This Time It's Global

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, Tenn. “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 things to go are the marketing dollars.”

But it's also not just about the economy — it's about the press. Says Levine of SpeakInc., “Given that recessions always end, no matter if this one will last a few more months or worse yet, a few years, the bigger question is whether this new mind-set regarding perception will forever change the use of speakers at insurance and financial meetings.”

Survival Mode

Excellence in Motivation is 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 currently 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 Greenspoon-Kelly at Destination St. Louis. “We are getting calls from those companies that wouldn't have come to us otherwise but who now need a DMC.”

Richardson at Memorable Meetings says, due to the current financial squeeze, the company 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 [where the company operates],” he says. “A client is more likely to pull back on a meeting booked in the Bahamas than one that is booked locally.”

Other companies are making operational changes to cut budgets and keep their employees. At Atlanta-based A Legendary Event, Creative Director Steve Welsh reports that managers were recently asked how, if they owned the company, they would cut costs without coming up short on quality. “Some suggested that we can reduce our courier bills by hand-delivering proposals or bills to our clients or by offering them the opportunity to stop by for a tasting of some of the chef's recent recipes — both of which give us some valuable face time with the customer,” he says. “Our executive chef was able to cut his overall food budget by 20 percent simply by calling his vendors and negotiating a better deal. By issuing paychecks every two weeks, we are saving over 50 percent of the cost of weekly checks! Many of our managers were so thankful to be included that they vowed to find ways to cut budgets in every department and to do whatever it takes to get through this.”

Uncertainty Reigns

Another result of the downturn: shorter booking cycles, making forecasting for 2009 virtually impossible. For example, White at Global Events Partners recently had a client in Nashville call on a Tuesday for an event the next day. “And this was major piece of business with off-site events and dine-arounds.”

While the unexpected business is certainly a plus, the inability to forecast through 2009 may translate into some suppliers going belly up. “I think some of the smaller DMC operations are not going to make it,” he predicts. “These are the ones that generally live on the edge with very close margins. I think we will see some of these three- or four-person operations fold this year.”

The Key Event Group's Hershiser says her company has gone from forecasting every six months to assessing the business on a quarterly basis. Some of her 2009 proposals have been out to customers for the past three to six months with no sign of action. “They're afraid to commit. They say they are doing [the program] but [it doesn't mean much] unless a contract is signed. We have a lot of leads. It's just a matter of what is going to go forward and what is not.”

Says Campos of Campos Creative Works: “Like us, most production companies are just trying to protect what they have. It's going to be a huge effort to keep what you have booked. We'll likely be in survival mode until 2010 — and I'm really an optimistic person.”

Sidebar: Opportunity Knocks?

With so many hotels being hit hard with cancellations, many suppliers are finding them more flexible about attrition. When Hannah Greenberg, CMP, director of conference services at Meeting Mavericks, a meeting planning company in Cherry Hill, N.J., saw attendance at an event in the Bahamas drop from 100 attendees to 22, the hotel was willing to waive all attrition penalties once she agreed to hold the event there again for the next two years.

“I really had to work hard to prove my case,” she says, but because she brings a lot of business to the property throughout the year, the hotel was willing to negotiate.

It was a good business decision by the hotel, says David Richardson, president and CEO of Memorable Meetings, an event-planning company in Charleston, S.C. “The ones that are really willing to partner together to do business are going to survive this.”

Richardson is going back to properties to renegotiate contracts for his clients for meetings that are already on the books. “I have clients who do not want to cancel but it is not economically feasible for them to have the meeting. It's a question of asking a property what can be done to keep the meeting from canceling, whether that be postponing cancellation fees, reducing room rates, or renegotiating attrition clauses.” He also often enlists the hotel's general manager in these sit-downs to discuss how they can offset certain costs in order to keep the business.

“Use the relationships you have with national chains,” Richardson advises, “and proactively go to them to ask for help.”

Says one hotelier: “Anything you have customarily paid for in the hotel environment is negotiable today: F&B pricing, Internet access, meeting room rental fees. You're going to find more flexibility on things like attrition terms and cancellation terms too.”