In the last few weeks, I’ve begun to wonder whether the meetings industry as we know it will survive the outside pressures that are lining up against face-to-face gatherings.
It feels almost disloyal to ask the question. Meeting and hospitality professionals’ relentlessly, almost unfailingly positive attitude is often a strength. But the threats to the industry are becoming more intense and complex, not less, and it’s getting harder to see how meetings and events will survive.
The latest, last week, was a report that hotel defaults and foreclosures had increased five-fold in California since January 1. The Los Angeles Times reported that more than 300 facilities across the state had run into financial troubles. Many of them remain open for now, but, as hospitality lawyer Jim Butler told the Times, “I have never seen so many lenders contemplating mothballing properties.” “It can and it will get worse for the hotel industry,” Butler said. And if it does, the industry’s woes could compound the larger foreclosure crisis in the United States.
Last February, at MPI’s MeetDifferent 2009 conference in Atlanta, a senior hotel executive commented that the economic crash would have hit the hospitality industry much harder if it had occurred in 2010, the year in which many of the industry’s five- and 10-year mortgages come due. That chicken is now coming home to roost, with California hotel broker Alan Reay of Atlas Hospitality predicting a dramatic increase in defaults. University of California, Berkeley, economist Kenneth Rosen told the Times that up to one in five hotel loans may be in default in 2010.
The American Hotel and Lodging Association is doing its best to talk up the stock, suggesting that the worst may be behind us. But the depth of the crisis is evident with a quick look at the Smith Travel Research Web site. In the last week, STR listed several U.S. destinations that had posted double-digit declines in occupancy and average daily rates, and projected that hotel property values will decline by up to 50 percent.
But wait, you say. If we just hang on and keep smiling, the economy is bound to recover. But what happens then? If demand in the wider economy is strong enough to drive up room rates, it will also lead to surging oil prices. At that point, the industry’s operating costs will rise, travel will become more costly, and meetings will feel the pinch, just as occurred in the summer of 2008 in the months before the economic crash, when oil hit $147 per barrel.
And none of this financial analysis directly addresses the competition between live and virtual meetings, the negative public perception of meetings as costly boondoggles, or the (incredibly important, long overdue) move toward carbon caps and pricing that will drive every part of our industry toward greater sustainability.
I have little doubt that people will continue holding face-to-face meetings. The question that led off this column was whether the meetings industry as we know it will survive. Meeting professionals have always assumed an automatic connection between the services we provide and the facilities where participants gather. But there was also a time, in my original profession, when journalists assumed the most important tool of their trade would always be produced by companies called Smith Corona, Underwood, and Royal. It was called a typewriter.
I misplaced my crystal ball the last time we moved offices, so I’m in no position to predict the end of hospitality or business travel. But I can’t believe our industry would be worse off if we put most of our effort into the results we are trying to generate when participants meet, regardless of whether that meeting is live or virtual, structured or informal. We don’t have to stop booking hotel rooms or convention facilities to think a bit more deliberately about using the best tool for every job. Then perhaps we can follow those decisions to a slightly more stable future.
For more on “The Shape of Things to Come,” visit The Conference Publishers’ blog.
Mitchell Beer, CMM, is president and CEO of The Conference Publishers Inc., one of the world’s leading specialists in capturing and repurposing conference content. Beer blogs at theconferencepublishers.com/blog. Send comments, facts, arguments, or column ideas to firstname.lastname@example.org.