The Cost of Doing BusinessJanuary 20, 2023

Planners Adopt New Budget Tactics After COVID-19 By
January 20, 2023

The Cost of Doing Business

Planners Adopt New Budget Tactics After COVID-19
Valerie Bihet, left, owner, director of VIBE Agency, suggests asking the right questions can help avoid budget issues. Courtesy of Valerie Bihet

Valerie Bihet, left, owner, director of VIBE Agency, suggests asking the right questions can help avoid budget issues. Courtesy of Valerie Bihet

The past nearly three years have been trying times for meeting and event planners, to put it mildly. Of course, the COVID-19 pandemic brought things to a grinding halt in 2020, and though it seems we’re heading out of the pandemic to live more normal lives, a host of challenges continue to present themselves.

“The pandemic has created quite a bit of turmoil for the events industry. We all have to be more creative when it comes to the overall look and feel of events,” says May Yeo Silvers, the COO of M2 Hospitality LLC and founder of Events4Anyone. “We are experiencing a shortage of labor, so the level of service is not what it used to be. To counteract that, we need to reprogram the events in a fashion that is not labor-intensive, such as reducing the number of changes in the room setup and utilizing menus that are self-served.”

There’s also the need to make it attractive for people to attend meetings and events virtually, which can further reduce the cost of the event since there are fewer mouths to feed, fewer people to service, and there is less space needed. However, those savings might be offset by soaring production costs for online and hybrid meetings.

It’s important to always remember that the challenges of the pandemic can be navigated, and planners who apply their experience and creativity to events are seeing success by putting in the hard work, especially when it comes to sorting out budgets after the pandemic.

“We have been working with our clients to mitigate risk around shifting back and forth between virtual and live formats,” says Matthew Byrne, CSEP, founder/president of Byrne Production Services. “In our budgeting process, we identify key dates to make decisions on format and shift to that budget as we need to. Additionally, with the uncertainty in supply and labor resources, we are backing up timelines for confirmations to secure equipment and personnel.”

Changing With the Times

In 2023 and beyond, planners must be aware of the market demands across the industry, and they should communicate with vendors early and often and be as specific as possible when talking about the needs of their clients. “Every one of your vendors wants to work with you and make your event go flawlessly, so engage them early to make sure they can provide the support you need,” Byrne says, adding that success also requires flexibility on the part of planners.

One of the key changes he’s seen since the pandemic is the increase in pricing for and availability of A/V equipment and resources. “While the resurgence of events is a welcome thing after two years, resources are in high demand, and that’s driving price increases,” he says.

Melissa Park, global event producer at Melissa Park Events, says her firm is dedicating more time than ever to client education, which involves briefing clients on the state of the industry and the impact that is having on budgets. “Prior to the initial kickoff meeting for every event my team produces, we sit down with our clients to clarify their mission, define any non-negotiables and outline their goals and key performance indicators (KPIs),” Park says. “Based on this information, we get to work creating an event concept, their program and a preliminary budget.”

The next step of her process includes scheduling time with clients to walk through each document, slide by slide, tab by tab, line item by line item. She does this so the client knows how each and every dollar is being used to create experiences that are guaranteed to achieve each client’s business goals and exceed the expectations of attendees. She explains that this doesn’t represent a change to her process, but she has added two additional tabs to her conference budget template, which is now loaded with 19 tabs, 15 column headers and more than 500 itemized expenses — everything that is required to deliver a virtual, hybrid or COVID-safe, in-person event.

“The thing to remember is that budgets haven’t necessarily increased in line with the cost of producing two events in one [for hybrid events] or paying for daily rapid tests for hundreds or thousands of attendees, and PCR tests for each of your international attendees,” Park says. “Because of this, I make it a habit to highlight all of the ‘nice-to-have’ expenses, so that way, if I need to reduce spending, I know instantaneously which line items — like non-essential signage, signature cocktails, a reduced number of branded activations and theming, excessive entertainment — I can eliminate that won’t impact the actual delivery of the event.”

The Effects of COVID

Paul Dolce, vice president of hospitality for Arch Amenities Group, says the pandemic and its aftermath have led to a trend toward more realistic budgets because clients have recognized that costs have gone up for travel, food, lodging, venues, production and wages. “And now with inflation, and unsettling world events, costs are rising even more,” he says. “So, I believe that meeting planners connect the dots and recognize that they have to be practical in budget planning. We are seeing this at our Meet Hospitality locations.”

Byrne notes that the availability of labor is one of the key challenges planners continue to face as we enter the post-COVID era. “Skilled labor has left the industry in droves over the last two years,” he says. “As such, we need to make sure we are recruiting and paying livable wages to our crew and staff to make sure we can retain them. A lot of clients and organizations are finding themselves without qualified personnel once they confirm an event or meeting.”

Keep in mind that a lot of people in the meetings and hospitality industries found other ways to earn incomes during the pandemic, and they are staying on those paths instead of returning to their old jobs. “Because of that, the service and hospitality industry is experiencing a crisis in delivering the customer service we used to deliver pre-COVID,” Silvers says. “Now, we have to pay a lot more for each event if we want to regain the level of service we used to have as people are demanding higher pay and benefits.” Those costs, she further says, are trickling down to planners.

May Yeo Silvers says planners now must be more creative to budget properly. Courtesy of May Yeo Silvers

May Yeo Silvers says planners now must be more creative to budget properly. Courtesy of May Yeo Silvers

Cost Considerations

When budgeting client meetings, Valerie Bihet, owner, director of VIBE Agency, says her first rule is to limit the percentage of the budget that is spent on hotel accommodations. “If your hotel is more than 30% [of your budget], you’ll have to cut on decor, food, transport, etc., and you’ll be tight,” she says. “Just as when you spend more than 30% of your income on your mortgage, you know you’ll have to cut back in other areas of your life. It’s the same in an event.”

This connects to the importance of staying in touch with clients and knowing what their priorities are in terms of the event. “Do they care more about providing activities for guests or giving them free time?” Bihet says. “Do they want to provide food and beverage for all meals or only a couple? Answers to these questions can adjust how much you spend on the hotel and its amenities, and therefore the rest of the budget. Now with inflation, you need to be even more conscious of that. Compared to where we were in 2019, things are more expensive. We are seeing huge increases in all areas of events.”

In fact, she says the hotel industry is extremely busy these days as meetings and events ramp up again, which has resulted in increased costs for room blocks. “Also, there is less availability because all the events we had planned for 2020 and 2021 that got moved to 2022 [and 2023] are using the inventory for any new events we are trying to do.”

One of the biggest challenges in terms of budgeting is tracking the pricing evolution from year to year and avoiding hidden costs when using budgeting templates. “For example, some hotels have attrition based on room nights, whereas others do it on room revenue,” Bihet says. “The difference between these two approaches can greatly affect the budget. Similarly, hotels tend to charge tax on gratuity, and now more restaurants are starting to do that as well. When you work for international conventions, the clients don’t always understand that, so you have to educate the clients even more about U.S. taxes and how the line-item price can vary when the actual bill comes because of taxes and gratuity.”

Her key piece of advice is to “know what you buy and how to negotiate reasonably while still keeping your relationship with the vendor or venue.”

Post-COVID Budgeting

The meetings and events industry is still feeling the effects of the pandemic, and that requires diligence when working with clients on budgets. “We are taking into consideration the additional costs such as on-site COVID-testing services, incorporating livestreaming, and being extra cautious with the financial implications for the possibility of rescheduling or canceling the event if there is another uptick of the COVID cases,” Silvers says. “My strategy is to have very open and honest conversations with my clients about their expectations for the return on investment if they plan to host an in-person event — and how to get additional sales by incorporating a virtual component of the event and work out a mutually agreeable arrangement with the venue and vendors so all parties can minimize their financial risk.”

She adds that communications between all parties involved in the planning process is of vital importance. “The things that can quickly get out of control and blow your budget include food and beverage, and this happens when you don’t stand firm on the final number of people you want to have at the event,” Silvers says. “Another thing that could get out of control is not understanding how much things cost. For instance, if you require a motivational speaker for your sales conference, it can cost as little as $5,000 or as much as $50,000. Set your expectations on what caliber of speakers you want to engage. Do your homework and find the best one that is within the budget.”

There are also many who are spending a lot of energy resources on making an event look “sexy or entertaining” to get people to come, when that often isn’t the most effective approach. “Understand what is the ultimate return on investment you want to achieve for the event, then decide if the extra money you want to spend on ‘experiential marketing’ — which is also known in the events world as anything that engages the emotions of your attendees — is worth going over the initial event budget,” Silvers says. “For instance, is it really necessary to have a vending machine that disperses a $75 baby bottle of champagne as a gift for each attendee? Or can we do artisanal, company-branded truffles with exotic flavors that cost only $25? As an event strategist and planner, sometimes you have to check your client’s ego and ask if what they want is what the attendees want.”

Challenges Beyond COVID

As if a pandemic that sent the world into lockdown and essentially ended in-person events for nearly two years isn’t enough, the meetings industry is also dealing with an array of challenges that are presenting problems when preparing events, while also adding to their costs. According to Dolce, many meetings and events are being planned with short time frames, which can make things difficult for planners. “Lead times to find meeting space and hotels, make travel arrangements, and book speakers and facilitators is increasingly compressed, and thus more costly,” he says. “And many clients want to budget for flexibility, which also drives costs.”

Park says another one of the biggest challenges meeting professionals are facing these days is supply-chain issues. “Earlier [last] year, I had a company quote on a large feature that would be part of one of my general session stages,” she says. “Approximately six weeks passed from the initial quote to when we would have placed the order, and in that time, the vendor contacted me on three separate occasions to increase the quote.”

She also echoes that staff shortages are presenting numerous challenges. “Unfortunately, a very large number of event, entertainment and hospitality staff lost their jobs due to lockdowns and the cancellation of large gatherings,” Park says. “Many of those individuals have decided not to return to their respective industries. On the other end of the spectrum, many contractors and freelancers are now charging a lot more than their pre-COVID standard rates. Due to the shortage, companies are left with little choice but to pay exorbitant fees to hire skilled professionals to enable them to successfully deliver their events.”

Tips for Success

Successful planners have a passion for their work and for organizing effective events that fulfill their clients’ needs. But for many of these professionals, budget management isn’t their favorite part of the job. If that describes you, the good news is that by taking the right steps, you can simplify the budget management process. “Budget management doesn’t have to be difficult or complicated, nor do you need to be a mathematician to do it well,” Park says. “It comes down to giving every dollar a job, so you know you’re investing in all the right things to host a show-stopping experience.”

She offers some key tips for staying on budget, starting with negotiating. “Most vendors and suppliers add a little cream to their quote,” she says. “Don’t be afraid to push back and ask for better rates or a discount. What’s the worst they can say, ‘No?’”

If you come in under budget, add a line item in your miscellaneous tab titled “Backup” or “Bank” and add the line difference there. “You should never agree to a budget that doesn’t have a little padding,” Park says. “With live events, one wrong move can cost tens of thousands of dollars. Whatever you do, do not set yourself up for failure.”

For items with lower costs, Park asks her main partners — the general show contractor, the venue, caterer and A/V provider — to confirm that their tabs outline every single cost associated with the delivery of the event, and, most importantly, that they are accurate. “Doing this not only holds them accountable to their anticipated cost, but also makes them feel and behave like the integral part of the delivery team that they are,” she says.

And though this may take some time to set up, she recommends using formulas from the start to automatically calculate all of your totals. “Doing this will remove a lot of margin for error, and save you time down the track if you need to manipulate the budget to show the impact of multiple audience sizes,” Park says.

Dolce suggests taking advantage of special offers that a hotel or meeting venue is offering and being realistic about attendee count. “Do not over-inflate, or you will likely be hit with cancellation or attrition charges,” he says. “Look for venues that offer a meeting package — at Meet Hospitality, we offer various levels of our Day Meeting Package, per-person, per-day and price-related to your meeting experience, as well as continuous breaks, meals, conference space, A/V and technology, and a conference and meeting support team.”

A Different Approach

If you want to keep your budget under control, Bihet, who was born and raised in Paris, suggests thinking like a European. “We tend to be very detailed right away compared to the American approach with budgets, which is usually more broken down by bigger chunks of categories,” she says. “I say go line-by-line.”

She also warns against estimating, even if there’s a rush to the event. “I tell the client we need more than 48 hours because we want to guarantee pricing in writing from vendors rather than estimate it,” Bihet says. “Those who are rushing to just get it done and give ballpark numbers tend to have issues later. With the problems we’re having now with delivery, staffing and equipment, it’s important to realize that pricing is not the same as where it was in 2019.”

Finally, she suggests that 10% of the budget should be set aside as a miscellaneous line item. “Clients tend to want to remove it, but it’s always needed to be sure you have room to move around things when, not if, it’s needed,” she says.

The lesson to learn is that the challenges of 2023 and beyond can be overcome, and successful planners certainly have what it takes to navigate these difficult times. In fact, it already says something about you and your business if you’ve managed to stay afloat during these unpredictable times.

As Park puts it, “If you survived the last two years, I can guarantee you are savvier than ever.” C&IT

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