Association Meeting Planners are Getting a New Job Description: alchemist. But instead of being asked to transmute lead into gold, they're being asked to provide a champagne and caviar-level meeting on a beer and hotdog budget. This is despite the fact that, according to the 2007Annual-Meeting Budget Survey, meeting planners generally are finding that the budgets for their annual meetings increased this year, and expectations are high that they will continue to increase for 2008. The problem? They're not increasing fast enough to keep up with rising costs and heightened attendee expectations.
Budgets on the Upswing
Respondents reported a median annual meeting budget just shy of $280,000, and more than a third said theirs were north of half a million (close to 10 percent of respondents had budgets of $2.5 million or more). It would appear that times are fairly flush for association meeting planners. To top it off, 59 percent of those surveyed said their annual meeting budget this year had increased from their 2006 budget, while 34 percent saw no changes. For 2008, more than half expected their annual meeting budget to rise, and almost 40 percent expected their budget would be flat next year. Only 5 percent said their budget decreased in 2007 from 2006; similarly, only 5 percent believed they'd see a dip in meeting monies available for 2008.
This all sounds like good news, but planners still say that they are at best running hard to stay in the same place, budget-wise. More than a third said the pressure to deliver more without spending more is the most important factor driving the need to cut costs. Twenty-nine percent said it was because their attendees are becoming more cost-conscious, and 21 percent pointed the finger at rising meetings-related costs.
How High Is Too High?
While fewer than a quarter of respondents named rising prices as the bane of their budgetary existence, nearly 90 percent reported that some meetings-related costs are unreasonably high for the value provided, notably food and beverage. Within that category, alcohol and coffee stood out as being especially overpriced, respondents said.
Audiovisual, meeting and sleeping room rates, and Internet connections also topped planner's lists of high-priced items. Not surprisingly, these also are among the items that they see as having undergone the most dramatic price increases in recent years. Eighty-four percent said F&B has gone through the roof recently, while 54 percent say room rates have inflated precipitously. Almost half bemoaned the rapid rise in AV costs, and 39 percent said general contractors and service charges are skyrocketing.
The proliferation of service charges and add-on fees also is driving many planners to distraction. As one respondent said, “Today there are so many added costs that it is impossible to clearly budget” for them all. Another lamented: “In the past, the challenge was to negotiate free meeting space. Now it's to get rid of all the extra charges.”
But F&B woes were still the most commented-upon area. “The pendulum has swung in favor of the hotel having more power in the negotiations now,” said one respondent. “For instance, the hotel is adding F&B minimums, and making those minimums higher now, even for very small meetings.” Another respondent pleaded with hotels to “be fair on F&B minimums. We have seen these skyrocket in the last two years, severely limiting where we can hold the meeting.”
Planners' biggest challenges correlate to these rising costs, respondents said, especially when it comes to room rates and F&B. But the main challenge, as one respondent said, was “putting on a meaningful conference that meets members' needs in a cost-effective manner without appearing to be cheap.” Another added, “and make a decent profit!”
The Negotiability Factor
Fortunately, survey respondents noted that they still can find some wiggle room when it comes to negotiating. Meeting space rental was at the top of the negotiability list for 62 percent of planners surveyed, 49 percent said they still could negotiate good deals on guest rooms, and 39 percent said speakers and related expenses were fairly negotiable. Interestingly, while F&B may be unreasonably priced and rising, this area remains easy to negotiate for reduced costs for a third of survey participants.
There still are areas that are difficult to negotiate, they said. One planner said, “It is getting difficult to get any real savings these days. Tokens, maybe, you'll get.”
Topping the difficult-to-negotiate list for two out of three respondents was air transportation, while 49 percent cited labor, general contractors, and service charges as tough items to crack in terms of budget. Other difficult-to-negotiate areas include shipping, freight, courier, and postage (45 percent) and AV (34 percent). Another sticking point, said a respondent, is “added costs you don't know are there. If you don't know about them, you cannot negotiate them.”
Savings for Them and for Us
Cost-conscious meeting planners, dealing with belt-tightening both within their organizations and their potential attendee constituency, say they're always looking for ways to save their organizations and their attendees money.
To keep costs down for attendees, 43 percent said it helps to have flexible booking dates, while 43 percent cited booking second- and third-tier cities and 41 percent mentioned negotiating to eliminate fees as the most effective way to save costs. Forty-three percent also said it helps to negotiate multi-year hotelto keep rates down for attendees.
In terms of saving money for their organizations, respondents said the most effective techniques were to use conservative room-block requests (53 percent), obtain comp rooms (46 percent), and market their meetings electronically (36 percent). Other possibilities raised by respondents include using university dorms during vacation times and co-locating your meeting with another related meeting to extend your organization's reach.
Listen Up, Suppliers
When asked what one thing they'd like industry supplier partners to know about their need to contain costs, respondents had plenty to say. And most of it boiled down to: We need to be able to provide value for the price.
One said, “I am not looking to be unreasonable, just fair to both sides.” Along the same lines, another said, “I think we all need to be cost-conscious in view of high prices these days. Associations definitely do not have an endless source of funds; we are limited by what we bring in from membership dues.”
Another put it a bit more plainly: “If my attendees are required in their businesses to provide a proper value for the price, I need you to do the same. It is impossible to justify spending $15 for a continental breakfast of coffee and Danish. It can't be done.”
Others pleaded for suppliers to concentrate on providing value. “In the end, suppliers will get all the dollars we have,” said one respondent. “But if they would let us spend it to make the guest experience a better one, it would reflect well on the destination as well as on us.” And while association planners do negotiate hard, suppliers should remember that “we're not trying to gouge them. We simply cannot play in the same arena as a corporate affair, and small things can make a big difference to us. It's a challenge to find cost savings for the organization without passing the costs on to attendees.”
And please, they said, keep relationships in mind. “Our industry suppliers really are partners,” said one planner. “The best partners understand where our conferences must save money, and they share with us areas where they need to make money. True partners make each other successful.”
Methodology Data was collected for the 2007 Association Meetings Annual-Meeting Budget Survey from May 30, 2007, to June 13, 2007.
In an online survey, Penton Custom Research e-mailed invitations to a total of 7,914 subscribers of Association Meetings selected on an nth name basis from all subscribers who provided an e-mail address. Not including bounce-backs and undeliverables, the survey went to 5,514 subscribers. To encourage prompt response, a drawing was held for one of four $50 Amazon.com gift certificates. We received 216 completed surveys, a response rate of 3.9 percent.
Factors Driving the Need to Save Costs
Pressure to deliver more without spending more 37%
Cost-conscious attendees 29%
Increasing meetings-related costs 21%
Organizational annual meeting budget reductions 7%
Other/no answer 6%
Top 5 Most Dramatic Cost Increase Areas
Food and beverage
Labor, general contractor, service charges
Most Overpriced Meetings Areas
Service charges, fees
For more cost-saving tips, visit our cost-saving tips page.