A: America is experiencing its first significant drop in GDP since 1981, so few professionals have real experience with downturns like this. Also, this recession is different from anything experienced for the past 80 years, which has created a host of new conditions for planners.
Take hotels for instance. According to the Washington Post “Some of the country’s biggest commercial real estate players are asking for government help, as their $6 trillion industry of hotels, office buildings and shopping malls faces record amount of debt coming due in the next few years.” That means, “with the credit markets virtually collapsed, thousands of those properties could go into foreclosure or bankruptcy if owners are unable to get new loans.”
For you, the planner, the question about hotels is: Who owns the buildings your hotel is in? How do we know who owns the buildings that Hyatt, Marriott, Hilton, Renaissance, Days Inn, Embassy Suites are managing? Are these building owners a good risk for booking a meeting three years out? Will your deposits be protected? My advice: Be smart; the future is unknown. Be sure to include in your hotel contract a clause regarding “Change of Ownership” and add a “Foreclosure Clause.”
Also consider these points with the recession lingering, the goods and the bads:
- Overall lead times for meetings will shorten due to less long-term corporate strategy planning and the need for increased flexibility.
- Meetings regarding new business projects may shrink due to cutbacks. So, if you have been planning think tanks and strategic real estate meetings, reconsider your future. It is on a different course.
- Association meetings with hotel contracts in 2010 and beyond could be affected by membership attrition. However, it is too soon to become frightened about the contracts you signed for 2012…I recommend that you try to wait it out as best you can. Or, if you know that three years out your numbers will have dropped drastically, then renegotiate your contracts today. Why wait? You know your industry better than I can comment on. And, if you are in the 15% of companies whose business is increasing due to the recession, buy your extra rooms now, while hotels are willing to deal.
- This bailout has helped meeting planners’ bargaining power due to the decline in occupancy and the increase in inventory of new rooms. Use this to your advantage, as this may not last. If you recall, our industry was in this same situation in the late 80s; we rebounded to that point just a year and half ago, and planners could not negotiate anything.
- Consider booking your meeting locally to save on costs; bringing business to local venues looks good to your customers and competitors, and by not wasting money, it clearly shows that your client is supporting local businesses.
- Teleconferencing and social networking are paramount. Use these means in your meetings to promote and identify your product to others. Many associations tell me that their attendance has not dropped drastically because everyone is looking for a way to connect with the customer.
- Unfortunately, vendors of stage productions, entertainment, décor/floral, resorts and large convention hotels will feel the crunch of the AIG effect and the bailout. There may be budgets for entertainment, but the average American does not want to see a lavish event—no publicly traded or government agency will allow extravagance.
For example, years ago a client had a series of high-profile international meetings, but they had to present a very cost-conscious image to attendees. Instead of having a late fall meeting in sunny Barcelona, where the prices were lower and the weather was perfect, we ended up having a much higher-cost meeting in Brussels, where no one likes to meet in the winter. Of course, none of our executives were allowed to have spa treatments!
Also, larger meetings and their productions will be scaled down for cost savings and image. Be smart. Be creative. This is your job—to create something from nothing. It can be done. But if you feel you need help, ask your vendors. Vendors are in touch with the pulse of what is acceptable and doable from their experience with other clients.
This year promises to be a rollercoaster ride.
Ms. Smart E. Pants
Ms. Smart E. Pants is none other than the energetic Denise Baran, CMP, CMM. With 25 years of planning experience under her stylish belt, Denise is our in-house planner and Co-Owner/VP of Operations of Spectrum Events. This meeting magnate has planned events all over the globe for associations and corporations, with groups ranging in size from 10 to 5000. Have a burning question for Ms. Smart E. Pants? E-mail us at email@example.com.