The good news is that the meeting industry will survive COVID-19: Many companies are planning for face-to-face meetings this year and beyond. The bad news, particularly for events happening this year, is that planners will face both logistical and budgetary challenges due to the pandemic.
The logistical hurdles of maintaining social distancing and ensuring proper sanitation are by this time quite familiar. But determining how budgets will need to be reduced, increased or readjusted is a process in which most planners are still in the midst.
Many factors can impact this new era in budgeting. Examples include the pandemic’s effect on room rates and airfares, specific expenses incurred by the company last year due to meeting cancellations and less available funds due to COVID-19’s impact on the company. Situations vary, of course. Companies that have been severely financially impacted may not be planning future face-to-face meetings at all, for example. “[Based on] what I’m seeing from my clients, companies greatly financially impacted by COVID are holding off on booking new programs,” says Amy Durocher, director, global accounts, with Scottsdale, Arizona-based Global Cynergies LLC.
On the other end of the spectrum is a company like Manchester, New Hampshire-based CCA Global Partners, a shared services membership purchasing cooperative of flooring/carpeting companies. Sharon L. Schenk, CMP, director of conventions and event management, notes that the home improvement industry “has not generally suffered during the pandemic.” However, “some of our vendors have banned travel. We’re hoping they’re going to be able to get back on the road by May and we’ll have a nice, robust exhibit floor.” At that time, the company will hold what would have been its winter convention, while the August 2021 convention has been cancelled. Next year, the plan is to go back to two conventions per year. “As a backup plan, we’re building a hybrid model for the foreseeable future,” Schenk says. “We expect reduced physical attendance this May at the Gaylord Rockies Resort compared to pre-pandemic attendance numbers, even though it will be members’ first face-to-face event since January 2020. We have a significant number of members in Canada, and we may have to build a hybrid option, or a central location for them to attend remotely from Canada, due to travel restrictions.”
South Jordan, Utah-based Ivanti, an IT software company, is also planning in-person meetings for this year, specifically customer-facing meetings for the end of Q1. “But we’re monitoring [the COVID situation] closely. We’re hopeful there will be some relaxation of travel restrictions,” says Karen Zunkowski, director of global event marketing. “We had already anticipated a change in our strategy with our large user conference [this year] with our new executive team in place. They wanted to offer training opportunities and other interactions, but more on a regional scale, which actually plays into a more COVID-friendly reentry anyway.” Like CCA Global Partners, Ivanti will also be offering a robust virtual component to its face-to-face events.
While major companies like CCA Global Partners and Ivanti are moving forward with in-person meetings, many companies are still in a holding pattern, awaiting further developments with the pandemic. Case in point, only 15% of the corporate clients of Dallas, Texas-based EventLink International Inc. are scheduling in-person events for [this] year, reports Teri Abram, president. “[Last year], 100% of our clients [went] virtual after the first week of March. Our clients that are currently moving forward with face-to-face meetings [this year] are having very high-level executive events. In this case, it is essential for the attendees to network with one another in person.”
Abram notes that, in general, her clients are allocating “only slightly lower budgets” to these future events. “We will be reviewing budgets regularly to determine if we need to cut expenses at any time,” she says. “At this point, the budget reductions or possible reductions we are seeing are due to the unknown. Clients are not sure how long the pandemic will last and what the future economy may look like. They are not sure if their internal budgets will be reduced or stay the same. So they are cautiously moving forward and trying to push out commitment dates and payment schedules.” She expects this cautiousness will last for at least the next couple of years.
Zunkowski’s team is in the position of being well under their meetings budget due to having converted last year’s meetings to virtual. Nonetheless, Ivanti leadership is exhibiting the caution Abram describes with regard to budgeting for future meetings. “Our leadership said that with the Q3 and Q4 budget allocations that we already have, don’t just automatically spend it, check with us before you spend it,” Zunkowski says. “For 2021, we’re budgeting according to our 2020 original budget, and also having a backup plan in case [funds] don’t loosen up.” Budget planning right now is “very fluid,” as Abram puts it.
One source of uncertainty is the particular expenses that COVID-19 risk mitigation may bring the host organization. These expenses can change depending on the risk level at the time of the meeting. “What I am hearing a lot is that there is another line item in the budget that the clients are having to consider, which is related to COVID protocols,” Durocher says. “If you are planning for a larger event, [you may have] a line item in your budget for contact tracing, temperature checks — the technology and services that are going to help keep your group safe.” A host organization may even invest in on-site medical staff for large events. The desire or need to invest in such risk-mitigation elements, which enhance what the meeting facility already provides, may well fluctuate based on the state of COVID-19 this year.
Schenk describes the pandemic-related expenses her team is currently planning on for CCA Global Partners’ convention in the spring. “Right now, the plan is we’re going to purchase acrylic dividers for our exhibit floor, [positioned] between all of our exhibitors — a one-time big expense. And we’re not going to have one registration desk; we’ll have to spread it out, so maybe five desks” to allow for social distancing. A little added cost is also expected for signage and decals related to COVID-19 safety. “We’re also going to send boxes in advance to all of our members with sanitation kits, so that is an additional cost,” she says. Zunkowski adds that F&B costs may rise if more meals need to be individually packaged, and if more attendants are needed for buffets since they can’t be self-serve for safety reasons.
Whether travel costs will increase for companies who pay for their attendees to fly is also an important budgetary consideration. Abram reports seeing lowered airfares, but reduced service in some cases may mean that attendees incur additional ground transportation costs in traveling to different airports.
Last year, many companies invested in new or enhanced virtual meeting platforms, and the hybrid meetings that will be prevalent this year will incur added technology costs. Some companies will be better positioned to absorb these costs — and the COVID-related ones described above — thanks to having saved on face-to-face meeting expenses in 2020. But companies whose in-person meetings were a source of revenue will not be as well positioned financially. Hybrid meeting tech costs may also to some extent be offset by airfare and lodging savings for part of the attendee base, assuming the host company pays those expenses.
“Our participants are responsible for their own airfare and hotel room, but we pick up the F&B,” Schenk says. “So if we have fewer people [on-site] in 2021, that gives us a little more money out of the F&B budget we can apply somewhere else. However, our technology budget has gone up because we’re building a hybrid backup in case not everyone can attend. In the end, it’s going to cost us more not just for the technology, but also for the production — bringing in extra equipment and extra labor. You have to have the in-person support; they’ve got to wipe down all the microphones, everything has to be cleaned and replenished and we’ll have to have more microphones. There are going to be additional costs to accommodate that.”
To secure the best value, Schenk’s team conducted an RFP process with six production companies for their virtual convention scheduled for early this year. Three were selected to pitch their platform for the hybrid meeting in the spring, which replaced the winter event. “It’s interesting because there are so many companies that claim to be ‘experts’ at hybrid when they only had six months to become experts,” Schenk observes. The high demand for that tech service in the coming years may well drive prices up, and planners should be prepared for that cost center to expand.
Engaging remote participants can be another cost center. For those unable to attend in person, Schenk plans to send them “mocktail” kits so they can join in virtual happy hours. And since virtual attendees will not be able to physically experience product samples on the exhibit floor, “We may end up sending them product samples in the mail so they can touch and feel the product,” she explains. “We also added money in our budget for speakers,” Schenk says. “We think that because we’ll just have the one convention [this year] and because the last one was virtual, we’ll have to have some dynamic speakers to make it more appealing for the audience to participate.”
Schenk predicts that budget cuts will come in 2022, when the company hopes to hold two hybrid conventions — thus incurring the additional expenses for hybrid twice over. “In my mind, hybrid is the way it will be going forward; we really have to accommodate the people that can’t or won’t travel,” she says. “We’ll depend upon the feedback of the May audience to see if they felt engaged and had any ROI. And if it was worthwhile for them and we have an even larger audience, then I anticipate that we’ll be doing hybrid going forward.”
At this stage, budgeting for hybrid meetings is still a learning process for many planners. “I think it will be complicated and challenging, but convention budgets always are. We’re just adding another component,” Schenk says. “After May, we’ll have learned what we need to spend money on and what we don’t. And in all of this, too, is the unpredictability of head count. Even if we now send a survey out asking, ‘Will you attend in May 2021?’ who knows [whether that will reflect the real attendance].”
Hotel Rates and Negotiability
While no one would have wanted the hotel industry to decline as it did due to COVID-19, the fact is that current market conditions favor the buyer. And the resulting lower rates will help many planners come in under budget for face-to-face meetings in the near future. Based on its recent RFP data, Cvent reported that rates at economy to upscale hotels were down 34% last year for September through December, will be down 19% for Q1 of this year, 10% for the entire year and 6% for next year — compared to the same arrival dates in 2019.
These market conditions go hand in hand with increased hotelier negotiability, particularly for early this year. “We are finding many hoteliers to be more negotiable and really partnering with us to come up with good solutions for all,” Abram says. “We have seen progressive attrition policies and concessions that will really help our clients in this environment.”
Zunkowski corroborates that trend. Hotels are “not necessarily coming out of the gate with rock-bottom pricing during peak times, but they’re definitely being more flexible with their attrition and cancellation terms,” she says.
In the coming age of hybrid meetings, it’s also critical to negotiate Wi-Fi. “We are trying to work with the property more on the cost of the Wi-Fi because we figure we’re going to need more bandwidth than what we’ve used in the past,” Schenk says. “They’re working with us, so we hopefully don’t pay two or three times what we normally do in order to livestream.”
While it’s accepted business practice to capitalize on market conditions, planners taking advantage of suppliers’ lower rates and/or increased negotiability do well to try to achieve a win-win situation. Negotiating for concessions that are within reason helps to preserve relationships that will continue when the pendulum swings back to a seller’s market. And in this era of the meetings industry, supplier relationships are especially critical when facing the new challenges posed by the pandemic.
Planners are sorting out the costs particular to hybrid meetings and COVID-19 event logistics, and contending with the indeterminacy of physical attendance numbers. In some cases, their company may have endured a financial blow due to the pandemic, and meeting budget cuts need to be made in the midst of dealing with uncertainty and new expenses. The silver lining to these challenges is the new opportunity they present for planners to once again demonstrate their worth to their organizations. C&IT