This second phase, Hanson predicts, will be marked by directives to travel managers to do such things as try to renegotiate rates and minimums on corporate hotel contracts. “And as we get into the negotiating season for 2009 — September, October, and November — we'll see a real different kind of attitude,” Hanson predicts. “There will be a reduction in travel budgets. Not a crisis kind of reduction, but a stepping back a couple of years in volume.”

Ironically, the financial turmoil of the last several months comes on the heels of a survey of planners (taken during the third quarter of 2007) by PKF Hospitality, Atlanta, that found that the improved fiscal health of corporations and associations was putting less pressure on meeting planners to curb costs.

Robert Mandelbaum, PKF's director of research information services, said that even with evidence that a seller's market would persist, the survey suggested that “rising room rates, attrition clauses, and second-tier cities are no longer the hot-button issues that they once were.”

For example, from 2004 through 2006, the percentage of planners asked to consider a second- or third-tier city in an effort to control costs rose from 31.5 percent to 40.3 percent. In 2007, that trend went into reverse — only 30.8 percent said they had pressure to select a less expensive meeting destination.

“The 2007 survey certainly took place before we got hit with the heavy recession news,” says Mandelbaum. “Our outlook for the hotel industry was more optimistic then. Our forecasts have been downgraded to a degree. It's still going to be a seller's market, but not as strong as people were thinking a few months ago.”

What Can Planners Do?

Still, a downward trend could open up opportunities for planners, even as budgets come under pressure. Like Hanson, Freitag agrees that if the economy deteriorates, small meetings will be the first to go. At the same time, a softening of demand, Freitag said, could help planners find deals with hotels that try to recoup lost group business.

Yet for planners looking to cut costs, booking top-tier destinations will continue to be problematic. Demand will remain high in many of those cities, as well as for high-end, luxury properties. A better strategy, says Freitag, will be to keep an eye on hotels coming online, creating competition that could benefit the planner.

The good news, according to Connors, is that while corporate travel departments used to take the brunt of spending reductions during bad economic times, that is no longer the case. “I think it has changed over the last few years, based on the global nature of the economy,” says Connors. “If corporations don't have people out there traveling, and buying, and selling, there will be consequences.”