It’s official: The U.S. economy — with its fluctuating gasoline prices, supply-chain issues, inflation and staffing constraints — is facing a challenging time. Businesses are worried, consumers are cautious and investors are downright jittery.
What does this mean for the budgetary environment within the meetings and events industry? Well, like everything else in the business, that depends on who you ask and where they’re located. But the consensus is that budgets for 2023 will be quite challenging for meeting planners.
Sherri K. Lindenberg, senior vice president, marketing communications with Crump Life Insurance Services, says the biggest budgeting concerns facing meeting planners and the industry in general are the unknown variables. “With each passing month, it seems there is a new area of challenge, from all travel related expenses and specific food items to availability of supplies, to staffing-related costs,” she says. “As we get back to holding events, planners have seen challenges with on-site A/V support, as local hotel A/V vendors seem to have trouble finding and maintaining skilled staff who can work the hours we need. COVID-19 has really impressed upon us the need to maximize our in-person time with interactive and engaging sessions — which often requires more preparation from speakers, planners and technology.”
Lindenberg adds that the inflationary economy has severely impacted meetings and events budgets. “We have increased our budget line estimates for every aspect of our events,” she says. “We are seeing airfare averages come in higher than pre-COVID, food and beverage costs are up, and most service related costs are up.”
She suggests a few cost-cutting tips:
“We discuss meeting costs with the business partners we work with early to clearly set expectations and jointly identify areas where we can cut costs,” she says. “We keep the partners apprised of status throughout the event, so everyone is clear on expectations and we can make adjustments as needed. With the continued economic pressures, I think events and event budgets will continue to be challenged.” She continues: “The pandemic experience has shown us what can be done in a virtual environment and what the benefits of in-person events are. We have learned to ask new questions every time we have programs: Should/can this content be handled virtually or must it be in-person? If we are in person, how are we going to maximize our time together? What areas should we spend money on to make the experience worthwhile? What areas can we cut back on if budgets are tight and still deliver a meaningful program?”
Brie Richards, CMP, sourcing manager at Brightspot Incentives & Events, says one of the biggest concerns the team at Brightspot is seeing is the increase in airfares and hotel pricing. They are seeing on average up to 40% higher airfare and 15% to 20% higher room rates from hotels, regardless of destination. “For many of our clients, these increases can take up over two-thirds of their budget, leaving limited funds to focus on things like attendee experience or creativity,” Richards says.
After COVID, also came inflation. “We truly feel it in almost every area of life. However, it has been interesting, at least with our client base, that we aren’t seeing as much willingness to increase budgets from what they had spent pre-COVID,” Richard says.
However, regardless of budgetary constraints, many of today’s organizations are no longer interested in the rinse-and-repeat beach trip with a choice of catamaran or zip line or a group beach dinner at night. They want once-in-a-lifetime experiences their attendees can’t go to or reproduce during their own leisure travel.
“They want their attendees to be ‘wowed’ in a way that keeps them talking about the trip back at the office with their fellow employee,” Richards says. “As event planners, this excites us, but for our alter egos, accountants, it can cause a bit of stress. The trend of air and hotel inflation requiring a larger share in the overall budget mixed with higher customer expectations requires not only creativity in the typical areas of themes and décor, but also in financial management.”
However, what makes this ever more tough, as Richards points out, is that most are not willing to sacrifice quality or an experience, but instead are raising the bar in those areas. The reality is that companies must come to terms with the fact that they are going to have increase their overall budgets to create the incentive or meeting experiences that truly have an impact on their attendees. “Although this may take a short-term hit on their yearly budget, it will ultimately achieve the long-term biggest return on their investment with employee or customer loyalty and increased results across the board,” Richards says.
Kara Dao, CEM, chief operating officer at JDC Events, adds that due to many organizations not having conventions in 2020 and possibly 2021, there was a lack of revenue being generated. That means, for some organizations, there was little to no funding in 2022 to hold events, and this is having a domino effect into 2023. “This, in combination with reduced participation from both the attendees, sponsors and exhibitors, means less chance to recoup quickly,” Dao says.
The inability for venues to provide lower-cost solutions is also adding to meeting planners’ budgetary concerns for 2023. “A good example is the impact that the pandemic has had on the supply chain,” Dao says. “Many venues have had to reduce their catering offerings because of this. That means less ability to provide lower-cost packaged solutions to groups.”
Annette Suriani, CMP, CFMP, DES, business events strategist at AMS Meetings Solutions, says with budgetary constraints also comes stress. “As we try to resume in-person meetings, there is so much uncertainty that stress is at a heightened level,” Suriani says. “Hotels, convention centers and restaurants are understaffed and are not at service levels attendees expect. Prices for goods and services have increased, and lead times for ordering signage, giveaways and even food have increased. Moreover, with the issues people are facing with air travel, attendees are truly reconsidering the value of attending in-person versus virtually, if that is offered.”
As the meetings and events industry continues to recover from the impact of the COVID-19 pandemic, one thing’s for sure: hybrid events are here to stay. Not only do hybrid events offer a sense of convenience for those unable to attend in person, but they also offer an affordable alternative for both hosts and attendees, alike. And in our current tight economy, that’s an oft-celebrated option.
Phoenix Porcelli, CMP, vice president of sales at Convene, a company that provides virtual and hybrid meeting platforms for meetings and events, sees key budgeting concerns facing meeting planners and the industry in general going into 2023 — including head-count uncertainty, technology needs and short-term booking windows.
“Budget uncertainty is prevalent for 2023, as budgets are being scrubbed and revised for the upcoming year. Our clients are experiencing pressure to be more strategic with the budget that is allocated,” Porcelli says. “A short-term booking window is also making it challenging to budget for the year, which was not an issue pre-COVID. This puts pressure on planning partners and other suppliers to turn RFPs around quickly and plan events on a much more compressed timeline, which may increase costs. There is also the hybrid component to consider as clients are trying to manage expectations from their hosts regarding the need for virtual speakers and participants.”
In response to the budgetary issues that have emerged as of late, Porcelli is seeing small meetings remain virtual to conserve budget dollars for larger events. For those in-person meetings, clients are looking to under-guarantee on head count, committing to revenue minimums that allow the flexibility of increasing head count if RSVPs surge. “We’ve also seen an increase in half-day meetings in an effort to conserve budget, while the demand for flexibility — whether flexibility in date due to budget constraints or flexibility to transition to hybrid — remains prevalent as well,” Porcelli says.
According to Mark Kilens, original creator of Hubspot and CMO of Airmeet, event budgeting is a big issue for organizations across the board. There are two key challenges that, if addressed, can make the process easier. These are leaning on expertise and having a big enough contingency. “It’s hard to know what you don’t know. And for first-time event planners, this is a common issue, even if you’ve created a detailed budget. Also, the issue can go both ways. Not having enough expertise can lead to over budgeting or under budgeting,” Kilens says.
The second issue is not having a big enough contingency. Contingencies are important, especially now, because, as we know, it’s easy for things to change on a whim. “If you have planned an in-person event that needs to be switched to one that is hybrid or fully virtual, it is not as simple as switching over to an online platform,” Kilens says. “The original in-person experience needs to be matched online. This means you’ll need to have enough dollars to re-create the original experience.”
And as previously mentioned, with supply-chain issues and changes, the cost of goods and services are all going up. There are shortages and delays affecting every dimension of an event. These include venues, event decor, promotional items, third-party vendors and even the cost of an online platform. “It is important to know what will bring the biggest ROI and contribute to delivering a top-notch experience for attendees,” Kilens says. “After identifying what these items are, if you normally give yourself three months to order, customize and check an item off your list — now give yourself six.”
Chad Helmer, vice president, operations at Impact XM, which provides a range of services across business and consumer trade shows, user conferences, event activations and digital engagements, adds that proving ROI on hybrid is challenging. “A lot of brands lacked sufficient measurement programs and systems to evaluate the ROI on their event programs pre-COVID,” Helmer says. “Now, with hybrid meetings and events, they are faced with trying to merge data sources between in-person and digital, which can add cost and complexity.”
When executing hybrid meetings and events, Impact XM is adjusting pricing expectations from suppliers. In general, they’re seeing supply issues impacting fabrication, technology and logistics to support meetings and events. “There’s been roughly a 30% cost increase across the board, but some categories are even higher. Or the items and materials aren’t available at all, or they are on back order,” Helmer says. “As a result, companies are having to plan further ahead and bake in these buffers to their event budgets.”
In addition, Helmer is starting to see the early effects of budget cuts — mostly in the labor markets, but some companies are starting to reevaluate their spend in certain areas. “It’s not a widespread reduction in marketing dollars spent on meetings and events, but companies are being more targeted and strategic on how they spend for events and meetings,” Helmer says. “We’ve seen a shift toward more regional, private events versus participation in industry shows and large gatherings. In the case of regional private events, the audience can be more targeted, and the message is directly from the company versus what you see at trade shows and major conventions.”
Today’s economic constraints means that meeting planners need to be detailed, creative and diligent when it comes to budgetary management of a meeting or event. Luckily, for Dao, clients are seemingly understanding and there is a willingness to retool their events to offer the “right things” versus “all the things,” she says.
That said, there are some key strategies that meeting planners can use when it comes to budgeting tactics in 2023, such as during the sourcing phase, planning ahead is extremely important in a sellers’ market. Hotel availability is slim, which means hotel revenue teams are likely to increase the rates because they know they can sell leftover rooms to the high demand, last minute, corporate or leisure travelers.
“Although, group business will always hold a place in the business model of the hotel world, the key to finding a good rate is looking early and being flexible in terms of pattern and destination,” Richards says. This is especially true in first-tier markets, which have returned quickly and intensely since COVID restrictions have been lifted. Richards suggests that a great way to save on costs is to look into second-tier markets that offer an arguably equal level of prestige, but at an overall lower cost and still with excellent airport access.
Dao also recommends meeting planners finitely track each dollar with re-forecasting revenue to projected spend on a monthly or even weekly basis. “Re-forecasting regularly has helped. Also, very detailed negotiations with venues has helped us locate reductions in spend,” Dao says. “What hasn’t worked is trying to get larger discounts. This doesn’t work when overall investments are down.”
And with limited supply, prices will continue to increase. Kilens says meeting planners should be sure to factor these rising costs into their budget plan. If you can’t get the products you had initially planned for, be flexible and ensure you maintain enough contact with your suppliers to keep an open line of communication should things change.
Meeting professionals all recommend buffering in additional costs to the budget for supply shortage, logistical delay and other “COVID-related” unexpected events. To that end, Helmer suggests having a proper contingency plan in place to cover for a shift in event format, the cancellation of a high-profile speaker/performer, or reduced attendance by considering hybrid and digital formats, and how they might amplify or augment the event experience.
“Have a plan to measure the performance of your events so that you have something to lean on when it comes time to provide budgets for 2024,” Helmer says.
Beyond that, there is a real need to consider attendees. “The inflationary environment is impacting travel costs, namely airfare and hotel. Even food costs are rising, which means employee travel allowances may no longer go as far as they once used to,” Kilens says. “This all has the ability to affect event turnout. This will be important when thinking about how you plan to price your event and whether you choose to host an in-person, hybrid or virtual one.”
Today, the meetings and events industry seems to be regaining some confidence. It is hard-won confidence, coming in the trough of the pandemic and inflationary economy, but it is a hint at least that there may be some light at the end of the tunnel.
“Due to budgetary constraints, the creativity and collaboration have to be even stronger. This means providing new ways of doing things that breathes life into the event and invigorates it,” Dao says. I&FMM