Magazine Online    The Authority On African-American Conventions, Incentives, & Leisure Travel
Issue: June/July 2009
Trimming The Fat From Meeting Budgets
By: Michael Bennett

Many of you remember the story of Andrea Gail. The Andrea Gail was the 72-ft. commercial fishing boat chronicled in the film "The Perfect Storm" starring George Clooney and Mark Wahlberg. For those unfamiliar with this true story, on October 30, 1991 a wicked storm battered the Massachusetts coastline off of Cape Ann about 30 miles northeast of Boston. The mountainous tides and heavy winds caused over $35 million in damage. The Andrea Gail and its crew of six were lost at sea, capsized in 100-ft. waves. You might be wondering where I'm going with this - bare with me a moment longer.

The so-called Perfect Storm was a rare combination of factors that caught meteorologist and residents alike completely off-guard. First, Hurricane Grace had moved up from the Caribbean causing high-surf, but remained well out at sea. In the meantime an offshore Atlantic Storm formed, nothing unusual to this point. But then the unthinkable happened. The remnants of Grace collided with the storm system unleashing powerful northeasterly winds and surging tides the likes of which most residents had never experienced in their lives - this three-headed monster became The Perfect Storm.

As any meeting planner will tell you, they've experienced their own Perfect Storm, and yes it caught most people willing to admit it, completely off-guard. Lets start with the hurricane in our story - the global recession. Said to have officially begun in December of 2007, this recession has severely damaged the Meetings, Incentives, Conferences and Events (M.I.C.E.) marketplace. Incentives have probably taken the worst beating as companies have sharply reduced or eliminated budgets altogether waiting for prosperous economic times to return. The fear-mongering and scare tactics of our elected officials caused organizations unaffected by bailouts to cut back or cancel events altogether, costing our industry billions.

The Atlantic storm in our analogy is reduced meeting planner budgets. As the recession took hold most organizations, associations and individuals had less discretionary income and immediately pulled back funding for meetings, conferences and events.

I have personally attended about a dozen events over the past 18 months. While I've enjoyed the experience at each event, if you pay close attention the changes are noticeable. Reduction in the number of sponsors, limited meal choices and smaller events are just some of my observations in these lean times.

The result of these two events leads to the third piece in this three-headed monster, reduced demand. Two hotbeds of convention activity Las Vegas and Orlando are suffering mightily. The Las Vegas Convention and Visitors Authority reports 402 cancellations between October 2008 and March 2009, costing the local economy $166 million, not to mention lost gaming revenues. Living in Las Vegas, I've seen the resulting personal toll this has taken with tens of thousands running to the unemployment office. Orlando has had well over 100 events canceled the first three months of 2009 costing the local economy 26 million and 146,000 room nights. If you combine the cancellations with reduced attendance the losses industry-wide are staggering.

And here's the rub for meeting planners. One would think with reduced demand for hotel space combined with more inventory coming online, meeting planners would be in a great bargaining position, aka the "buyers market." While that pendulum has definitely swung in their favor, now they must do more with less as their budgets have been slashed, some as much as 30 percent.

Kelli Bland, president of A Moments Notice Events says organizations are going as far as taking the meeting planner function in-house and delegating responsibilities to individuals with no experience to save a few bucks.

With that as our backdrop, lets look at ways meeting planners might save in a tight market and still put on a world-class event.

Lets start with room rates. In the old days, pre-2008, hoteliers were reluctant to negotiate on room rates. Bland says over the past six to eight months she's noticed a far friendlier atmosphere between the hotelier and the meeting planner in negotiations as business has fallen off sharply.

Everything is on the table for negotiation from room rates to those annoying ancillary fees that drive your clients and participants crazy. You know the ones I'm talking about - resort fees, Internet usage fees, charges to restock the minibar, gym and pool access fees, parking charges, water in the room; need I go on?

Many organizations negotiated room blocks for 2009 gatherings prior to the economic meltdown. With attendance figures drastically reduced in some cases those guaranteed minimums in terms of room nights are now out the window. Will the hoteliers renegotiate?

Charlotte Haymore, president of the Travel Professionals of Color (TPOC) was faced with just that for their annual conference in Buffalo, NY. With attendance down, she knew she had to renegotiate the group's room block commitments. Initially, her host hotel made life a little difficult, but eventually acquiesced to a more reasonable set of room numbers. While attendance was down somewhat, she was able to maintain all her previous food and beverage commitments, which in turn guaranteed she would get her meeting space for free.

TPOC's 2010 conference presents a different set of challenges according to Haymore. TPOC will be held in The Bahamas and she readily admitted at first the negotiations with the hotelier were tough. Eventually, the two sides came together and settled on an all-inclusive deal of reduced room rates, resort fees and taxes.