Scary. That's never been a word you'd expect to hear describing the state of our industry.

And yet that's exactly how Hannah Greenberg, CMP, describes business at Meeting Mavericks, a meeting planning company in Cherry Hill, N.J. “I've had two cancellations in the last four weeks,” she reports. “Before this, I had two in the past five or six years. It's definitely scary.”

In St. Louis, Julie Greenspoon-Kelly is feeling it, too. “We have two large groups who book in January every year,” says Greenspoon-Kelly, president of Destination St. Louis. “They both canceled.” She has also seen some large St. Louis-based corporations pull out of annual events. Anheuser-Busch, Enterprise Rent-a-Car, and MasterCard all canceled their 2008 holiday parties, she says, and while her company was not involved in planning those events, the cancellations hit many local suppliers hard. “These are the kinds of things that make you sick to your stomach.”

It's made virtually all suppliers in the meetings industry — from destination and meeting management companies to incentive houses and speaker bureaus — take stock and rethink their business strategies, says Chris White, chairman and CEO of Global Events Partners, a worldwide partnership of DMCs based in Washington, D.C. At a recent meeting in Nashville, Tenn., White brought together all the company's domestic DMCs. “Each owner stood up and told us what is going on in their region, and nearly everyone said 2009 business was going to be down. They were forecasting anywhere from 10 to 40 percent less business this year.”

As Bill Boyd, CMP, CMM, CITE, president and CEO of Sunbelt Motivation, Dallas, and a well-known industry leader, puts it: “I haven't seen business this bad in the 28 years we've been in operation.”

Who's Hurting Most?

“Event professionals who serve the corporate market exclusively are bearing the brunt of the downturn,” says Lisa Hurley, editor-in-chief of Special Events (a sister publication of Corporate Meetings & Incentives). “While social business is certainly feeling the pinch, the corporate event business is facing a sharper falloff.” It's not surprising, she says. “People still want to celebrate a wedding or other milestone event, but corporations are not only reining in spending, they also fear looking extravagant in these tough times, so they are canceling events that might appear frivolous.”

Debbie Meyers, CSEP, head of Dallas-based entertainment company Bravo! Entertainment, expects a 20 percent to 30 percent drop in the budgets slated for her events this year. While some of the cuts are due to lower projected attendance at conferences, she agrees that the negative press that companies like AIG have received over sending people on incentive trips has caused others to rethink what they are doing. “We've seen cancellations even when canceled services have to be paid for anyway,” she says.

Malcolm Greenwood, owner of Big Events, Franklin, Tenn., has seen more cuts than cancellations — things such as dine-arounds and catered events. “Clients are watching the menu more closely and choosing more economic entrées.” They are also scaling back on décor. Audiovisual, however, is one area where clients are not as willing to make cuts, he says.

For DMCs, the situation depends on the destinations they serve: Exotic locales such as Hawaii are getting hit harder by the economy than second-tier cities like St. Louis, says Greenspoon-Kelly. “We're fortunate in that we're not an incentive destination,” We have never seen the super-highs, and now we are not seeing the super-lows like [DMCs] in cities such as San Diego or Miami. St. Louis is also still easy to get to. We're down from last year, but it is nothing compared to my colleagues at DMCs in Boston, Atlanta, Miami, and Nashville.”

Times are definitely tough in Nashville, reports Rhonda Marko, CMP, CMM, DMCP, president and CEO of Destination Nashville, who has had to lay off three people at her company. As president of the Association of Destination Management Executives, she has seen “more DMCs laying off staff than I can count on both hands. I have never experienced that before in all my years in the business.”

Then there are the small- and medium-sized incentive firms, which sometimes rely on just a few key clients. Following the late cancellation of a large travel reward program for a West Coast automotive client, Excellence in Motivation laid off 34 employees in November. These were the first layoffs for EIM since the Dayton, Ohio-based company has been in business, says Bob Miller, president and CEO.

Speakers and entertainers are also feeling the pinch. “A few of our clients have canceled outside speakers and are holding reduced-length meetings,” reports Andrea Gold, president, Gold Stars Speakers Bureau, Tucson, Ariz. She is also seeing “a radical change” in the way some groups are budgeting for speakers. “In one case, a [client] that normally books a pricey keynote speaker is now spending one-third that amount for the same keynote speaker, and a few groups have cut out speakers altogether. ”

How Does This Recession Compare?

While many of these suppliers have weathered recessions in the past, the consensus is that this downturn is worse than the others, including the period following 9/11.

“In my opinion, 9/11 had a very different feeling,” says Valerie Hershiser, CMP, DMCP, president and owner, The Key Event Group, Nashville. “That was an attack on our country, and people were adamant about not letting it affect them.” Destination Nashville's Marko agrees, adding that financial uncertainty is at the heart of the current crisis, unlike in the period following 9/11.

Another big difference: The current recession is global. “Most of the recessions we have faced in the past have been U.S.-based,” says Julio Campos, founder and executive creative director of Santa Monica, Calif.-based production company Campos Creative Works. “In those downturns, global companies could sustain their business even though domestically they were suffering. The problem now is that everyone is affected — both nationally and internationally — and the first thing to go is the marketing dollars.”

Survival Mode

In the current climate, diversification is the key to survival, says CCW's Campos. “We are strengthening other departments in the company and diversifying our client base. Rather than fight for the same number of clients in the industries we have always worked in, we are building different segments in our business to explore what else is out there.” For example, his company has always focused heavily on the automotive and high-tech industries, but he is now looking to expand into the pharma and financial sectors. He is also delving into experiential marketing events for consumers in addition to corporate events. “Consumers will still be going out and spending money,” says Campos.

Excellence in Motivation is also expanding its reach in an effort to remain successful in 2009. Despite layoffs in its travel management division, Miller says the company is seeing growth in its marketing and technology services divisions and is hiring in these areas.

And when it comes to layoffs, one person's loss may be another's gain. “Some corporations have had to lay off their in-house planners,” says Destination St. Louis' Greenspoon-Kelly. “We are getting calls from those companies that wouldn't have come to us otherwise but who now need a DMC.”

David Richardson, president and CEO of Memorable Meetings, Charleston, S.C., says his company has primarily focused on the national market, but due to the financial squeeze, he is putting greater emphasis on developing clients regionally. “It doesn't cost us as much to do regional business in Georgia, North Carolina, and South Carolina,” he says. “A client is more likely to pull back on a meeting booked in the Bahamas than one that is booked locally.”