Deficits. Foreclosure. Layoffs. Recession. These are the watchwords of the current precarious state of the U.S. economy. What does all the bad fiscal news mean to planners and the process of organizing events? The picture is not nearly as bleak as events would portend. M&C spoke to industry insiders to reveal a shifting landscape in which real opportunity can be found amidst the uncertainty.
It is far too early to trumpet the dawn of a buyer’s cycle, such as the one that followed 9/11, when hotel occupancies plummeted into the single digits and properties wrestled for the few pieces of meeting business out there. In fact, the hotel industry, which racked up breathtaking year-over-year profits for the last three years, is forecast to continue to see revenue and profit margins increase in 2008, albeit a tad less sharply.
“From a market and financial perspective, we believe the U.S. lodging industry is in a healthier position entering this economic recession than prior recessions,” says Mark Woodworth, president of Atlanta-based PKF Hospitality Research, citing a continued increase in room rates and healthy occupancy levels that will keep 29 of the top 50 markets tracked by PKF humming at full throttle. “The typical U.S. hotel will enjoy increases in both revenues and profits, but at a more modest pace,” he adds.
For planners, this outlook means it would be unrealistic to expect hotels to offer an avalanche of freebies or to forgo attrition and cancellation clauses. According to Bjorn Hanson, principal of New York City-based Pricewaterhouse-Coopers’ hospitality and leisure group, in red-hot markets like Boston, New York City and San Francisco, where occupancy and room rates are through the roof and new inventory is slow to arrive, there will be little change. PWC is forecasting a 62.9 percent average occupancy rate for 2008 -- just slightly off the 63.3 average notched in 2007.
According to a report by American Express, room rates are expected to climb further in 2008, between 5 and 8 percent -- particularly at the luxury level -- before they begin to level out by year’s end. (By contrast, in New York City last year, where year-round occupancies hovered at 83.3 percent, the average room rose 15.4 percent.)
Economic uncertainty breeds a climate of confusion and fear, which can derail even the best-planned event. Lynn Stadler Randall, right, strategic meetings consultant for Maritz, a Fenton, Mo.-based sales and marketing services company, offers this advice for avoiding potential pitfalls while achieving management objectives.
Don’t stop communicating. Maintaining focus and morale is critical. Keeping the flow of communication between leadership and employees open is essential to provide a sense of comfort.
Know your audience. “Get the pulse of attendees, so you can ensure the meeting’s message is on target,” says Randall. “If they have an issue that is not being addressed, they will never be mentally in the space you want them to be.”
Expand your audience. Take a look at your current portfolio of events. By adding a virtual element to a physical event (e.g., a national sales meeting), management can send a message to the entire organization.
Speak up. “Step outside the order-taking bubble of meeting planning and think more like a meeting marketer,” Randall suggests. “Take the temperature of your attendees. If you don’t feel an event you’ve been asked to plan will bring a return to your company, say so, because going ahead might affect other events.”
Don’t rush to cancel. Planners who are good at measuring the value of a meeting can craft a good data story explaining why it shouldn’t be eliminated. The data might show that carrying on with an event can alleviate cer-tain workplace issues, while canceling would intensify the situation. -- C.A.S.