Meeting Planners Optimism Rising
By Robert Mandelbaum, Director of Research Information Services at CBRE Hotels
As U.S. lodging industry performance has turned positive in 2010, so too has the attitude of meeting planners, though not quite to the same degree. While the temperament of association, corporate, government and independent planners cannot be characterized as exuberant, the emergence of optimism provides hope for hoteliers that the group demand segment is now on the path towards recovery.
Of greatest interest to hoteliers is the increasing number of planners that expect the volume of events they handle to grow in 2011. Nearly one-third (32%) of the planners surveyed stated that the number of meetings they will be responsible for in 2011 will be greater than the number they are organizing in 2010. Among exhibition organizers, 22 percent expect an increase in events next year. These percentages are not overwhelming, so what may be of more significance is the fact that the number of planners expecting their meeting counts to decline in 2011 is half that recorded in the 2009 survey.
Attendance expectations are slightly more optimistic than the outlook for the number of events. Thirty-seven percent (37%) of the planners believe attendance at their events will rise in 2011. More importantly, only six percent (6%) foresee a decline in attendance, down from 18 percent of the planners that reported a decline in attendance in 2010.
Corporate and association budgets for meetings and exhibitions may not be plentiful, but they appear to be growing. Just over one quarter (26%) of the planners said they will be spending more per meeting in 2011 than they did in 2010, while only 10 percent expect continue to cut costs.
Less budget pressure is further illustrated by the guidance given to planners by their organizations. Thirty percent of the respondents stated they will not have to cut any costs in 2011, while only 28 percent are having to consider secondary or tertiary markets an effort to save money. In fact, over 50% of the planners cited that the economy is no longer affecting their choice of destinations and meeting venues.
While the pressure to cut costs may be diminishing, it has certainly not gone away. Overall affordability was rated as the most important criteria when selecting an event destination. However, when focusing on the areas of cost containment, there appears to be a disconnect between meeting planners and hoteliers.
In last year's survey, guest rooms were ranked as the second most frequent area for cost containment. In the current survey, room rates declined in importance to number five as a cause for concern. While meeting planners are becoming less compelled to negotiate room rates, they believe that hotel managers are more than willing to do so. Almost three-quarters (71%) of the planners surveyed identified room rates as the number one item hoteliers are willing to concede. On the other hand, hotel managers are less willing to budge on reductions in service and cancellation fees.
According to our survey of meeting planners, 2011 should mark the first year of recovery for the group demand segment in the U.S. While the majority of respondents believe the number of events, event attendance and meeting expenditures will remain the same as they did in 2010, the number of planners expecting an increase in these measures now outweighs the number expecting a decrease. By 2012, hotel managers will hopefully have enjoyed tangible growth in group room nights, thus bolstering their ability to be more aggressive with room rates.
Robert Mandelbaum is the Director of Research Information Services for Colliers PKF Hospitality Research (www.pkfc.com). Special thanks to Marlane Bundock, Managing Editor of ConventionSouth, for sponsoring the survey. This article was published in the December 2010 edition of Lodging.
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CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world's largest commercial real estate services and investment firm (based on 2019 revenue). The company has more than 100,000 employees (excluding affiliates) and serves real estate investors and occupiers through more than 530 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.