Economic indicators in the U.S. in mid-June—unemployment back to 8.2 percent, job growth numbers adjusted downward, manufacturing growth slowing, and gross domestic product projections down for 2012—all added up to pessimism about the speed and strength of the economic recovery in the U.S. Couple that with the upcoming presidential election and the continuing debt crisis in Europe, and you can see why uncertainty reigns in Corporate America.

Except, perhaps, when it comes to corporate meetings. “Although you hear negative statements about the economy, our conversations with clients reveal that meetings are increasing,” says Tony Wagner, vice president, CWT Meetings & Events, Carlson Wagonlit Travel, Americas. “The demand is there. Across the board, corporate customers are doing more meetings and are committing earlier.” Of course, when demand is up, he adds, “that provides a challenge from a pricing and availability standpoint. Even though new hotel room supply is up slightly, we are still near five-year lows.”

CWT has just released its 2013 Travel Price Forecast, which shows that, in the United States and Canada, spending on meetings and events is growing, with a 5 percent increase expected in cost per attendee per day. Higher prices account for some of that, but also expected is an average 6 percent increase in group size and, significantly, a 5 percent increase in booking windows, which would seem to indicate that the “wait-and-see” mode of committing to meetings is behind us.

“Booking windows have increased as organizations are more confident in their own performance and thus their ability to invest in meetings and events to drive business,” the report states. “Given this, advance bookings for 2013 are already strong as of mid-2012, a trend that is expected to continue throughout the remainder of the year.”

But while companies may be willing to invest in meetings, they are less willing to invest in new employees. “Companies are hesitant to add non-core staff,” Wagner says. “That’s where the economic uncertainty comes in. They have capital but they don’t want to add fixed costs to their payroll. So they are definitely doing more outsourcing” of all or part of the meeting process.

SMM Keeps Up Its Momentum
Planners who are left handling more meetings also will be facing a tougher negotiating landscape through 2012 and 2013. As CWT explains: “The combination of increased demand and tight supply will enable suppliers to continue to hold their ground when negotiating contract terms such as attrition and cancellation clauses, though organizations with centralized sourcing and contracting practices have been able to secure more favorable terms than those working with a property on an ad-hoc basis.”

Indeed, CWT found that more companies will embrace centralized sourcing and contracting—among other principles of strategic meetings management—in 2013. Meanwhile, mature SMMPs, the report states, “will continue to bring [meetings and events] and transient travel together when it comes to leveraging combined spend with suppliers, particularly for hotels.”

And those who haven’t begun implementing strategic meetings management? In a “recommendations” section of the report, CWT tells them to get on the bus: “SMM is where the industry is headed, and buyers who embrace it will avoid being left behind. Consider starting small, and building into other areas over time.”

CWT’s other recommendations for meetings and events:

  • Treat destination analysis as critical.This is especially true in industries that are heavily regulated, as companies must justify every event—including its location. Be sure your rationale is transparent to procurement, C-level executives, and even regulatory bodies if necessary.
  • Give small meetings some love.Small meetings represent the majority of meeting requests for many organizations, according to CWT, yet they receive less attention than the larger gatherings that organizations hold once or twice a year. Bring more small meetings spend under management and you can drive improvements in savings and attendee satisfaction along the way.
  • Opt for carrots over sticks.The most effective meeting management programs find ways to pull stakeholders into the process and engage them, rather than pushing them to comply. Articulate the benefits to them of participating in your program—you may create program advocates in the process.
  • Consider the attendee experience.While cost is always key in meeting and event decision-making, the goal of all events is to drive behavior changes in attendees that benefit the organization in some way. Given this, individuals must understand the objective for attending and feel excited about participating. Buyers must not lose focus on this element in pursuit of effective pricing and contractual terms.

U.S. Prices Headed Higher
CWT predicts that U.S. airfares will rise 3.4 percent in 2013, while hotel rates will be up 3.7 percent.

“Continued volatility in oil prices, as well as within the U.S. stock and housing markets, is containing overall growth,” the report states. “However, airlines continue to stay disciplined about controlling capacity to ensure demand outpaces supply… Overall, heavy merger and acquisition activity within the North American airline industry in recent years continues to create a highly competitive marketplace in terms of pricing, and even more consolidation is anticipated in 2013.”

As for the hotel scene, the report acknowledges variability of rates across the country, noting that major business cities will sustain higher room-rate increases. In addition, CWT notes, “the western part of Canada is expected to experience particularly high demand in 2013 … based on an influx in foreign demand for the region’s energy and mining resources.”

The Global Picture: Brazil Will See Biggest Rate Hikes

  • Brazilian Hotel Rate Hikes—Brazil is the only nation in CWT’s 48-country forecast expected to see double-digit price increases next year. However, Brazil also is among only a few markets globally where significant new hotel construction is expected, as the country prepares for the FIFA World Cup in 2014 and the Olympics in 2016. Eventually, this will alleviate the pricing pressure.
  • Interesting Air Scene in Latin America—Countries in the Latin American region are split between two pricing scenarios that reflect the broader economic disparities there, CWT states. The healthy economies of Brazil and Chile are expecting airline price increases in 2013, while the suffering economies of Argentina, Colombia, Mexico, and Peru are expecting moderate decreases or only slight growth in fares.
    CWT reports big news in Latin America’s airline industry: The newly formed LATAM Airlines Group (formed from the merger of Chile’s LAN Airlines and Brazil’s TAM Airlines) is in its first full year in operation. The carrier is now the world’s second largest by market value, which may result in improved routes that benefit travelers based within, or traveling to/from, the region. While the airlines continue operating independently for now, by 2014 they must decide with which global alliance to align—LAN is a member of oneworld, while TAM is a member of Star Alliance.
  • Asia-Pacific Slows Down—While the Asia-Pacific region has been a strong economic performer in the past several years, growth is expected to “normalize” in 2013, according to CWT’s report, which means more measured price inflation in most categories of travel, with some moderate deflation in specific markets as well.
  • Singaporeis expected to see the highest 2013 hotel rate increases in the region, at 8.3 percent. At the other end of the spectrum, the dramatic increase in hotel building will keep rate increases in Chinato a modest 1.5 percent, while the same phenomenon in Indiaactually will drive rates to decreaseby 4.5 percent in 2013.
  • Japanwill mark the highest airfare increase in 2013, at 3.5 percent; otherwise, airfare in the region is expected to rise only modestly, with an increasing number of low-cost carriers providing competition, and additional capacity among Chinese carriers providing service to foreign markets.
  • CWT pegs Russiaas a market to watch in 2013 as, like Brazil, it will host both the Olympic Games and the FIFA World Cup over the next six years. The resulting strong construction pipeline will create increased competition that will keep rate growth down until closer to the events and again after the crowds have subsided, the report states.
  • Hotel rates in London,which had seen strong increases, will stabilize or experience slight decreases in 2013 following the Olympic Games.

Methodology
To arrive at its global price projections for 2013, CWT combined information from a statistical model that evaluates historical price behavior and forecasts future price references, the market-specific expertise and travel industry knowledge of CWT personnel worldwide, and macro-economic information sourced from IHS Global Insight, the International Monetary Fund Research Department, and the United Nations.

CWT offers services and solutions in the areas of traveler and transaction services; program optimization; safety and security; meetings and events; and energy services. Find more information at the company’s global Web site.