Most players in the besieged financial services industry have avoided the kind of public relations disaster experienced by American International Group for its ill-timed incentive program, which eventually resulted in the cancellation of 160 company meetings worth about $8 million. (See the AIG story). Nevertheless, some observers are bracing for troubles in the incentive travel market as a result of the ongoing financial crisis.
“Obviously the financial sector has been hit hard,” said Bill Boyd, president and CEO of Sunbelt Motivation & Travel Inc., Dallas. “The impact will probably be fewer qualifiers on trips, but the same number of trips. We aren’t seeing insurance taking a hit yet, but there will be a trailing impact.”
Tom Wilson, group vice president, Maritz, said it’s clear that in some sectors of the financial services and insurance market, the numbers of participants traveling to meetings and qualifying for incentives is down. On the other hand, he noted that other sectors are seeing an uptick in activity, “particularly on the property and casualty side of our business. These are companies that are saying it’s more important than ever to be in front of their clients,” Wilson said.
Companies “are cutting back on meetings,” observed Peter Ricchiuti, professor and associate dean at Tulane University’s Freeman School of Business, and a frequent speaker for meeting industry groups. “But this is absolutely the wrong time to be canceling meetings with your sales forces. When times are good, they really don’t need the oomph they get out of these meetings, but now they need answers more than ever.” And like Wilson, Ricchiuti believes that in a downturn, companies “have to stay in front of their clients.”
In a message to members of Financial & Insurance Conference Planners, Ken Crerar, president, the Council of Independent Insurance Agents & Brokers said that while meetings will be more important than ever during this economic downturn, “events that do not have a specific purpose and defined outcome are likely to fall by the wayside because meetings take both the time and money of participants.”
Ricchiuti said that while it’s obvious the financial news of the last several months has left people “shell shocked,” he pointed out that the economy has taken worse hits within recent memory and bounced back. “1982 was the worst downturn since the Great Depression,” he says. “We had negative GDP growth, 10 percent inflation, and 12 percent unemployment. Yet people are much more negative about our situation today, and it’s really not warranted.” Unlike many analysts, Ricchiuti thinks the downturn could be fairly brief.
“I’d be very surprised if the economy doesn’t start to come out of it by the first or second quarter [of 2009],” he said.—Michael Bassett
For more articles about how the economy is affecting meetings and conventions, visit the economy section.