Meeting Planners Struggle To Control Costs | PKF Reports

Hotel managers are not the only party at the negotiating table struggling to control costs and operate within the limits of austere budgets. Meeting planners have also been given the challenge of setting up effective events at the least possible cost.

In an effort to work within the framework of slashed government, corporate, and association meeting budgets, planners have continued to cut banquet menus and off-site events as they have in the past. However, now they have begun to flex their negotiating leverage and ask for aggressive room rate concessions from hoteliers. In response, it appears that hotel managers have been increasingly willing to negotiate and offer room rate discounts.

In September of 2009, PKF Hospitality Research surveyed a national sample of nearly 100 meeting planners on behalf of ConventionSouth magazine. The survey covered such topics as meeting attendance, destination and facility selection criteria, technology, and budgets.

The following paragraphs and charts highlight the findings of the survey that are most pertinent to hoteliers.

Meetings and Attendance

• Roughly one quarter of the respondents are planning fewer meetings and exhibitions in 2009 compared to 2008. Next year, the majority of respondents expect the count of events to remain the same as 2009. It appears that the market has reached the bottom and stabilized.

• In 2009 and 2010, attendance has surpassed expectations for an increasing number of planners, as opposed to falling below expectations. After being surprised by the dramatic fall off in 2008, planners must have lowered their future expectations for attendance.

Destination / Facility Selection

• Surprisingly, only 54.7% of the respondents said that the economy has affected their destination and venue selection. In addition, fewer planners are looking at secondary and tertiary cities in 2009 compared to 2008. We believe this is partially attributable to the lowering of room rates and other meeting costs at the first-tier cities.

• Price of hotel rooms” was cited as the number one criteria for selecting a meeting facility. “Willingness to negotiate” was number three. Interestingly, room rates were identified by the meeting planners as the number one item hoteliers are most willing to negotiate.

• The vast majority of planners (78%) have not “traded-up’ hotels due to price reductions.

• “Overall Affordability” was ranked as the number one criteria for destination selection, followed by drive access, then air access. In last year’s survey, air access surpassed drive access. This indicates a preference for “drive to” destinations as a cost reduction. We did not ask about “overall affordability” last year.

• Environmentally friendly meetings are growing in importance, but are still not critical.

Budgets

• After reductions in 2008 and 2009, planner’s budgets appear to have stabilized, albeit at low levels.

• Food and beverage is still the top area where planners are being asked to cut costs. Guest rooms are now number two, having surpassed off-site events.

Technology

• Technology is replacing meetings to just a limited extent.

• Nearly two thirds of the planners are incorporating some form of meeting technology during their face-to-face meetings.

Planner Expectations

• After leveling out at the bottom in 2009, an equal number of planners expect overall market conditions to be the same or better in 2010. Expectations for further deterioration in market conditions have lessened.