Last week, American Express released the sixth forecast on global meetings and events. The report includes data from actual and planned meetings activity of American Express Meetings & Events globally as well as other sources, including licensed third-party data and industry information as well as interviews with industry leaders.
The report highlights the increasing strategic value of meetings and events for companies of all sizes. However, the continued global expansion and growth, coupled with the political and economic uncertainty result in a shift in sentiment. Survey respondents indicate that spending will remain unchanged, but the overall number of meetings and attendees per meeting are likely to decline.
According to the survey respondents, in 2017 meetings activity will vary across regions. It appears that meeting organisers are looking for the right balance between number and size of meetings in order to maximise the value for the their organisations, be it fewer meetings with more attendees, a more targeted audience or multiple local meetings that require less travel.
The report also emphasises the importance of using creative and innovative approaches to organising meetings and also being mindful of geopolitical and geoeconomic uncertainty.
Globally, the report predicts virtually no change in duration of meetings. Conferences and tradeshows as well as incentives and special events are still the longer meeting types (about 3 to 3.5 days). Only in Europe, there will be a slight decrease of half a day when it comes to incentives and special events.
“While a meeting would have been four days in the past, now it might be three days, with a focus on innovative and creative elements of the meeting.”
Compared to last year, respondents expect a smaller increase in meeting budgets but an increase nonetheless. The only exception is the Asia Pacific region where budgets are expected to remain flat. These minor budget adjustments fit with the predicted increase of value and content. According to meeting planners, discussing budgets at the proposal stage is crucial for the success of the meeting, even though meeting owners are reluctant to do so.
“Meeting planners [should look] at lower-cost destinations where savings can be redirected to enhancing the content of the meeting.”
A shift in the planning process can be observed across all regions as many clients do not have a good idea of how much an entire meeting will cost, and as a result, meeting planners are increasingly being charged with managing the entire meeting form A to Z.
“Customers are increasingly ‘requesting to have a key contact to plan everything, to do the sourcing, identify the location, and handle the planning, with full visibility of the budget and the service’ […] this one person can then ‘control the budget and speak from an end-to-end perspective regarding the event.’”
The highest costs per attendee are dedicated to incentives and special events, followed by conferences and tradeshows. The lowest spend is on internal team meetings and training, in some cases even less than half of the spend on incentives. Interestingly, average anticipated costs in South America are considerably higher than those in North America, Europe and Asia Pacific – probably due to the use of more expensive properties such as resort and luxury hotels in key areas in South America.
Lead times are expected to continue to be tight but vary across regions which highlights the different approaches to meeting planning and organisation in different parts of the world. Product launches and tradeshows have the longest lead times across all regions, however, in North America they last about 43 weeks while in Asia, Central and South America, preparation for such events may last as short as 13-14 weeks.
Another factor which may contribute to shorter lead times is the growing number of smaller meetings emerging from one large meeting. As a result, some meeting planners are now charged with organising additional meetings for the same lead time.
Group hotel rates
Following the general trend for the past few years, average group hotel rates are still on the rise with an expected increase for 2017 of about 1.2%-3.7%. Respondents generally agree that meetings will continue to be a sellers’ market with certain hotel brands gaining even more leverage through M&A. In addition, losing key contact persons as a result of restructuring is perceived as a serious challenge.
For planners in North America, Europe and Asia Pacific, for example, mergers will mostly affect contractual negotiation processes and changes to contractual terms and conditions. Central and South American meeting planners point to commissions as a challenge but see a potential in possible establishment of preferred hotel programs.
“Fewer hotel groups controlling the market means there is more opportunity to increase rates.”
Some meeting owners are concerned about hotel supplier providing online access to meeting-related availability and reservation capabilities, especially when it comes to buyers who are working to increase compliance to policy and develop relationships with preferred properties.
For buyers from all regions, when negotiating with hotels, the biggest challenge remains rates and complimentary meeting space. Data from hotelier respondents indicate that they are open to negotiating both rates and complimentary space as well as discounted Wi-Fi and amenities but less willing to negotiate service fees and cancellation penalties.
Property type demand
For six years in a row, respondents anticipate the highest demand of about 45% or more for mid-tier properties. As a result, there is increased competition for hotel rooms and a corresponding increase in planned new openings for this type of properties. The report highlights the importance of adjusting property features to meet the demand for unique, non-traditional venues. Indeed, meeting owners choose mid-tier facilities for cost considerations, however, they still expect that the properties will satisfy the attendees’ need for memorable experiences.
“Hotels are working to meet the demand for unique experiences by setting themselves apart from other hotels with differentiated brand identities or through unique design elements and offerings, such as flexible outdoor spaces, hightech rooms, an increase in spaces using natural light and partnerships with theaters or other local attractions.”
“People are trending toward more creative, innovative locations and looking for interesting and different venues and it’s not just one type of customer, it’s all customers.”
The greatest interest in luxury properties in concentrated in Central and South America as well as the Asia Pacific region.
As in previous years, the big four top cities remain: Dubai, New York, London and Shanghai, followed by Hamburg, Sanya, Chicago and Muscat. Hotel openings in top cities will increase, led by Dubai with 39 in 2017. London is also worth mentioning with 24 openings suggesting that top cities enjoy healthy demand despite higher rates.
2017 Hotel Openings: Top 3 Cities per Region
Source: TOPHOTELPROJECTS GmbH, as of August 2016
According to the report, the choice of destination is influenced by a variety of factors such as customer experiences and participation in preferred supplier programs, with ease of travel and safety being a top priority. At least 15% of respondents across regions and 26% of respondents in Europe, point to economic and political instability as key factors in decision-making. The most neglected factor – online reviews, seems to be of lower importance when choosing the meeting location.
The study indicates that at least 40% of organisations have implemented formal meeting policies. This number is as high as 61% in Europe. The policies cover mostly payment and approval, procurement, safety and security. This is an ongoing trend intended to address the growing complexity of meeting planning and organisation. At least a third of organisational policies contain guidelines on using meeting technology such as mobile apps, registration systems and AV for virtual meetings.
In fact, mobile apps are gaining momentum with faster and more pervasive adoption. Compared to 2016 there is a significant increase in mobile app adoption in all regions, and now a third of respondents plan to use apps in 10% or more of their meetings. It is believed that apps are most effective when it comes to attendee engagement as well as for communicating information regarding changes or emergencies.
“It is still early in the curve, but once you attend a meeting with an app you expect the same going forward, to have everything at your fingertips.”
Sharing economy suppliers is less present element in policies, however, respondents indicate it is gaining in importance especially for smaller meetings.
“While Airbnb has not been on the radar of meeting planners, ‘the desire for some to have a unique meeting space’ may encourage new sharing economy suppliers in the meetings and events space.”
Standardisation of the meetings and events programme which is now part of at least 31% of policies in most regions provides the much needed transparency in planning. When it comes to approval processes, respondents in all regions have the least difficulties for internal team meetings and training due their smaller scope and length. In North America in particular, conferences and tradeshows are also relatively easy to get approved, probably due to the small-sized groups in attendance. In contrast, in Europe and Central and South America, sales and marketing meetings are considered the easiest which may explain the larger numbers of this meeting type compared to other regions.
Globally, the most difficult types of meeting to get approval for are incentives and special events which are usually company-driven and involve larger budgets and reputational risks.
Virtual vs face-to-face meetings
Experts identify face-to-face meetings as the most effective and therefore preferred meeting type. However, the ever more sophisticated technologies further enhance virtual meeting attendance and provide high-quality networking opportunities. The fact that virtual meetings offer certain cost and security benefits provides a certain incentive to buyers.
Currently, about 25% of respondents in North America and Europe plan to organise virtual or hybrid meetings. In Asia, levels are predicted to increase to 41% while in Central and South America, such meetings will probably decrease.
Duty of care
The current political and environmental landscapes present meeting planners with a whole range of potential risks and emergency situations. Additional challenges challenges are associated with tracking and managing attendees who are now using multiple vendors and processes when booking their transportation and lodging, for example. According to the report however, technology is also the solution when it comes to managing complexity, assessing the impact and devising strategy in a crisis.
Future of Talent in Meetings and Events
“The meetings and events industry continues to grow and gain recognition within organizations as a key area of investment, a driver of growth and a critical component of a balanced sales and marketing strategy.”
The report points out the attractiveness of the Meetings Industry to the new generation of workforce who are interested in opportunities for travelling, flexibility and creativity in a dynamic professional environment. The growing number of hospitality, meeting and events majors and training opportunities are also a testament to the increased interest in this field. The report underscores the importance of educational institutions of keeping up with the ever changing industry needs, technological trends and reporting requirements.
There are also more internship opportunity on offer which allow students to gain real-life experience and important insights into the industry thus being better prepared for a career in the event management. According to the survey, HR professionals considered soft skills such as ability to read situations, appropriate communication skills, fostering relationships and troubleshooting particularly important when hiring.
Strategic planning – According to experts, in any case, the best approach to adapt to the challenges is to start planning as soon as possible following a well devised strategy. Such strategy should include sourcing,event planning and group travel but above all, be aligned with the organisation’s overall strategic goals and budget.
Going beyond the basics includes creative communications, attendee management, data gathering, reporting and analysis.
Shorter lead times – Beginning the planning process early allows planners to remain relatively flexible with rates and dates when it comes to booking.
Budget constraints – Considering alternative locations and dates is key in order to fit within budget requirements. The demand for uniqueness can sometimes be satisfied by the choice of destination or venue and more and more hotels offer unique meeting spaces.
Meeting Apps – As apps gain popularity, meeting professionals should learn more about the features that matter most for the ultimate success of the meeting, such as agenda, messaging and surveying as well as extracting important data about the participant behaviour. Experts also recommend that apps are used to enhance the attendee experience and engagement.
Duty of care – It is important to develop a comprehensive duty of care policy which should ideally provide guidelines for choosing locations, travel arrangements etc. which would also inform attendees for their personal responsibility when it comes to safety and would ultimately mitigate the risks and enable more timely and decisive response.
The complete report is available at https://www.amexglobalbusinesstravel.com/meetings-events-forecast/