Event BudgetingFebruary 9, 2024

Planners Face Hard Challenges Head On By
February 9, 2024

Event Budgeting

Planners Face Hard Challenges Head On
Some planners are cutting the duration of events to cut costs, and scheduling meetings in small bursts with longer breaks to hold attendees’ attention. Photo by Adrian Scat

Some planners are cutting the duration of events to cut costs, and scheduling meetings in small bursts with longer breaks to hold attendees’ attention. Photo by Adrian Scat

Under the best of circumstances, a meeting planner’s job is fraught with challenges. How does one choose the right destination, and venue(s) — not to mention food & beverage, educational content and entertainment — to meet or even exceed a group’s goals, and do it within budget? The tasks, and the weight of what could go wrong, seemingly are massive.

Now consider all of that against the backdrop of current conditions. Inflation has been on the rise for a while and the labor shortage, while slightly lessened from when it first started, remains an issue for planners eager to execute optimal events. At the same time, by many accounts, meeting budgets are unchanged from prior years, or only slightly increased. Those headwinds, along with some other related trends, promise to give planners some very tall orders this year.

But the good news is, these circumstances are not unsurmountable, they just require advance planning and strategic thinking. More than that, the growing power of events as a crucial part of a company’s year-round business and marketing strategy has sparked key conversations across corporations and industries.

To reinforce that point, TED, the nonprofit organization on a mission to spread ideas that spark imagination, embrace possibility and catalyze impact through their model of short “talks” from influential speakers from various industries — business, education, science, tech and many creative and artistic field — promoted event strategist Monique Ruff-Bell to the newly created role of chief program and strategy officer.

In a recent interview with BizBash, she said, “There’s a growing recognition of events strategists as true business leaders, strategists and revenue drivers,” said Ruff-Bell, who joined TED in 2022 as head of events. “This shift in perception and the increased representation in the C-suite is not only motivating but also inspiring to our industry. This milestone is not just about my personal achievement, but a testament to the broader acknowledgment of the crucial role events play in shaping overall business strategy.”

Ruff-Bell handled events at a variety of high-level places, including Haymarket Media Group, Money20/20, and now TED for the last couple of years. Her current role reflects the growing recognition of event planners across all industries. “We’re being recognized as the innovators and thought leaders we’ve always been because of our resilience and adaptability in the face of challenges like the global pandemic.”

While Ruff-Bell applauds the meetings industry for playing a pivotal role in the success and growth of any organization, she also recognizes the challenges — “budget resourcing for our events.”

Inflation Landscape

Last December, consumer prices generally climbed more quickly on a yearly basis than November: 3.4% compared to 3.1% previously, according to a January report in The New York Times.

It’s worth noting that there are some signs that inflation is beginning to turn around. After stripping out food and fuel costs — commodities that the Times said are “volatile” — a “core” price measure climbed 3.9% in the year through December, down from 4% previously. That marked the first time the core index has dropped below 4% since May 2021.

And while prices remain inflated, meeting planners expect to continue seeing especially elevated costs at hotels as well as off-site venues. Linda McNairy, global vice president, strategic meetings, American Express Meetings & Events, said her firm’s Global Meeting & Events Forecast, which surveyed over 500 planners, found expectations of 3.5% to 4% cost increases, “across all meeting types. Hotel rates and event production costs, in particular, were expected to rise.And inflation delivers a double whammy to meeting planners. There are rising hotel costs, with room rates driven up by supply outpacing demand, as well as the passing on of hotels’ higher costs of food, labor, fuel, etc., while planners’ own costs are going up, positioning them to have to do more with less.

“Inflation is very real and budgets haven’t increased but you have to do a meeting on the same dime as before, so something has got to give,” stated Cindy Lo, CEO and owner of RED VELVET, a full-service experience agency, and Strong Events.

Coping Strategies

Lo advises clients facing cost-prohibitive prices to cut the number of attendees at their meetings, and/or to pare down the agenda. In some cases, Lo has talked to clients about taking the do-it-yourself approach on meeting elements, such as flowers, which “can save quite a bit.”

Meeting organizers need to be sure though that centerpieces created in someone’s kitchen, rather than a flower shop, don’t look cheap. “People often want to have these really creative, interactive centerpieces,” Lo explained, but when a florist’s prices become too steep, “the group might go to Oriental Trading and buy stuff and call it a centerpiece. Personally, I would rather just not have trash on the table.”

Lo cautioned planners against saying yes to the DIY approach in most other areas. In other words, when an executive says “my brother is in a band so he can handle the music!” don’t do it. The cost savings don’t provide enough value when considering a meeting’s overall objectives — unless someone is really a professional singer. Or, to cite another area with potential savings, if someone is great on Canva, maybe a graphic designer is not needed, but again, most likely, deferring to the experts is best.

In another money saving measure, McNairy suggested tweaking meeting agendas to reduce the duration of gatherings. “Even cutting one night, depending on the size of your meeting, can have a significant impact.” But such an adjustment does more than cut costs. It plays into creating smarter meeting design, a much-needed consideration to take care not just of attendees’ meeting related needs but of their total selves.

“We’re moving away from having attendees on the go from that 7 a.m. breakfast and then jumping from session to session through the day with just 20 minutes in their hotel room to check email, call home, change clothes and brush their teeth before going to an evening event that runs until 10 o’clock,” McNairy said.

Instead, she suggested that meeting organizers arrange shorter bursts of education, like 15-minute sessions followed by 45-minute breaks, which would allow attendees to “get some fresh air and do whatever they need to do to be complete human beings. Whether that is checking in with home, doing 10 minutes of yoga or something else, that’s our greatest recommendation in terms of really looking at, and challenging, the status quo.”

Getting Ahead of the Problem

Sarah Buchbinder, regional director, meeting broker division, Meetings Made Easy, takes some preemptive approaches to clients potentially facing high fees.

She advises clients to be flexible on dates and destination because, of course, that allows for more possibilities and can enable a group to fill an empty spot on a hotel or city’s calendar and pay much better rates than asking to be, say, in Miami in December.

Buchbinder also tries to secure a strong attrition clause, as well as staffing and service guarantees to ensure that increasing hotel costs don’t affect the quality of the service or product being provided. Additionally, she cautions groups to expect to pay higher prices than they did for their last meeting. “When we start sourcing meetings with a client, especially if we haven’t worked with them for a while, we’re making sure they know from the get go that food and beverage prices and service charges will be higher, plus hotels are going to be less likely to waive room rentals and resort fees because they’re dealing with inflation.”

Planners also can trim the budget by cutting some items that might have been typical in past years, like certain off-site activities, attendee or speaker gifts or even some services that were planned for VIPs, while still keeping some special treatment plans in place.

Budget woes are no big surprise to anyone in the meetings industry. Nikki Yep, senior event planner and partner, Event Solutions, said, “I’m not telling you something you don’t know because you’re seeing it first hand in your personal life.” Like most Americans, she has noticed that food costs are up everywhere you turn, from your local market to restaurants and hotels. “But some of the ignorance comes from senior level workers who came to meetings post COVID and they likely are just focused on a need to have a meeting, not on what’s involved in the planning, deadlines for booking with suppliers before prices rise and related concerns,” said Yep.

“Shorter lead times can partly be driven by organizational hesitancy to approve and book meetings,” McNairy added. “If there are new stakeholders in the meeting process, they may not be fully aware of the dynamic nature of top meeting costs such as airfare and room rates, and the potential benefits of booking further in advance.”

Planners reportedly are seeing flat budgets, and those who anticipate an increase are not exactly projecting big surges. According to the AMEX survey, which had over 500 respondents, only 13% of those who said budgets will increase expected them to show more than a 10% gain.

In Knowland and ConferenceDirect’s annual report, 2024 State of the Meetings Industry, the collaboration reveals insights to help industry professionals understand what meeting planners and event managers expect and will prioritize in 2024.

“Planners are optimistic about 2024, with almost half expecting to book more meetings than in 2023,” the report said. “But the pressure is on to deliver high-quality events and game-changing attendee experiences while staying within budget. Rising costs combined with less experienced hotel staff are changing how and where planners book, resulting in smaller events, a move to secondary markets and modified experiences.”

That lack of major funding for organizations also poses problems for both corporate and association groups. Companies with fixed budgets are seeing their expenses rise without event budgets to match. That’s a challenge for pharmaceutical meetings with healthcare professionals in attendance because they are under strict limits for what they are allowed to spend on food and beverage, housing and other costs, because of the Sunshine Act, Buchbinder noted. “The menu prices are rising but their meal cap numbers are not.” This is forcing planners to once again get creative, changing agendas to cut a day or reducing off-site activities.

Such conditions drive planners to really hunker down with clients on what are must haves, nice to haves and really not necessary. “I always like to ask the client for their budget, not to spend their money, but to understand what I can include to give them the best event possible,” said Yep. “Once we’re planning, food is first and foremost; then you need a venue. Those are the two areas where I put the budget and then I start working backwards. Entertainment is last.”

Groups can also save money when meeting planners embrace technology, such as attendee management systems and registration tools. “Such additions to a meeting make the planning process more efficient, in terms of securing all of the logistics and better leveraging efficiencies in the planning process,” said McNairy.

Adding those tools, theoretically, can free up some of the meeting planners’ time and allow them to take a more consultative approach with the meeting owner and design a more thoughtful meeting agenda that has maximum impact — also known as Return on Investment [ROI] – and help attack the cost.

Labor and Pay Battles

Beyond budgets, planners are plagued by issues that have arisen because of the labor shortage. Event staffs sometimes include workers who are new to the industry, or the venues simply don’t have enough people, while some third-party planning firms find themselves having to scale back their own teams and do more with less.

RED VELVET now has 17 full-time employees, Lo noted, yet that costs the same as it cost to have 27 people in 2019 and 2020, before she had to lay off 10 workers. Now, the firm brings on temporary workers wherever its meetings are held, she said. “We have augmented our entire contract staff because that’s the only way I can afford to do all these bigger events and we still need them. I just can’t keep them year-round unfortunately, because we don’t get enough contracts to justify them.”

On the plus side of the current landscape is the fact that independent planners are asserting what they want, and need, in the form of higher fees.

“We had to raise our fees a small percentage, across the board, due to the economy,” Yep said. “If you’re wanting reliable, quality work, we are priced accordingly. Our jobs are complex and depending on the scope, fees change.”

Event Solutions sometimes loses business over fees, Yep said; but to her, that just means the client and the firm were not a good fit.

At RED VELVET, which also had to raise rates and does sometimes lose bids solely based on price, customers are not just paying for frills, they’re paying for a professional operation, Lo noted. “We are a team where we’re training all of our people and we have a support system. We have an accounting team, legal people; we have a whole team so it’s not just an independent planner.

And, she advised other planners, “When you’re operating with fewer people, you need to make sure you’re hiring the right people, because if you don’t, it can taint everything.” Her firm lost part of a big contract because they just had a person in place who was not the right fit for the business.

On a Positive Note

In the meantime, Yep remains optimistic about the year ahead. “I see 2024 as the year of the industry coming back, because there was uncertainty in 2023 with the economy but now I think more companies will want to have events. I feel good about the climate of the industry,” Yep declared. “And I have had a lot of clients who postponed in 2023 say we’re going to do something in 2024 instead, mostly because of budget.”

AMEX’s survey respondents sounded a similar positive tone. Asked in the AMEX survey about their confidence in the industry, 82% or respondents rated the industry eight or higher out of 10, which is an increase from 77% in 2022 and 71% in 2021.

“There’s an optimism that the value of meetings is fully established,” McNairy said. “The ability to accomplish an organization’s objectives through meetings and events is definitely being proven. It’s exciting to see.” C&IT

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