Meetings Industry Forecast 2016

What's next for hotels, airlines, trade shows, incentives and more

Forecast 2016 opener art

M&C interviewed a number of industry luminaries at this year's IMEX America on trends and projections. Head here to see what they had to say.

The meetings industry is thriving and will continue to strengthen, according to American Express Meetings & Events. "For the first time, we saw optimistic responses that point to growth across nearly every indicator studied," said senior vice president and general manager Issa Jouaneh in the 2016 Global Meetings & Events Forecast.

Among the factors noted in the latest edition of the annual Amex report:

 Meeting spend is rising globally, led by the Asia Pacific region with a 2.1 percent expected increase, and followed by a 1.9 percent rise in North America. Supplier rate hikes are a big reason, with hotels enjoying record performance and airplanes packed.

 • As the seller's market continues, planners will continue to stretch their budget dollars and work with what is available. "We're seeing a lot more flexibility from the meeting professional when it comes to day, pattern, even week," notes Michael Dominguez, senior vice president and chief sales officer for Las Vegas-based MGM Resorts International. "The more options you can bring to the table, the more success you have in the short term."

 Planner flexibility is essential, asserts Carlson Wagonlit Travel Meetings & Events in its 2016 Meetings & Events Forecast, because hotels continue to become less so. In attrition and cancellation clauses, for instance, flexibility has been significantly reduced and even removed, notes the forecast, both in terms of rooms and food-and-beverage minimums. In major cities with large airports, CWT is seeing initial attrition-clause offers in the 10 to 15 percent range, a drop from the traditional 20 to 25 percent. And hotels are less likely to hold space per availability requests: Planners find themselves in the position of booking it or losing it.

 With availability becoming more scarce, lead times continue to grow. "You won't find something 90 or 120 days out, like you could for three to five years," says Dominguez.

Following is M&C's prognosis for key industry segments in 2016. (For related video interviews, head here.)

HOTELS: Room Rates and F&B on the Rise

Hotel rates are expected to rise around the globe, but nowhere more so than in North America. In the past year, North American properties have enjoyed record-high levels of occupancy, average daily rate, revenue per available room, rooms sold and rooms revenue, according to lodging data provider STR. "We're hitting record numbers," affirms MGM Resorts' Michael Dominguez, "by multiple percentage points. It's not even territory that we've been in before."

Average daily rate is expected to rise by 5.9 percent at North American hotels next year, according to PKF Hospitality Research, and that's on top of a 5 percent hike this year. Consultancy PwC predicts a 5.8 percent rise in ADR next year, while STR is calling for a slightly lower 5.2 percent ADR increase.

Demand remains strong and, for the next year at least, is expected to outpace supply growth. American Express Meetings & Events expects group rates in North America to climb by 4.2 percent in 2016, and CWT M&E projects a 4.3 percent average group-rate rise.

Planners and meeting stakeholders increasingly are looking to mid-tier hotels and nontraditional meeting properties, Amex found across its regional supplier surveys. Interest in those categories rose in every global region surveyed, a trend Amex says has been evident for the past four years. On the flip side, interest in resort and luxury properties for meetings dropped on a regional basis globally, except in Central/South America, where demand for resort meetings rose by just under 1 percent.


Faced with rising prices, planners will need to keep a close watch on F&B costs in 2016, cautions CWT Meetings & Events. "It continues to have a significant impact on cost per attendee, per day," notes the company's 2016 forecast. "In the U.S., we've seen an increase of 2.9 percent year-over-year for F&B. Consider trading down on menu items that don't heavily impact attendees,  such as moving to tap water from bottled or reducing the number of breaks."

MGM's Michael Dominguez is concerned about escalating food prices brought about by the drought in California, among other factors. "I think that's a pain point we're all going to feel from a budgeting standpoint," he says.




AIRLINES: Flat Fares But More Fees

The free-falling price of oil globally finally is having an impact on travelers, according to the Global Business Travel Association's BTI Outlook-United States 2015 Q3. This year, the average U.S. airfare will be $379, the report finds, down from $392 a year ago. But the potential cost savings likely will be negated in the coming year by ancillary airline fees, which have climbed steadily for the past several years, notes GBTA.

Advito expects global airfares to remain flat next year, with some variation by region. In North America, Europe and Asia, the advisory arm of BCD Travel predicts business fares will be stable, but intercontinental fares in other areas actually could drop by 2 to 3 percent. Regional trips within Latin America, as well as in the Southeast Pacific, could rise -- by as much as 3 percent for business class in Latin America.


The Amex forecast focuses on group air rates, an element of meeting management the travel management company expects will become increasingly prevalent. (See "Meeting Airfares Are Back!".) One important trend, notes the report, is for companies to incorporate meeting-fare contracts into their overall transient air negotiations with major carriers.


TRADE SHOWS: Strong Rise for Key Metrics

Trade-show industry insiders who predicted great improvement for 2015 over 2014 were right. Early numbers for 2015 show robust growth for exhibitions, and predictions for 2016 are calling for more of the same. For the second quarter of this year, the industry grew 3.8 percent, the second-highest rate since the second quarter of 2007 and the 20th consecutive quarter of year-over-year growth.

The Center for Exhibition Industry Research expects to see 2.8 percent growth in four key metrics -- attendance, revenue, square feet sold and number of exhibitors -- once all the data is in for 2015. "We're predicting about 2.4 percent overall for 2016, conservatively just under 2015," says Brian Casey, president and CEO for CEIR. "But they're still really strong numbers."

CEIR has noted that however the U.S. gross domestic product goes, so go exhibition industry metrics. "We're at 5 percent unemployment, which is good for us," says Casey. "It improves consumer confidence and GDP, provides more revenue for individuals. Exhibitions should perform as well."

Among other industry trends, building, construction and home-repair shows are going strong. This B2B sector was up by 11.8 percent year-over-year in Q2 2015, followed by industrial heavy machinery and finished business inputs, up by 10.9 percent.


The education and nonprofit sector, as well as government meetings, are growing more slowly. For 2014, government events grew by only 0.6 percent, and education was down by 3 percent. Both grew in the second quarter (education/nonprofit was up by 4.7 percent and government was up by 2.4 percent), but, says Casey, they're still struggling.

Attendance is helping to drive all the metrics up. "Revenues are rising as a result of the fact that when you have more attendees, you can sell more exhibit space," says Casey of the metric that grew by just 1.7 percent over 2013, but showed a healthier 3.1 percent rise in Q2 of 2015. "It is the leading indicator overall in the industry."

And those attendees are more demanding than ever. "They've done a lot more research before they leave home," says David DuBois, president and CEO of the International Association of Exhibitions and Events. "The burden of having a successful experience is heavier, because of their need to say that attending was really worth their time."

There's also a heightened focus on ROI, building databases and tracking leads more effectively, says DuBois. "If an exhibitor spends $30,000 on a stand for a three-day show, the CFO is going to expect a post-event report," he notes.

Show organizers are using more technology to understand the behavior of attendees, putting pressure on facilities to have sufficient bandwidth available. "Maybe 90 percent of shows now have an app," says DuBois, "with everything at your fingertips during and after the show. It's an important element, especially for Millennials tied to their phones."

More education will take place on the show floor, a relatively new revenue stream. "For example," says DuBois, "if I set up a classroom environment in the corner of my exhibit hall and make it the new-product presentation room, I can charge exhibitors $500 for 20-minute vignettes. This allows exhibitors to extend what they do in their booths."


INCENTIVES: Budgets Are Inching Up


 The past year was a strong one for incentive travel, and all signs point to a robust 2016. "Many of our members said 2015 was their best year ever," says Kevin Hinton, CEO of SITE, the largest global association of incentive professionals, "and they expect the growth to continue."

The current economy is playing a positive role in the ability to hold incentive travel programs, per the Incentive Research Foundation. The IRF's fall survey of 190 industry professionals found that incentive travel budgets, stagnant for several years, will rise slightly in 2016. Per-person budgets will rise, too; 36 percent of those polled expect to spend more than $4,000 per person in 2016, compared to 14 percent who spent that much in 2015.

How companies spend their budgets is changing, too. Bonnie Boisner, vice president, event management, at Aimia, says clients are more likely to spend dollars on one-of-a-kind experiences rather than traditional incentive program components such as gifts and mementos.

Lead times are growing, driven by faith in the economy and by rising demand and competition for incentive-caliber hotels. Aimia's clients, for example, are booking small programs 12 months out, midsize incentives 12 to 24 months in advance, and large programs two to three years out.

Marty MacKay, DMCP, president of DMC group Hosts Global Alliance, reports that more groups will hold programs in Canada or Europe due to the stronger U.S. dollar, while IRF research shows the U.S. and Caribbean currently tied as most popular incentive destination.

For program components, more than half of those polled have some level of social media in their programs, and nearly half include charitable activities.