breakfast vouchers at a certain hotel. “The maximum value of the voucher covered the cost of the full buffet with the gratuity included, but if you took it into the coffee shop and bought coffee and muffin, that’s all it cost. And if you didn’t eat breakfast, the company didn’t pay for breakfast. It saved me probably $10,000 in F&B. Since I didn’t know [how much they would spend], I had to still budget for everybody eating a full buffet every day. But it brought me in under budget.” When that happens, she added, “I wave the flag.”
In other cases, F&B package deals are preferable to paying à la carte. “I always counsel my clients here, whether with us or if they’re doing a dine-around: Go with the beverage package, because in Miami, for example, you’re going to pay $12–$15 for a single drink, whereas your beverage package for two to three hours would be $25–$30.” But whatever approach one takes to cutting back on F&B costs, preserving the right amount and quality of food is critical, since it’s a meeting element that tends to be foremost in attendees’ minds in between business sessions.
Other aspects, such as décor, theming and entertainment for F&B events, are oftentimes more expendable. Here again, one must bear in mind the group’s tastes and demographics. “I am in the tech industry, and most of my meetings are probably 75 percent men,” said King. And with the kind of humor that has a grain of truth, she observed, “Men don’t care if there’s even tablecloths or if they use napkins or paper towels. So I would rather pare down the budget for décor and spend the money on something that’s going to make the meeting memorable for them.”Décor And Themes
But if the mandate is to put dollars into décor, the same guideline applies: Focus on elements that will make the most impact. Kirkland has seen a simplification of both decoration around the perimeter of the ballroom and florals at the tables, and more emphasis on the stage backdrop and functional décor pieces such as the bar. “We’ll have a nice long bar that is themed and in the same color scheme as the rest of the room, and it’s got a backdrop to it that is decorative as well,” Kirkland explained. “You’re making an impact with the guests that way because just about everybody’s going to visit the bar at least once.”
Kirkland also has used a variety of offsite venues that tend to have lower rental fees and come “pre-decorated,” such as art galleries and private homes. Many restaurants, if they’re large enough or have a private room, also can be a cost-saver. Squeglia advised, “Oftentimes they already have a great atmosphere, great tables, chairs and linens. And if it’s mid-week, or maybe off-season, you can buy out the restaurant very affordably. Most of them will welcome that business.”
The Buddy System
Another tried-and-true route to savings is to seek overlap with another group in products or services from a supplier. Sometimes, a cost-conscious supplier will suggest the option. “If I know you have a limited budget going into the meeting, I’ll say, ‘Here are props that we just used two weeks ago. If you like them I can get you a better rate because we’ve got them sitting back on the warehouse floor,’?” Kirkland explained. Planners can similarly inquire what banquet menu has been selected by a group that’s concurrently at the hotel, and assuming it fits the group’s needs, catering may be able to duplicate it at a discount.
The experienced planner knows these cost-saving techniques and many others, but upper management increasingly wants to know the metrics. They want to see reports on budgeted amounts, negotiated rates, actual spend and other data for various line items, and that’s where budgeting software is a real logistical aid, one that’s unsurprisingly become more popular since the recession.
“In the past the data was held in such disparate silos, and really getting a handle on what was being spent wasn’t an easy task to say the least,” commented Brian Ludwig, vice president of sales for McLean, VA-based Cvent Inc. The company’s budgeting tool, one of the most sophisticated of its kind in the industry, is available as part of the Enterprise version of Cvent’s meeting management software. The Professional version does not include the tool, but some clients select Professional Plus, “which means they want the Professional version plus just a couple of the Enterprise features. And one of the most common ones that our clients will license is the budget toolset,” Ludwig affirmed. The program can automatically generate reports on spend for one event, all meetings across a certain date range, in a certain category, with a particular vendor, and so on.
“One of the challenges we’ve seen with clients is that management becomes so reliant on the data that it becomes a burden for the planners to continuously send more up-to-the-minute reports that aggregate the spend,” he observed. “So a pretty popular feature of our toolset is its report-delivery capability. For instance, a meeting planner can say, ‘I know that these three senior managers like to see these reports every Monday morning, and this is the way they like to see them,’ whether raw data or summarized in graphs and charts. And they schedule it with a password that the senior manager would use to go in and see whatever metrics they want to see. And if they were to click into those reports at any time over the week, they always get the most current details regarding spend.”
They also can see that spend analyzed into a variety of customizable categories with a tool like Cvent’s. “There are categories, subcategories and vendors: transportation, flights, American Airlines,” Ludwig explained. Management can thus see, for example, what was spent with American Airlines vs. Delta across the board during a certain time frame, or for an event type (e.g., training programs) during that time frame.
Event type has proven a very useful field with clients, he added. “What is very popular when our clients first build meetings in our system is that we can make it mandatory that they choose different event classifications: what region does it belong to; what’s the business purpose; what division does it belong to; what’s the type of meeting? That becomes a very important step so that when they are slicing and dicing their spend by vendor, they can do it within just one category of meeting instead of across the board,” Ludwig noted.
“It also allows managers to sort of rationalize why there’s a different amount being spent for, say, board meetings of 50 people vs. training programs of 50 people. It’s acceptable that the budget be greater for different types of programs and depending on who the audience is, the business purpose, etc. And if you categorize it appropriately, all of the reports and data that you extract are in line with that.”
One feature Ludwig feels sets Cvent’s tool apart is its ability to “show the math” in reports of how much was saved. “Everyone has a different definition of what savings is. Is it my final negotiated rate vs. what I actually spent, or is it my initial estimate on what I was going to spend vs. what I actually spent? And then do I want to add in some other things that can be a part of the equation? So what we allow you to do is define the formula as x-y+z, and the calculation is also a part of the reports.”
In addition to savings figures, the system also can track data on cost avoidance for items such as negotiated concessions and upgrades. That way, “when the meeting planner is showing their value, they can report back on both savings and cost avoidance,” said Ludwig.
In December, Cvent plans to roll out a “budget versioning” feature that will be able to track the changes each user makes to data in the system, and when they do it. Ludwig noted that in many cases, company-wide usage of a meeting management tool such as Cvent’s remains an ideal. “The real challenge is not only having a technology solution in place to collect data, but to get compliance across all planners or ad hoc planners that are spending,” he said. “We see so many organizations that have the best of intentions and ultimately track 30 percent of their meeting spend in the toolset because there are rogue people out there who aren’t registering the meeting. So it’s about changing habits. It’s happening slowly but surely, and with additional scrutiny on spend, I think we’re moving in the direction of full compliance.”
Longtime planners do tend to be set in their ways, and many are still comfortable using Excel spreadsheets for documenting budgets and tracking spend, despite the advantages of an automated system. King is one such planner, although she is not beyond discovering new ways to save costs, if not new ways to track those savings.
One such discovery occurred during the planning of a January regional sales meeting in Lake Tahoe. “I have traditionally had a production company with a stage manager to take care of all the speakers, and the meeting host said, ‘No, I don’t want to spend a quarter of my budget on a production company,’?” she related. “So my boss, who’s the executive director of marketing communications, ended up being my stage manager: He collected all the presentations, introduced the presenters for the general session and more. So where I would have normally spent $50,000–$60,000 on production, he spent basically nothing except for the AV equipment that we used from the hotel. It worked, and it proved to me that it could work.” C&IT