“Right now, all you can do is read the developing issues and trust your guts. There are no guidelines to point the way,” says Steven Hacker, president of the Dallas-based International Association of Exhibition Managers.
In a world where opening your mail and flying an airplane are practically acts of faith, where economic recovery is a miasma and terrorism all too real, Hacker's advice is cold comfort for association planners trying to see their way through 2002. The fact that meetings and expositions bring in an average 25 to 30 percent of revenues for associations — and can range up to 50 percent or more — makes planners' judgment all the more critical to their organizations' survival.
But how can you navigate your way through an unpredictable economy? Anthrax-laced letters? The potential for more terrorist attacks?
We surveyed the leaders and the rank and file to see how associations can mitigate potential revenue losses from attendance declines, and how they can boost revenues even in a recession. Here's what we found.
Controlling Variable Costs
David DuBois, CMP, president of Chicago-based Professional Conference Management Association, says PCMA reforecast the rest of its fiscal year to take into account a 15 to 20 percent reduction in revenues and expenses. “We're at war in two places: militarily and economically,” he says. “We all need to button down.”
Associations are fighting back by sending fewer staff and reducing amenities and food and beverage programs. Good fiscal management, says DuBois, is controlling variable costs: “If you're down 500 people, prepare 500 fewer registration badges, look at guarantees very carefully, and tell the hotel now that you're looking to make adjustments.”
Anticipating a 25 percent drop in meeting revenues next year, Michelle Reeder-Dauten, who plans meetings for the Investment Recovery Association, Mission, Kan., says the association reworked its meeting budget. “We're just not set up for affinity programs or additional sources of revenue that would make sweeping gains for us,” she says. “We've cut our budgets to the bone, and we'll have to work very hard to stay within them.”
Sheri Boeckman, director of association services with the Oklahoma Association of Realtors, Oklahoma City, says her organization went through this before after the banks in Oklahoma started collapsing in the 1980s. “It took a big toll on our members, so we retooled our meetings. Those $15,000 decoration budgets were cut to almost nothing.” This time around, she says her association is thinking about combining its spring and fall conferences to cut costs.
Bill Howard, vice president of marketing, tourism, and communications with the Atlanta Convention and Visitors Bureau, has noticed that entertainment and extracurricular activities “are taking a beating. A lot of our meetings are sticking to business, and social hours are falling by the wayside.” Similarly, programs that used to draw spouses and children are among those that will be going all-business, predicts independent meeting planner Edina Lessack, CMP, Meetings & Events USA, Chicago.
Some organizations are planning as though they're going to hit their targets in 2002 — and developing backup plans. “We're working some different scenarios and doing some financial modeling so we can inform our board of what the possibilities would be if we had to cancel, or if we had 50 percent, or whatever it might be,” says Lisa Block, director of meetings and conventions for the Society for Human Resource Management, based in Alexandria, Va. “Not because we are expecting problems; it's just part of our due diligence.”
“You'll see associations everywhere scrutinizing hotel contracts,” predicts Michael Olson, president/CEO, American Society of Association Executives, Washington, D.C. He adds that planners already are digging into their 2003, 2004, and 2005 contracts to double-check attrition penalties and renegotiate pickup-to-block ratios.
“The first thing to do is reduce blocks because a) you'll probably have reduced attendance, and b) almost without exception, you'll be able to get rooms if you need them,” says Bruce Harris, founder of the Cleveland-based independent meeting planning firm Conferon Inc.
Harris also suggests renegotiating attrition clauses, “but don't even pick up the phone until you've done your homework.” This includes finding out what their competitors are doing, and what they're offering to the public. “Attrition is the battle ground for associations.”
Reeder-Dauten went to work renegotiating her 2002 rates and blocks even before her fall meeting was held. “I put in additional time limits for cutting blocks without penalties,” she says, “and I had them spell it out more cleanly — I don't want their idea of what we're going to do to differ from mine.”
One thing Lessack is putting in her contracts is to spell out that rates will be increased each year based on the cost of living, and that it will be negotiated each year with the written consent of each party before it's raised. “The hotel often puts down no more than a 5 percent increase per year. The consumer price index may only go up 2.5 percent, but if they have 5 percent in the, that's what you're going to get.”
Lessack adds that her newclause includes a stipulation that if more than 25 percent of her attendees can't get to the meeting, or if the hotel is harmed in any way, her client doesn't bear attrition responsibility. “That's not a cancellation,” she says. “It's a termination where neither party is responsible.”
An ancillary, yet vital, issue is filling room blocks while hotels are aggressively marketing incentive rates to pull in transient travelers. These can be as much as 50 percent below an association's contracted rates, says Olson, and they're no secret to attendees. Meet with the property and have them agree to let you review occupancy night by night so you can identify members who took advantage of the lower consumer rate, he urges. And ask members to notify you if they're getting better deals.
When it comes to attrition, Harris believes that the logical place to put the risk is on the attendees. Not by creating a prepayment plan where attendees commit up front to the full amount: “I could prepay and stay there for three days, or I could go to the hotel next door and pay $20 less per night without prepaying,” Harris says. “Explain to attendees that the hotel is providing the meeting space, the chairs, and the heating and air conditioning because we're booking the guest rooms. If you stay in hotel X, the registration is X. If you stay in hotel Y, the registration is X plus Y. Now the risk falls where it should.”
Marketing Like Mad
“I think we're going to see very creative meeting marketing and promotion through significant discounts for early registrations, perhaps preferred rooms at convention hotels for early registrants, and special prize drawings,” Olson suggests. “With dramatic incentives built into the preregistration process, associations will have a better idea earlier of what their revenue streams are going to look like further out from the event.”
Oklahoma Association of Realtors' Boeckman notes, “We're definitely doing more e-mail and fax marketing.” She's also setting up online registration through the association's Web site to encourage early birds. Meanwhile, IRA's Reeder-Dauten says her organization is increasing its Web site marketing, as well as doing additional mailings, inserts in its newsletters, and teasers on specific topics for upcoming meetings. “We're driving our education, our networking opportunities, and our ability to say ‘This is the only place you'll find this many investment recovery managers in one room, at one time,” she says.
Many planners are also looking to drive more sponsorships for 2002 conventions and trade shows. “I'm going to get on the phone with our exhibitors and personally solicit sponsorships instead of just sending out the letters and forms,” explains Reeder-Dauten.
Lisa Block, with the Society of Human Resource Management, says that in addition to more electronic marketing, “We're also looking to get ourselves placed on radio talks shows and use other less traditional methods of getting our message out to the public in different areas of the country.”
Creating More Revenue Streams
“Everyone is looking at their products and services to see what they can add,” says PCMA's DuBois. Many are contemplating offering more regional or chapter educational opportunities to augment their annual meeting, and offering more courses online. ASAE's Olson also expects to see more associations supplementing their annual meetings with more online reporting from the show, online access to speakers, and digitized programs that can be purchased by nonattendees.
Diane Watanabe, conference manager with Morristown, N.J.-based Financial Executives International, was planning to augment her April 2002 meeting with a “Webinar,” where participants can view presentations on their computers and receive copies for a reduced price. The Webinar will be archived for 30 days, so participants can view the program at their convenience. Her organization moved the schedule up to do the Webinar for the December 2001 program, and they attached Webinar options to future smaller programs. “We need to offer education with alternative means so we don't eliminate an important member benefit,” she says.
Another idea, which once was heresy, may become the norm: opening association educational offerings to nonmembers. “Associations need to find ways to offer information to anyone who's interested in it,” says Harris. “Otherwise, there will be private organizations who will steal away your members by offering information to everyone in the marketplace. Associations can't just sit back and feel that they own their particular place in the market.”
In ASAE's Olson's view, “We're going to find unique partnerships between associations and online education delivery systems to the point that down the road it will be difficult to identify the original source of the information. The association will be branding it and promoting it and getting credit for it, but it will be done through partnerships and reaching larger audiences than the association can reach with its own membership. Third parties will have much more validity and marketing support than if they did it competitively.”
Associations are partnering with each other as well. “We are creating alliances with other associations to jointly market our programs,” says Watanabe. “We're also looking for program content alliances to share in the risk and the revenue.”
In these uncertain times, planners need to push for change. As IAEM's Hacker says: “This is a good time for associations to step back and carefully and honestly evaluate their events and to make appropriate strategic changes. You will probably have to go through a lot of governance to get where you want to go, but the stakes are high. These are make-it-or-break-it times.”
Rather Than Flying…
“The farther people have to travel, the bigger the impact on attendance,” says Bill Howard, vice president of marketing, tourism, and communications with the Atlanta Convention and Visitors Bureau. Like many CVBs, his is concentrating its marketing to organizations based within a four-hour drive of the city.
Chances are many cities will be seeing more in the offing as associations look to supplement their annual 2002 conventions with more regional events. A recent Meeting Professionals International online survey found that one in three respondents picked “more local and regional meetings” as the most pervasive trend.
David DuBois, CMP, president of Professional Conference Management Association, explains, “If you typically get 2,000 people at your annual convention and you're now forecasting 1,500, that leaves 500 people that the association community needs to serve with educational offerings. So we're looking at more regionalized meetings, as well as e-learning.”
But, unless we take a giant step back to the days before the prevalence of air travel, it's unlikely that annual meetings will be broken up into smaller, regional meetings. “You just multiply the costs of speakers, staff planning time — all your expenses,” says Bruce Harris, founder of Conferon in Cleveland, Ohio. “The only reason you'd do that is if people can't travel to a meeting.”
Edina Lessack, CMP, Meetings & Events USA, says she had one client who decided last year to break its annual managers meeting into three regional meetings. “Not only wasn't it cheaper, but the headquarters people had to go to three meetings instead of one.”
Is Your Job Safe?
“We're hearing stories about associations that are doing some pretty dramatic downsizing, and freezing or reducing salaries, in order to offset reduced revenue streams,” says Michael Olson, CAE, president/CEO, American Society of Association Executives.
But generally speaking, meeting planners aren't the ones getting the axe, according to Dawn Penfold, president of New York City-based The Meeting Candidate Network (www.meetingjobs.com).
“I've seen the downsizing of meeting staff beginning in the corporate market, but the good news is that I haven't seen even an inkling of it on the association end,” says Penfold. “Because association meeting departments are still a revenue source, their jobs are relatively secure.”
While association planners are unlikely to get a huge salary increase or bonus next year, they can expect their pay to remain relatively stable, with standard increases, she says.
But Penfold warns that this is no time to coast on your job security. “The recessionary economy is a good excuse to lay off someone who is perceived as not pulling his or her weight,” she says. “This is prime time for association planners to document their return on investment, to prove their worth.”
Breaking It Down
Some types of associations are expecting a relatively strong showing in 2002. Professional associations, especially medical ones, which have strong education certification components, generally are saying they expect a relatively healthy attendance next year.
However, professional associations with a large international contingency are girding for a drop-off in overseas delegates. “I've heard of entire blocks of cancellations from different specific countries,” says Michael Olson, CAE, president and CEO of the American Society of Association Executives, Washington, D.C. In addition to a reluctance to travel too far from home, some international attendees are finding it more difficult to get visas, and overseas exhibitors worry that customs slowdowns will prevent their materials from arriving in time for the show.
Many trade associations, whose corporate members are dealing with financial difficulties of their own, also are anticipating that exhibitors will reduce booth size and the number of staff they send to a show. For these organizations, what's happening on Wall Street will continue to be a good barometer for what's happening with the meetings business.